PORTLAND, Maine — U.S. Sen. Olympia Snowe and a businessman who plans to challenge her in next year’s Republican primary traded barbs Tuesday over the role Snowe’s husband plays at a publicly traded education company that is being sued by former employees.
Scott D’Amboise called on Snowe to resign from the Senate over a whistle-blower lawsuit that accused Pittsburgh-based Education Management Corp. of defrauding the government of taxpayer-funded financial aid. Snowe’s husband, former Maine Gov. John McKernan, is Education Management’s board chairman and formerly served as CEO.
D’Amboise, who plans to run against Snowe in the Republican primary in 2012, said in a statement that Snowe benefited from “the defrauding of taxpayers” out of “millions of our hard-earned tax dollars.”
“Snowe has the responsibility to the people of Maine to resign and find a way to give back the money she has been banking through her husband’s ill-gotten business strategies that included stealing and misappropriating taxpayer funding,” said D’Amboise.
Snowe called D’Amboise’s comments “outrageous, false and libelous.”
“The level of discourse coming from my opponents in this campaign is a reflection of their character,” she said. “This is just what voters are tired of — smear tactics with no basis in fact.”
Education Management Corp. runs higher-education institutions with more than 150,000 students at 104 locations in 31 states and Canada.
A lawsuit filed by two former Education Management employees and unsealed last week in federal court in Pittsburgh accused the company of violating the Higher Education Act and Department of Education regulations by paying recruiters based on their success in enrolling students. Schools participating in federal financial-aid programs are prohibited from offering incentive compensation as a way to discourage them from enrolling unqualified students and taking advantage of federal funding.
The company said it plans to “vigorously defend itself.” It said its compensation plan for recruiters was implemented in 2003 and designed to comply with federal regulations.
The Department of Justice has filed a notice of intervention in the case and has until July 5 to file a complaint.