Nationally, most of the media coverage of Maine Sen. Olympia Snowe’s decision to drop her re-election bid has been depicted as an honest and moderate politician sick and frustrated with polarized politics on Capitol Hill.
Listen to the liberal, corporate media, like National Public Radio (NPR), and you will hear that the senator from Maine announced she will not seek re-election because there is a lack of civility in politics. NPR is just one media outlet among many that paint Snowe as a Republican senator under siege from radical elements in her own party.
The Daily Beast called Snowe a “moderate.” In his article, “The center crumbles“Politico writer Jonathan Allen stakes out the corporate media’s spin on the Snowe announcement bemoaning the fact, “Congress can’t find the middle ground because no one’s willing and able to stand there anymore” as if this somehow has anything to do with Snowe’s unexpected announcement.
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Snowe is hardly a moderate. Casting the conservative senator from Maine as such exemplifies how far to the right this country has moved and how supplicant the fawning mainstream media have become. And the news is more complicated than the corporate press would like Americans to know.
Snowe’s announcement she will not seek another term in the Senate may have little to do with “civility” or “loss of the center” within contentious politics and more to do with the fact her husband is knee-deep in controversy over an educational for-profit college chain know as Educational Management Corporation or Wall Street ticker (EDMC).
Snowe’s husband is former Maine Gov. John McKernan, and he is currently the chairman of the board of directors of EDMC and former CEO of what is the second-largest owner of for-profit colleges in the country.
The for-profit educational retail chain has been sued by the Justice Department and eleven states, based on allegations that the firm falsely reported to government officials that it was not basing recruiter salaries on incentives, which is an illegal ploy the for-profits have used to increase enrollment. The government alleges that they did use incentive pay for recruiters.
If the allegations are proven, then EDMC will be held liable for the theft of billions in government funds from Title IV. This could raise some eyebrows regarding McKernan’s role as CEO during the time that the company allegedly received Title IV monies illegally and could subject the former governor of Maine to criminal liability.
The company is also being queried by Change to Win, a shareholder in the company, regarding over-leveraging of debt to fuel continued company profits on Wall Street. The company owes more than $1.5 billion dollars and is the most debt-ridden of all the corporations that sell higher education, yet it has failed to provide a required letter of credit to the federal government.
In a January 20, 2012, letter to EDMC audit committee chairman Leo Mullin, Change to Win notes that EDMC has been steadily increasing its reliance on Title IV funds as a source of revenue for the company in violation of the 90/10 rule. In 2011, according to Change to Win, 90.3 percent of the company’s aggregate net revenue came from Title IV funds. This was up from 2010’s aggregate net revenue of 88.5 percent. In 2009, the amount of income derived from Title IV funds was 81.3 percent and, in 2008, Title IV revenues for the company were 70.2 percent.
The letter also expresses concern over the fact that the current CEO of EDMC is Todd Nelson, the same person who acted as CEO for the Apollo Group (The Phoenix University) at the time the company was sued and later settled a $78.5 million false claims suit with the federal government.
My recent Project Censored article detailed the financial and legal troubles the company is facing, and released information from the Change to Win Investment Group letter asking the company to correct their practices. There had been no response from EDMC since the piece ran.
The Sunlight Foundation reported:
According to the senator’s most recent financial disclosure form, she and her husband, former Maine Gov. John McKernan Jr., have investments worth between $2 million and $10 million in Education Management Corp., a Pittsburgh-based company that operates for-profit higher education institutions.
Snowe’s husband owns more than 835,000 shares in the company, worth more than $14.9 million at current prices. That was up from the 128,000 shares he owned when he became CEO in 2003.
Following her ‘unexpected announcement’, Snowe indicated that she was certain she would be re-elected if she stood for election. However, there is a good chance that her husband’s ties to EDMC would have sullied her reputation and perhaps doomed her chances. The company’s onerous ties to Wall Street and McKernan’s role as EDMC’s current chairman of the board and former CEO certainly would have dragged EDMC and its numerous legal and financial problems into the limelight. No politician wants scandal like that.
One thing is for certain: both Snowe and McKernan would have had a lot of explaining to do in the face of an eleven-state lawsuit, a federal government lawsuit and direct action from shareholders like Change to Win.
The influence-mapping web site Muckety provides a stunning chart that details both Snowe and McKernan’s political and economic ties to the for-profit educational company.