A federal judge recently named the Oklahoma Police Pension & Retirement System (OPPRS) to lead a lawsuit that claims Education Management Corp. defrauded OPPRS and other investors. Berman DeValerio is lead counsel.
The class action lawsuit accuses Pittsburgh-based Education Management and certain of its officers and directors of issuing a series of materially false and misleading statements about its growth and potential profits beginning with filings tied to the company’s initial public offering in October 2009. When the true facts about the company emerged in August 2010, Education Management’s stock fell nearly 18%.
“Our members are police officers and retired police officers. As they have a duty to serve and protect our citizens, we, too, have a duty to protect their hard-earned retirement money and to take appropriate action to recover that money when someone breaks the law and tries to steal it,” said Steven K. Snyder, the OPPRS executive director and chief investment officer. “We are not hesitant to use the courts when they provide the best avenue for recovery.”
The alleged fraud cost OPPRS losses of more than $426,000, giving it the largest financial interest of any investor actively pursuing the lawsuit, according to court filings.
The case, Gaer v. Education Management Corp. et al., 2:10-cv-01061, is pending in the U.S. District Court for the Western District of Pennsylvania. In his Nov. 10, 2010, opinion and order appointing OPPRS, U.S. Magistrate Judge Robert C. Mitchell agreed that OPPRS is “a sophisticated institutional investor, the paradigmatic lead plaintiff envisioned by Congress” when it created the lead plaintiff mechanism in 1995.
As lead plaintiff, OPPRS will represent purchasers of Education Management common stock between October 2, 2009, and August 3, 2010, inclusive, who seek to pursue remedies under the Securities Exchange Act of 1934.
Specifically, the plaintiffs accuse the defendants of making positive statements throughout the class period about the company’s operational performance and future growth projections that they knew were false or recklessly disregarded as false.
In fact, the plaintiffs contend that the defendants all along were propping up Education Management’s results by fraudulently inducing students to enroll in its scholastic and educational programs and engaging in manipulative recruiting tactics. Furthermore, defendants materially overstated the company’s growth prospects by failing to disclose that they had engaged in illicit and improper recruiting activities.
Investors only began to learn the truth on Aug. 2, 2010, when the U.S. General Accounting Office issued a report that concluded that for-profit educational companies like Education Management had engaged in an illegal and fraudulent course of action designed to recruit students and overcharge the federal government for the cost of education, according to the plaintiffs.
“The facts will show that Education Management and other for-profit education companies were cheating their students, the federal government and investors in a brazen manner,” said Jeffrey C. Block, a partner in Berman DeValerio’s Boston office. “The claims in this case appear strong and we are optimistic about achieving a meaningful recovery for OPPRS and the class.”
Established in 1981, the Oklahoma Police Pension & Retirement System administers $1.6 billion in retirement assets for more than 8,000 qualified police officers and their beneficiaries from participating municipalities around the state.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.