Monday, November 16, 2015

US reaches $95.5M settlement in for-profit education case

US reaches $95.5M settlement in for-profit education case - Yahoo Finance

"A Pennsylvania company that
enrolls more than 100,000 students at for-profit trade schools and
colleges across the U.S. and Canada has agreed to pay $95.5 million to
settle claims it illegally paid recruiters and exaggerated the
career-placement abilities of its schools.

Under the deal
announced by the Justice Department on Monday, Education Management
Corp. also agreed to forgive $102.8 million in loans it made to more
than 80,000 former students.
case not only highlights the abuses in EDMC's recruitment system; it
also highlights the brave actions of EDMC employees who refused to go
along with the institution's deceptive practices," U.S. Attorney General
Loretta Lynch said at a news conference."
"That lawsuit, and others like it, claimed the company signed up students
it knew likely wouldn't succeed or finish its programs. It did so by
paying recruiters using illegal enrollment-based incentives in hopes of
raking in government financial aid, which provided the bulk of the
company's income, the lawsuit said."



Nadia Taylor, 23, of Durham,
North Carolina, said she enrolled at the Culinary Institute at
Raleigh-Durham in 2011 after being cold-called by a recruiter who knew
personal details about her, including her low-income status, and that
her mother was incarcerated and her father deceased.
said the recruiter talked her into a four-year bachelor's degree
program without disclosing its cost — $100,000 — which Taylor learned
about only after completing her first quarter. Taylor said she
eventually quit school in 2014, with two months left, when the
curriculum was changed requiring her to take more classes she couldn't
"I would love a
degree," said Taylor, who cooks at a steakhouse after losing her job as a
hotel sous chef because she doesn't have a diploma. "Right now I have
$47,000 in debt and literally not one thing to show for it.""

How Pfizer has shifted U.S. profits overseas for years

How Pfizer has shifted U.S. profits overseas for years - Yahoo Finance

"Pfizer has used transactions
between companies within its group to allow an Irish subsidiary based in
Ringaskiddy - Pfizer Ireland Pharmaceuticals - to buy the rights to
patents developed in the United States and then use them to make drugs
which are sold back to U.S. affiliates.
though the Irish and other overseas units pay $3.2 billion a year in
royalties to use such patent rights, the higher prices at which Pfizer
in the United States imports manufactured drugs from affiliates means
almost all the profits from these drugs are reported overseas.
which were discovered in the United States, manufactured in Ringaskiddy
and sold back to the United States include anti-cholesterol treatment
Lipitor - the best-selling prescription drug of all time - and epilepsy
drug Lyrica, which generated revenue of over $5 billion last year for
Pfizer does have manufacturing
plants in the United States but filings for its overseas units show
non-U.S. companies supply over 80 percent of U.S. sales.
sales generate margins of around 40 percent for Pfizer's overseas arm -
earning it over $17 billion in 2013. However, Pfizer has reported
losses on its U.S. business in each of the past five years.
said it follows the "arm's length" tax principle when conducting
inter-company sales and purchases. This says companies should transact
with affiliates at the same prices unconnected companies would.
academics say it is very hard to judge whether inter-company sales of
unique products like patented chemicals, for which there is no
independent open market, are conducted at prices that independent
companies would agree to use.
current arm's length rules are always difficult to enforce because of
the lack of a comparable price (in the drugs industry)," said Edmund
Outslay, tax accounting professor, Eli Broad College of Business at
Michigan State University" 
" Ed Kleinbard, Professor of law
at the University of Southern California said the company's arrangements
reflected "aggressive tax planning" and it seemed, from the outside, to
be almost as capable in tax planning as pharmacology.
"This is a company that is investing heavily in tax research, as well as pharmaceutical research," he joked."