For-Profit College Sues Over ‘Conspiracy,’ Names Short-Seller Eisman, Others

Over the transom this morning came word of a lawsuit filed in Florida by Keiser University, a privately held for-profit education institution, claiming a conspiracy by Florida State College, two of its administrators, and several "short-sellers", alleging that Florida State sought to "derail" the for-profit education companies through a campaign of mis-information.

(Florida State College is not the same as the more well-known Florida State University, I should note.)

The suit names as "co-conspirators" Steve Eisman, with FrontPoint Financial Services, who has been a frequent, vocal critic of the for-profits, even appearing before Congress to testify about what he deems underhanded practices on the for-profits’ part.

The suit also names Gilchrist Berg, founder of Jacksonville, Florida-based hedge fund Water Street Capital; analyst Antal Desai with Dallas-based investment advisors CPMG, Inc.; the National Consumer Law Center; the U.S. PIRG; and American Association of Collegiate Registrars & Admissions Officers, among others.

Keiser alleges it “suffered special damages as a result of Defendants’ negative media campaign in the form of, among other things, decreases in expected enrollment, increased costs of doing business, and decreased business valuation,” and the school is requesting compensatory damages be paid for lost profits, and an injunction against false claims by the plaintiffs.

The juiciest part is the selection of appendices, where Keiser has included emails back and forth between Florida State’s head of government relations, Susan M. Lehr, and various parties, including Berg and Desai, the analyst for CPMG.

In one email, Lehr writes that she is sending along “a bunch of good stuff to get you started in your exploration of greed, corruption and predatory schemes among Florida’s proprietary and for-profit career ‘colleges’.”

Steve Eisman was not immediately available when I called for comment. Keiser’s legal counsel filing the suit, Gary Sherman, was not immediately available.

The lawsuit was sent in an email this morning by a representative of The Student Access Student Choice Coalition.


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