Eisman claims he’s never heard of Keiser University; named in lawsuit

Posted: October 6, 2010 in News
Tags: , , , , , , ,

Following on this morning’s post about privately held for-profit school The Keiser School suing Florida State College at Jacksonville, Keiser’s senior counsel, James Waldman, was kind enough to take a few minutes this afternoon to talk with me by phone.

Most interesting to investors following the travails of publicly listed for-profits such as Grand Canyon Education (LOPE) and Apollo Group (APOL), and others, is that Waldman contends the suit is a first of its kind in terms of alleging defamation against for-profit ed, but he also says Keiser has not joined forces with any other for-profits, public or private, in bringing suit. The action is strictly related to what the company sees as a particular smear campaign by Florida State.

Waldman says the company can show that misleading statements by executives of Florida State, featured in the media, harmed the company’s business by reducing enrollment and even getting Keiser barred from recruiting at some high schools.

The issues in the suit, however, go to the heart of the criticisms against for-profit ed.

“Florida State has said that we [Keiser] are ripping off our students, and has said our degree is worthless,” said Waldman.

“There is no evidence that our degree is worthless. It is the same degree that can be obtained at the University of Florida,” contends Waldman. ”

“We have higher graduation rates than the community colleges do, and we create more jobs [for graduates] than they do,” said Waldman.

As for the connection to short sellers, such as Steve Eisman of FrontPoint Financial Services, who are named in the suit as co-conspirators, Waldman says Eisman and others “have been in direct communication with the named defendants,” exchanging information about for-profit ed.

As for Eisman, he also spoke with me this afternoon by phone. Eisman tells me he had never heard of Keiser before hearing of the suit last night. Eisman is not a party to the suit.

“I laughed,” Eisman tells me. “It’s very hard to be a co-conspirator about an institution I’ve never heard of.”

Eisman said he may have had some contact with Florida State’s government liaison, Susan Lehr, who is named as a defendant. However, it was only in the context of a general discussion of for-profit ed. “I speak to a lot of people about this stuff,” says Eisman. “We never spoke about any particular schools, and I’d never heard of Keiser before.”

The suit is ultimately “not at all important to the for-profit eds,” contends Eisman. “What I have said publicly,” adds Eisman, “is that the graduation rates are exceptionally low [in for-profit ed], the default rates are astronomical, and that the federal government should do something to change the industry. Those first two are facts, the latter is my opinion.”

From: http://blogs.barrons.com/stockstowatchtoday/2010/10/05/keiser-details-smear-campaign-against-it-eisman-never-heard-of-em/

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