Coming in 2011: the end of Eli Lilly as we know it

Coming in 2011: the end of Eli Lilly as we know it

On Jan. 30, 2009, Eli Lilly and Company pleaded guilty to a violation of the Federal Food, Drug, and Cosmetic Act (FDCA). Accepting Lilly's guilty plea, the Court sentenced the company to pay a criminal fine of $515 million and asset forfeiture of $100 million, the largest criminal fine imposed against an individual defendant in the history of the United States. 

The Government believed this historic criminal fine reflected the seriousness of the offense and the defendant's earlier violations of the FDCA. The Government believed the criminal fine would promote respect for the law, and that the sentence would deter Eli Lilly from further unlawful promotion of its pharmaceutical products. The Government believed a criminal fine of this magnitude would serve as general deterrence to others who might be tempted to go down the road of off-label marketing. 

Under the Corporate Integrity Agreement (CIA) between Lilly and the U S. Department of Health and Human Services, the parties agreed that Eli Lilly would not be placed on probation. However, the agreement imposed a strict compliance program to ensure that Lilly's criminal conduct would not recur. 

Eli Lilly is subject to exclusion from Federal Health Care programs, including but not limited to Medicaid, for a material breach of the CIA. A material breach includes failure by Lilly to report a reportable event and take corrective action. A reportable event means anything that involves a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal Health Care program and/or applicable to any FDA requirements relating to the promotion of Lilly products. 

Exclusion has national effect and applies to all other Federal procurement and nonprocurement programs. 

That's the gist of it.   Details to follow. 

Thank you, Dr. M. I. Bonkers for keeping us posted!  We sit with baited breath on pins and needles.

If you have financial interests or own stocks in Eli Lilly, dump them now.

Here is a bit of background to the on-going saga:

Eli Lilly and Company Agrees to Pay $1.415 Billion to Resolve Allegations of Off-label Promotion of Zyprexa

$515 Million Criminal Fine Is Largest Individual Corporate Criminal Fine in History; Civil Settlement up to $800 Million

Corporate Integrity Agreement between OIG HHS and Eli Lilly

American pharmaceutical giant Eli Lilly and Company today agreed to plead guilty and pay $1.415 billion for promoting its drug Zyprexa for uses not approved by the Food and Drug Administration (FDA), the Department of Justice announced today. This resolution includes a criminal fine of $515 million, the largest ever in a health care case, and the largest criminal fine for an individual corporation ever imposed in a United States criminal prosecution of any kind. Eli Lilly will also pay up to $800 million in a civil settlement with the federal government and the states.

Eli Lilly agreed to enter a global resolution with the United States to resolve criminal and civil allegations that it promoted its antipsychotic drug Zyprexa for uses not approved by the FDA, the Department said. Such unapproved uses are also known as "off-label" uses because they are not included in the drug’s FDA approved product label.

Assistant Attorney General for the Civil Division Gregory G. Katsas and acting U.S. Attorney for the Eastern District of Pennsylvania Laurie Magid today announced the filing of a criminal information against Eli Lilly for promoting Zyprexa for uses not approved by the FDA. Eli Lilly, headquartered in Indianapolis, is charged in the information with promoting Zyprexa for such off-label or unapproved uses as treatment for dementia, including Alzheimer’s dementia, in elderly people.

The company has signed a plea agreement admitting its guilt to a misdemeanor criminal charge. Eli Lilly also signed a civil settlement to resolve civil claims that by marketing Zyprexa for unapproved uses, it caused false claims for payment to be submitted to federal insurance programs such as Medicaid, TRICARE and the Federal Employee Health Benefits Program, none of which provided coverage for such off-label uses.

The plea agreement provides that Eli Lilly will pay a criminal fine of $515 million and forfeit assets of $100 million. The civil settlement agreement provides that Eli Lilly will pay up to an additional $800 million to the federal government and the states to resolve civil allegations originally brought in four separate lawsuits under the qui tam provisions of the federal False Claims Act. The federal share of the civil settlement amount is $438 million. Under the terms of the civil settlement, Eli Lilly will pay up to $361 million to those states that opt to participate in the agreement.

Under the Food, Drug, and Cosmetic Act (FDCA), a company must specify the intended uses of a product in its new drug application to the FDA. Before approving a drug, the FDA must determine that the drug is safe and effective for the use proposed by the company. Once approved, the drug may not be marketed or promoted for off-label uses.

The FDA originally approved Zyprexa, also known by the chemical name olanzapine, in Sept. 1996 for the treatment of manifestations of psychotic disorders. In March 2000, FDA approved Zyprexa for the short-term treatment of acute manic episodes associated with Bipolar I Disorder. In Nov. 2000, FDA approved Zyprexa for the short term treatment of schizophrenia in place of the management of the manifestations of psychotic disorders. Also in Nov. 2000, FDA approved Zyprexa for maintaining treatment response in schizophrenic patients who had been stable for approximately eight weeks and were then followed for a period of up to eight months. Zyprexa has never been approved for the treatment of dementia or Alzheimer’s dementia.

The criminal information, filed in the Eastern District of Pennsylvania, alleges that from Sept. 1999 through at least Nov. 2003, Eli Lilly promoted Zyprexa for the treatment of agitation, aggression, hostility, dementia, Alzheimer’s dementia, depression and generalized sleep disorder. The information alleges that Eli Lilly’s management created marketing materials promoting Zyprexa for off-label uses, trained its sales force to disregard the law and directed its sales personnel to promote Zyprexa for off-label uses.

The information alleges that beginning in 1999, Eli Lilly expended significant resources to promote Zyprexa in nursing homes and assisted-living facilities, primarily through its long-term care sales force. Eli Lilly sought to convince doctors to prescribe Zyprexa to treat patients with disorders such as dementia, Alzheimer’s dementia, depression, anxiety, and sleep problems, and behavioral symptoms such as agitation, aggression, and hostility.

The information further alleges that the FDA never approved Zyprexa for the treatment of dementia, Alzheimer's dementia, psychosis associated with Alzheimer's disease, or the cognitive deficits associated with dementia.

The information also alleges that building on its unlawful promotion and success in the long-term care market, Eli Lilly executives decided to market Zyprexa to primary-care physicians. In Oct. 2000, Eli Lilly began this off-label marketing campaign targeting primary care physicians, even though the company knew that there was virtually no approved use for Zyprexa in the primary-care market. Eli Lilly trained its primary-care physician sales representatives to promote Zyprexa by focusing on symptoms, rather than Zyprexa’s FDA approved indications.

The qui tam lawsuits alleged that between Sept. 1999 and the end of 2005, Eli Lilly promoted Zyprexa for use in patients of all ages and for the treatment of anxiety, irritability, depression, nausea, Alzheimer’s and other mood disorders. The qui tam lawsuits also alleged that the company funded continuing medical education programs, through millions of dollars in grants, to promote off-label uses of its drugs, in violation of the FDA’s requirements.

"Off-label promotion of pharmaceutical drugs is a serious crime because it undermines the FDA’s role in protecting the American public by determining that a drug is safe and effective for a particular use before it is marketed," said Gregory G. Katsas, Assistant Attorney General for the Civil Division. "This settlement demonstrates the Department’s ongoing diligence in prosecuting cases involving violations of the Food, Drug, and Cosmetic Act, and recovering taxpayer dollars used to pay for drugs sold as a result of off-label marketing campaigns."

"When pharmaceutical companies ignore the government’s process for protecting the public, they undermine the integrity of the doctor-patient relationship and place innocent people in harm’s way," said acting U.S. Attorney for the Eastern District of Pennsylvania, Laurie Magid. "Off-label marketing created unnecessary risks for patients. People have an absolute right to their doctor’s medical expertise, and to know that their health care provider’s judgment has not be clouded by misinformation from a company trying to build its bottom line."

The global resolution includes the following agreements:

• A plea agreement signed by Eli Lilly admitting guilt to the criminal charge of misbranding. Specifically, Eli Lilly admits that between Sept. 1999 and March 31, 2001, the company promoted Zyprexa in elderly populations as treatment for dementia, including Alzheimer’s dementia. Eli Lilly has agreed to pay a $515 million criminal fine and to forfeit an additional $100 million in assets.
• A civil settlement between Eli Lilly, the United States and various States, in which Eli Lilly will pay up to $800 million to the federal government and the states to resolve False Claims Act claims and related state claims by Medicaid and other federal programs and agencies including TRICARE, the Federal Employees Health Benefits Program, Department of Veterans Affairs, Bureau of Prisons and the Public Health Service Entities. The federal government will receive $438,171,544 from the civil settlement. The state Medicaid programs and the District of Columbia will share up to $361,828,456 of the civil settlement, depending on the number of states that participate in the settlement.
• The qui tam relators will receive $78,870,877 from the federal share of the settlement amount.
• A Corporate Integrity Agreement (CIA) between Eli Lilly and the Office of Inspector General of the Department of Health and Human Services. The five-year CIA requires, among other things, that a Board of Directors committee annually review the company’s compliance program and certify its effectiveness; that certain managers annually certify that their departments or functional areas are compliant; that Eli Lilly send doctors a letter notifying them about the global settlement; and that the company post on its website information about payments to doctors, such as honoraria, travel or lodging. Eli Lilly is subject to exclusion from Federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.

"OIG’s Corporate Integrity Agreement will increase the transparency of Eli Lilly’s interactions with physicians and strengthen Eli Lilly’s accountability for its compliance with the law," said Department of Health and Human Services Inspector General Daniel R. Levinson. "This historic resolution demonstrates the Government’s commitment to improve the integrity of drug promotion activities."

In addition to the $1.415 billion criminal and civil settlement announced today, Eli Lilly previously agreed to pay $62 million to settle consumer protection lawsuits brought by 33 states. The state consumer protection settlements were announced on Oct. 7, 2008.

"Today's announcement of the filing of a criminal charge and the unprecedented terms of this settlement demonstrates the government's increasing efforts aimed at pharmaceutical companies that choose to put profits ahead of the public's health," said Special Agent-in-Charge Kim Rice of FDA's Office of Criminal Investigations. "The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the safeguards of the drug approval process and recklessly promote drugs for uses for which they have not been proven to be safe and effective."

"The illegal scheme used by Eli Lilly significantly impacted the integrity of TRICARE, the Department of Defense's healthcare system," said Ed Bradley, Special Agent-in-Charge, Defense Criminal Investigative Service. "This illegal activity increases patients’ costs, threatens their safety and negatively affects the delivery of healthcare services to the over nine million military members, retirees and their families who rely on this system. Today’s charges and settlement demonstrate the ongoing commitment of the Defense Criminal Investigative Service and its partners in law enforcement to investigate and prosecute those that abuse the government's healthcare programs at the expense of the taxpayers and patients."

"This case should serve as still another warning to all those who break the law in order to improve their profits," said Patrick Doyle, Special Agent-in-Charge of the Office of Inspector General for the Department of Health and Human Services in Philadelphia.  "OIG, working with our law enforcement partners, will pursue and bring to justice those who would steal from vulnerable beneficiaries and the taxpayers."

The civil settlement resolves four qui tam actions filed in the Eastern District of Pennsylvania: United States ex rel. Rudolf, et al., v. Eli Lilly and Company, Civil Action No. 03-943 (E.D. Pa.); United States ex rel. Faltaous v. Eli Lilly and Company, Civil Action No. 06-2909 (E.D. Pa.); United States ex rel. Woodward v. Dr. George B. Jerusalem, et al., Civil Action No. 06-5526 (E.D. Pa.); and United States ex rel. Vicente v. Eli Lilly and Company, Civil Action No. 07-1791 (E.D. Pa.). All of those cases were filed by former Eli Lilly sales representatives.

The criminal case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Office of Consumer Litigation of the Justice Department’s Civil Division. The civil settlement was reached by the U.S. Attorney’s Office and the Commercial Litigation Branch of the Justice Department’s Civil Division.

This matter was investigated by the FDA’s Office of Criminal Investigations, the Defense Criminal Investigative Service and the Department of Health and Human Services Office of Inspector General.

Assistance was provided by representatives of FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

The Corporate Integrity Agreement was negotiated by the Office of Inspector General of the Department of Health and Human Services.

Eli Lilly's guilty plea and sentence is not final until accepted by the U.S. District Court.

New CIA; New DoJ/SEC Investigations — As Of August 2, 2010

Posted on August 6, 2010 by condor| Leave a comment

This new corporate integrity agreement (mentioned on page 26 of the just-filed SEC Form 10-Q) is plainly material, and will have to be disclosed as an exhibit to the Form 10-Q, for the third quarter of 2010.

Do look for it then; I know I will:

. . . .Effective August 2, 2010, Merck and HHS-OIG executed a Unified CIA, which replaced the individual CIAs that had been signed by Old Merck and Schering-Plough prior to the Merger. The Unified CIA incorporates certain of the requirements of the individual CIAs of Old Merck and Schering-Plough and is similar, although not identical, to those legacy CIAs. Merck assumes the compliance obligations of the Unified CIA through February 5, 2013, which is the same as the Old Merck CIA. The Company believes that its promotional practices and Medicaid price reports meet the requirements of the Unified CIA.

The Company has received letters from the DoJ and the SEC that seek information about activities in a number of countries and reference the Foreign Corrupt Practices Act. The Company is cooperating with the agencies in their requests and believes that this inquiry is part of a broader review of pharmaceutical industry practices in foreign countries. . . .

Adverse outcomes here would be material to Merck.

Executives Collect $2 Billion at For-Profit Colleges

November 10, 2010, 4:12 PM EST

(Updates with closing share prices in the 10th paragraph.)By John Hechinger and John Lauerman

Nov. 10 (Bloomberg) -- Strayer Education Inc., a chain of for-profit colleges that receives three-quarters of its revenue from U.S. taxpayers, paid Chairman and Chief Executive Officer Robert Silberman $41.9 million last year. That’s 26 times the compensation of the highest-paid president of a traditional university.

Top executives at the 15 U.S. publicly traded for-profit colleges, led by Apollo Group Inc. and Education Management Corp., also received $2 billion during the last seven years from the proceeds of selling company stock, Securities and Exchange Commission filings show. At the same time, the industry registered the worst loan-default and four-year-college dropout rates in U.S. higher education. Since 2003, nine for-profit college insiders sold more than $45 million of stock apiece. Peter Sperling, vice chairman of Apollo’s University of Phoenix, the largest for-profit college, collected $574.3 million.

Education corporations, which receive as much as 90 percent of their revenue from federal financial-aid programs, are “private enterprise that’s almost entirely publicly funded,” Henry Levin, director of Columbia University’s National Center for the Study of Privatization in Education, said in a telephone interview.

Students at for-profit colleges are defaulting on their loans at three times the rate of those at private, nonprofit institutions, according to data from the U.S. Department of Education, which is tightening regulation of the industry. The graduation rate for first-time, full-time candidates for four- year degrees at for-profit colleges is 22 percent, compared with 55 percent at state colleges and 65 percent at private nonprofit universities.

‘Public Trough’

“For-profit colleges are reaching into the public trough to finance luxurious lifestyles at the expense of people who are going to have to pay back loans,” said Levin, a professor at Columbia University’s Teachers College in New York.

John G. Sperling, Apollo’s 89-year-old founder and executive chairman, received $263.5 million from stock sales during the last seven years. Robert B. Knutson, retired CEO and chairman of Pittsburgh-based Education Management, the second- largest for-profit college chain by enrollment, got $132.4 million. Dennis Keller and Ronald Taylor, former co-CEOs of DeVry Inc., a Downers Grove, Illinois-based for-profit higher education company, together collected $110.4 million in stock proceeds.

‘Appropriate’ Rewards

Industry executives deserve to be rewarded because of their records as entrepreneurs and the performance of their companies’ stock, said Harris Miller, president of the Washington-based Association of Private Sector Colleges & Universities, which represents the industry.

“If a company has done well, and the market has rewarded executives, that’s totally appropriate,” Miller said in a telephone interview. “These guys were in it for the long term. They believe in the sector. They weren’t in it for a quick buck.”

Apollo shares doubled over the last decade, even after dropping almost 40 percent this year because of investor concern that new government regulation will reduce enrollment and profits. Strayer and DeVry shares each more than doubled since the beginning of 2003, even after stocks in the industry declined 32 percent this year through today, according to an index of 13 companies.

Apollo fell 21 cents, or less than a percent, to $36.63 at 4 p.m. New York time in Nasdaq Stock Market composite trading. Strayer declined $2.60, or 1.8 percent, to $144.33. DeVry fell 11 cents, or less than a percent, to $46.79 in New York Stock Exchange composite trading. The education stock index retreated 1.8 percent.

Exceeding Harvard

The windfall to executives at for-profit colleges towers over the rest of higher education.

Harvard University in Cambridge, Massachusetts, pays President Drew Faust $800,000 a year. Shirley Ann Jackson, president of Rensselaer Polytechnic Institute in Troy, New York, received $1.6 million and was the highest-paid president of a nonprofit or public university, according to Chronicle of Higher Education surveys of the most-recent college filings. The median annual pay of presidents at private nonprofit universities was $358,746, compared with $627,750 at large, private research universities, the Chronicle found. Heads of public institutions took home a median $436,111, according to the Chronicle.

At Strayer, Silberman heads a chain of colleges with 54,000 students last year, about the size of New York University, based in lower Manhattan. Silberman’s $41.9 million pay package amounted to 32 times NYU President John Sexton’s $1.3 million a year.

Soaring Stock

Silberman received a $40 million stock grant in 2009 that vests over 10 years, David Wargo, a Strayer director and former head of the company’s compensation committee, said in an e-mail. After Silberman arrived, Strayer shares rose almost 10-fold through 2009, when the grant was made, Wargo said. Silberman will receive none of the stock if he leaves the company before 10 years, so the grant is aligned with shareholders’ long-term interests, making it “consistent with best compensation practices,” Wargo said.

Silberman oversees 86 campuses, while NYU centers on New York City, Wargo said. Sondra Stallard, president of Strayer University, the company’s primary educational unit, is paid similarly to Sexton, Wargo said.

NYU has 18 schools and colleges in New York and sites abroad, including a degree-granting campus in Abu Dhabi, said university spokesman John Beckman.

University of Phoenix

The enrollment of Apollo’s University of Phoenix, 470,000, is about the same as that of the State University of New York system. Apollo co-CEO Charles Edelstein received $6.75 million in the year ended Aug. 31, 2009, 12 times the pay of Nancy Zimpher, who gets $545,000 a year as SUNY chancellor. William Pepicello, president of the University of Phoenix, is a closer comparison with Zimpher and receives cash and stock compensation of $1.8 million annually, said Apollo spokesman Ryan Rauzon.

Over half a century, Apollo’s John Sperling, a former college professor raised in a log cabin in the Missouri Ozarks, pioneered the for-profit college industry, Rauzon said. Sperling improved access for the poor, providing courses on demand, online and at night, Rauzon said. The “overwhelming majority” of the shares that John and Peter Sperling sold are founders’ stock that had been held for decades, Rauzon said.

The Landscape

“John Sperling had a revolutionary idea, and we think it has changed the landscape of higher education for the better,” Rauzon said in a telephone interview. “When you look at him as a founder and entrepreneur who has improved the lives of millions of Americans, that alone explains his compensation.”

An Aug. 4 report by the U.S. Government Accountability Office, Congress’s investigative arm, found that recruiters from Apollo and other for-profit companies misled students about the cost and quality of courses. About 13 percent of University of Phoenix students default in the first two years during which they are required to make payments on their student loans, three times the percentage at private, nonprofit colleges, Education Department data show.

Apollo has eliminated incentive pay for recruiters, monitored phone calls and started a program that lets students sample courses for free before committing, Rauzon said.

Indebted Barista

Jolene Daly, who lives in Turlock, California, borrowed $54,000 to pay for her bachelor’s degree from the University of Phoenix. She now works as a barista at a Starbucks Corp. coffee shop, making $8.94 an hour. Apollo should spend less on its executives and more on its instructors, who were poorly qualified and unprepared for courses, she said.

“It’s nice to know that that’s what I was paying for, because it certainly wasn’t the courses,” Daly said in a telephone interview. “It’s kind of infuriating.”

Apollo spends $2.1 billion annually on education and instructional costs, which is more than any other expense and “commensurate with what our students need,” Rauzon said.

Seven of the 15 higher education CEOs were paid more than their peers at similarly sized companies, according to Equilar Inc., a Redwood City, California-based executive-pay researcher. Equilar tallied salary, bonuses, long-term incentive pay, stock awards, the value of stock-options grants and perks from SEC filings. Equilar didn’t include the change in value of executive pensions.

Annual compensation ranged from Silberman’s $41.9 million to $413,000 paid to Donald Graham, chairman and CEO of Washington Post Co., which owns the Kaplan higher-education chain, the nation’s third-largest by enrollment.

Silberman’s annual compensation would have ranked him eighth on Equilar’s list of the highest-paid executives at the largest 1,000 companies. Strayer was too small to make the Equilar list.

Stock Options

Andrew Clark, president and CEO of San Diego-based Bridgepoint Education Inc., ranked second among for-profit colleges in annual pay. His compensation amounted to $20.5 million, according to an SEC filing. Clark’s 2009 pay was an anomaly because he received a $19.4 million stock-option grant, most of which was related to the company’s April 2009 initial public offering, said Bridgepoint spokeswoman Shari Rodriquez.

The number of students attending for-profit colleges rose to 1.8 million in 2008 from 550,000 a decade before, Education Department data show. Since 1998, annual industry revenue increased almost sixfold, to $33 billion, according to an estimate by Trace Urdan, an analyst with Signal Hill Capital Group in San Francisco.

Transformation

The industry has transformed itself, growing from its roots in trade schools for auto mechanics and massage therapists to offer bachelor’s and even graduate degrees. For-profit colleges cater to low-income and minority students often neglected by traditional institutions, the industry group’s Miller said. Higher default rates reflect the socioeconomic status of students, rather than the quality of institutions, he said.

Students, not colleges, apply for federal grants and loans to pay tuition and fees, so the companies aren’t directly subsidized by taxpayers, Miller said. State and private universities also receive government money, while education companies pay taxes, reducing their cost to the public, he said.

The executives with the biggest gains -- including the Sperlings at Apollo -- sold substantial holdings before their companies’ stocks fell because of proposed government rules restricting recruiting and tying federal financial aid to student-loan repayment rates.

To identify those winners, InsiderScore.com, a Princeton, New Jersey, company that analyzes insider transactions, compiled data for the seven years starting in July 2003, when electronic stock-sales data became available.

Finding Winners

Share proceeds start with the overall sum received from selling stock over the seven-year period. To approximate gains, InsiderScore then subtracted the value of open-market purchases and the cost of exercising options in that time frame. Because of the limitations of publicly available data, the proceeds may include amounts that executives paid for shares or options in earlier years, including when companies were private.

Not all the shares sold were granted by company boards as compensation. Executives also sold long-time holdings of founders’ shares or, in the case of the Washington Post, inherited stock in which the CEO had no ownership interest.

Washington Post

SEC filings show $65.7 million in stock sales during the last seven years under the name of the Washington Post’s Graham. The family held the shares for decades, largely in trusts for the benefit of siblings and their children, according to Post spokeswoman Rima Calderon. Graham acted as a trustee and had “no beneficial interest” in the proceeds of the sales, she said. Graham also transferred stock to his ex-wife, Mary Graham, Calderon said. None of the stock originated as compensation to Graham, she said. Filings confirm her account.

The SEC is conducting an informal inquiry into Apollo’s insider share sales. The inquiry relates to disclosures of information about an early 2009 Education Department review of Apollo’s operations, the company said Oct. 26. Apollo said it was cooperating.

John Sperling and his 50-year-old son, Peter, have sold a combined $837.8 million in Apollo shares since 2003, filings show.

The Sperlings have been diversifying their investments, selling shares during SEC-sanctioned “windows” for disposing of stock, Rauzon said. On Nov. 1, Apollo said it would initiate a trading plan for the Sperlings that would further restrict the timing of stock sales. The father and son still hold Apollo shares valued at about $770 million, filings show.

Fighter Pilot

Education Management’s Knutson, who made $132.4 million in stock sales, is also a founder. Starting with the Art Institute of Pittsburgh, Knutson, a former fighter pilot and Wall Street banker, built a national chain that now has 158,000 students.

In 2006, Knutson, then CEO, sold Education Management to a group of private-equity firms, led by Goldman Sachs Group Inc., for $3.4 billion. Education Management, which went public again in October 2009, now has a market value of about $2 billion. Jacquelyn P. Muller, a spokeswoman for Education Management, declined to comment on Knutson’s stock sales.

DeVry’s Keller and Taylor, who founded for-profit Keller Graduate School of Management in 1973, bought Oakbrook Terrace, Illinois-based DeVry in 1987. Their combined stock sales of $110.4 million reflect decades of investment in DeVry, Joan Bates, a company spokeswoman, said in an e-mail.

“Dennis and Ron were entrepreneurs who started this organization from scratch,” Bates said. “They made tremendous sacrifices and took on a great deal of financial risk.”

Taylor remains a DeVry director and senior adviser. Keller retired in 2008 and is a senior adviser.

Using Fortunes

For-profit college executives have used their fortunes to fund outside investments and interests.

Peter Sperling owns a Santa Barbara estate with a $20 million tax value. He is selling a “neoclassical villa and guest house” in San Francisco, which is on the market for $47 million, according to a listing. Rauzon declined to comment on Sperling’s property.

Keller has been a trustee of both his alma maters, Princeton University in Princeton, New Jersey and the University of Chicago, two of the nation’s wealthiest nonprofit colleges. He has given at least $50 million combined to the two universities, according to announcements from the institutions. Princeton named an engineering education center in his honor. DeVry won’t comment on Keller’s philanthropy, Bates said.

Student Loans

Maria Avila recently got her master’s degree in business administration from DeVry’s Keller Graduate School of Management and also has a bachelor’s from DeVry. A 44-year-old single mother and Mexican immigrant, she is featured in a promotional online video of school success stories.

Avila owes $74,000 in student loans, which she must repay on a $40,000-a-year salary as an accounting clerk for a Chicago television station, she said. Keller should have given money to a scholarship fund at DeVry, Avila said. Bates declined to comment.

“I’m like, ‘Give it to me,’” Avila said. “I need it.”

--With assistance from Stephen Grove in New York. Editors: Robin D. Schatz, Jeffrey Tannenbaum

To contact the reporters on this story: John Hechinger in Boston at jhechinger@bloomberg.net; John Lauerman in Boston at jlauerman@bloomberg.net.

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net.

Justice Department Reaches Settlement with University of South Carolina to Ensure Students Are Free from Harassment

Justice Department Reaches Settlement with University of South Carolina to Ensure Students Are Free from Harassment

WASHINGTON – The Justice Department reached a settlement agreement with the University of South Carolina to resolve an investigation into the university’s policies and procedures related to discrimination and harassment.
After receiving a report of race discrimination on campus, the department examined the university’s policies and practices related to the handling of complaints of discrimination and harassment. Federal civil rights laws require public institutions to appropriately address and respond to such complaints. To meet this federal standard, the university agreed to improve its policies and practices for receiving, investigating and resolving complaints of discrimination and harassment. The settlement agreement will ensure that students, faculty and administrators understand and are trained on their responsibilities under the university’s policies, including when and how to report incidents of harassment or discrimination, and will require the university to respond to such complaints in a timely and effective manner. In order to ensure ongoing compliance with its revised policies, the university also will train select administrators, faculty and students to lead future trainings on campus. The settlement provides that the university will adopt revised anti-discrimination and harassment policies before the start of the 2011-12 school year and will initiate training during the spring 2012 semester.
"Public institutions of higher education must ensure that their students are not denied equal access to educational opportunities," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "Public institutions must adopt policies and procedures that allow them to identify and respond to allegations of discrimination and harassment in a reasonable, timely and effective manner. I applaud the University of South Carolina for entering into an agreement that will communicate to students, faculty, administrators, and the public at large, that discrimination and harassment will not be tolerated on its campus."
The enforcement of Title IV is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website atwww.justice.gov/crt .

Student fees - path to a stupider future

Student fees - path to a stupider future

DC - University Food Police Ready to Strike Again

The two government agencies and Cornell University on Thursday announced a three-year, $1.15 million partnership to compile and share information about the safest ways of growing and packing produce.

The Produce Safety Alliance’s mandate includes launching a website to distribute its findings and setting up an educational network to spread knowledge of good agricultural practices.The alliance will be based at Cornell, home to a nationally regarded agriculture standards program.

FDA already has issued non-binding guidance for tomatoes, leafy greens and melons, so the industry already has some idea of agency thinking on safety standards that might go into a rule, Gilmer said.

Egg, juice and seafood producers already operate under industry-specific rules.

That kind of rule-making may take on increasing importance in the food safety arena. Legislation that would overhaul the nation’s food safety laws has been stalled in the Senate for a year, and prospects for passage in a lame duck session are unclear at best, leaving administrative action as the main route to bolstering the food safety system.

Questions:

Cornell runs multi-million dollar agricultural programs. Isn't there a conflict of interest for industry insiders to be creating regualtions for their own industry. Who is going to oversee the process to make sure government is NOT captured by some to keep others out.

Is this a way for industry insiders to reduce the competition posed by locally grown farmers with farmers markets and coops booming around the country.

The problem in the food industry and epidemics were with the big suppliers not the farmers. Is an overhaul of regulations necessary or is it a guise for the Federal Government and Universities to take more control over America's food supply?

If legislation to overhaul the nation's food safety laws is stalled in the Senate, what right does the FDA (and Cornell) have to circumvent the legislative process. FDA implements the rules and regulations enacted by the senate. It does not create it's own regulations -- that would be an abuse of power.

http://www.chicagotribune.com/health/la-heb-produce-safety-20101104,0,2754791.story

10 Shocking Stats on the State of U.S. Education

November 1st, 2010

Like everything created and operated by fallible humans, the American education system boasts some impressive strengths but lags behind with some rather egregious offenses. Studies persistently become available that shed light on the positives and the negatives, allowing teachers, administrators and parents a look at what factors need some serious tweaking. Ignoring the issues means compromising students’ abilities to succeed in college (should they elect to attend) and careers alike. By no means comprehensive, this list points out some of the more surprising statistics available – so be sure to explore other research for a much broader glimpse at what goes down in the nation’s schools; not to mention the impact on society on the whole.

1. Twenty-two percent of American adults are considered illiterate: Intensive testing by the National Center for Education Statistics in 2003 revealed that 22% of American adults displayed "below basic" literacy. The study did not include those with Alzheimer’s or other cognitive or learning disorders, and they noted discrepancies based on sex, race and education level. Adults with a high school education or higher understandably scored higher than those who ended in elementary or middle school. Theories abound over why this is allowed to happen, and many attribute it to apathetic teachers passing kids with inadequate reading comprehension skills just to get them out of their classrooms. Many believe that parents form the first line of defense against illiteracy and shoulder the responsibility of teaching their children to read. Others blame internet and text message-speak for the degradation of the English language. Whatever the source, which likely varies from case to case, the citizens of the United States must work harder to ensure that every child leaves the education system capable of basic reading and comprehension skills.
2. Forty-three percent and 53% of eighth graders receive inadequate music and visual arts educations, respectively: For most Americans, knowing that on an NAEP from 0 to 300, students scored between 105 and 194 on music assessments and between 104 and 193 on the visual art equivalent seems like a trifle. After all, schools tend to emphasize math, science and athletics at the expense of most other subjects. When institutions need to scale back their budgets, the visual and performing arts usually take the heaviest hits. In reality, a well-rounded education means balancing logical, analytic and objective disciplines with the creative, abstract and subjective. Music and its mathematical constructs make for an especially viable bridge between the two. Ignoring the importance of all arts means students graduate with incomplete skill sets — certainly a handicap when searching for colleges and employers who value creativity and improvisation. So yes, these statistics should be extremely disconcerting to parents and educators alike. Much more horrifying than knowing that the football team won’t be getting shiny new jerseys this year.
3. Around 57% of preschool-aged children are enrolled in center-based daycare programs: Daycare centers and preschools offer harried parents a convenient way to keep their kids safe while they tend to work, but the advantages extend beyond that. Those genuinely concerned with the well-being of their clients provide appropriate educational toys, games and activities as a means of granting them a head start in their academic careers — especially when it comes to reading and math. Considering around 90% of a child’s brain development occurs before the age of 5, this definitely puts this 57% at an advantage once they enroll in kindergarten. In addition to nurturing their educations, daycare providers also facilitate socializing at an early age, teaching children an awareness of and ability to relate with their peers. Certainly skills they need to succeed in school and business!
4. Only 73.2% of students graduate from high school on time: As of the last data aggregation from the class of 2005-06, anyways — though the number has likely fluctuated little in 2010. Every dropout or student who repeats a grade has their own personal reason for their status, and almost all of thempossess enough self-awareness to know how their decisions may negatively impact the future. At least half of those who never complete high school made the decision because they felt disengaged and bored with classes, though serious illness, unexpected parenthood, caretaking and failing grades also contribute heavily to the dropout rate as well. There will always be students who either never graduate or take longer than four years, of course, but knowing that so many quit on account of apathy offers up a massive challenge to educators. Finding creative ways to capture student attention without compromising the ultimate lesson can certainly solve a major component of the issue at hand.
5. Forty-seven percent of female and 38% of male teenagers understand proper birth control methods: Said comprehension of practicing safe sex comes either courtesy of parents, school or both. Both sexes seem to equally understand the dangers of contracting an STD or STI, yet young women typically know much more about the proper methods of preventing them — and unwanted pregnancies. Considering worldwide efforts to stop the spread of AIDS and HIV, the fact that only two-thirds of American teenagers know anything about prophylactics whatsoever is beyond jarring. It seems as if abstinence-only approaches and their "Just Say No!" tactics give curious kids an incomplete picture of sex that could lead to irreversible consequences. Yes, abstinence is the only strategy for a 100% avoidance of diseases and babies. But that information won’t help the 38.9% of students who already do not use condoms during intercourse — probably because nobody ever taught them how. Only well-rounded, objective discussions that never purposely circumnavigate certain corners can help prevent such risky behaviors.
6. Nineteen-point-nine percent of students are bullied on campus: The CDC’s survey on risky youth behavior reveals that 19.9% of American high school students have been forced to deal with bullying at school. While educational institutions may not always have the resources for addressing cyberbullying, they can make a better effort to prevent and stop it on campus. This does place many schools at an impasse, though, especially considering the spate of GLBTQIA teens unfairly mocked for their gender identity or sexual orientation. Unfortunately, local parents who distort religion in order to promote hate make it difficult for administrators to promote the tolerance and harmony needed to seriously cut back on verbal, physical, emotional and mental abuse. Stricter policies for dealing with perpetrators and the avoidance of victim-blaming need implementing, but this does put the poor kid on the receiving end at the risk of escalated torture. Faculty and staff members must also keep a sharper eye out for suspicious behavior and direct both the bullies and the bullied towards the proper mental health channels.
7. Thirteen-point-eight percent of students have seriously considered suicide: Ten-point-nine percent of them went through with making the preparations, 6.3% actually attempted and 1.9% needed medical treatment as a result. Not all of these instances necessarily stemmed from bullying, either. An estimated 20% of teenagers suffer from depression before entering adulthood. Most schools do offer counseling services for students, but prevailing social stigmas against pursuing psychological help prevent them from receiving the intervention they desperately need. Some states provide outreach to educational institutions with free materials on caring for mentally ill teenagers — regardless of whether or not they experience suicidal thoughts. Concerned parents, faculty, staff and students should work towards encouraging teenagers who need help to schedule a meeting with their school counselor or psychologist. Despite what the vocal ignorant dictate, strength lay in admitting weakness and actively pursuing treatment; not in denying its existence and allowing issues to fester forever until they boil over.
8. An average of 5% of students want to avoid school for fear of violence:Race, socioeconomic bracket, gender, sexual identity and placement in a public or private school all factor into a students’ reticence to show up for class, though the total 2007 average sat at 5%. This is an improvement over the 12% surveyed between 1995 and 2007, but no percentage of children should consider a house of education a frightful place. An average of 7% of students did not hope to avoid school altogether, but they made it a point to stay away from specific classes or areas where they felt unsafe. Many of them suffer from the persistent threat of general violence, whether from gang activity, ignorant bullies, shootings or some other source — though females especially have to guard themselves against the threat of sexual assault and rape.
9. Six percent of high school students have possessed weapons on campus: Unfortunately, the National Center for Education Statistics did not include survey questions on motivation for carrying weaponry to school. Eighteen percent of high school students, however, confessed to the habit of always keeping something on their person at all times. Regardless of whether or not they lug around a gun or a knife for self-defense or far more sinister purposes, there’s really no place for them on school grounds. If most bring them on campus in order to protect themselves from harm, then faculty and staff members have to seriously contemplate solutions to quell the violent, aggressive behavior. Some of the more dangerous ones out there have taken to installing metal detectors and security cameras, but not all of them can afford such measures. Others perform random or routine bag searches in order to catch any contraband. Unfortunately, such things do not entirely deter violence — the only way to really end such things is to chip away at the broader systemic functions that allow it to occur. Not exactly a realistic undertaking.
10. Thirty-five percent of students have seen hate-related graffiti at school:And 10% have reported hearing some sort of hateful slur hurled in their direction. Such actions certainly fall under the heading of bullying, and the same solutions apply — though eradicating hate and ignorance is about as easy as curing AIDS and widespread hunger. In 2007, 5% of students answered that the harmful words spewed on them specifically targeted their race, 3% their ethnicity, 2% their religion or gender and 1% their sexual orientation or disability. Females were more likely to receive gender-based insults, whereas males were slapped with more racial and ethnic slurs.