[7] In 1999, 145 students brought suit against the Art Institute of Houston and its former parent company Education Management Corporation Inc alleging they were defrauded by the school.
They charged the school knowingly misled students into believing they would receive a valuable post-secondary education as well as skills which would lead to subsequent employment.
During which time, Goldman owned EDMC (Education Management Corporation) was being audited by federal regulators and found the mounting student debt along with other financial discrepancies.
The institution replaced those stripped federal loans with an internal repayment program that withheld transcripts and diplomas from students until the balance was paid in full.
With additional closures campuses were ordering a “teach-out” (including The Art Institute of Houston - North), EDMC sold to DCEH (Dream Center Education Holdings).