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New York AG reaches $7.7 million settlement with charitable foundation

By Bryan Cohen | Dec 16, 2013

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $7.7 million settlement Friday with a not-for-profit education company that allegedly misused charitable assets to benefit a for-profit company.

Pearson Charitable Foundation allegedly developed a series of courses, instructional materials and software offerings from students from kindergarten through the 12th grade that were intended to be sold commercially by Pearson Inc., a for-profit company. Pearson Charitable Foundation allegedly went on to independently sponsor expenses associated with an international summit program that Pearson Inc. was able to commercially benefit from.

"The law on this is clear: non-profit foundations cannot misuse charitable assets to benefit their affiliated for-profit corporations," Schneiderman said. "Moving forward, funds for Pearson Charitable Foundation will be used exclusively for legitimate charitable purposes, beginning with millions of dollars to help ensure that every public school student has a great teacher in the classroom."

Under the terms of the settlement, Pearson Charitable Foundation will direct $7.5 million to recruiting and retaining high-quality kindergarten through 12th grade teachers and pay $200,000 to cover attorney and court costs. Pearson Charitable Foundation will also adopt program changes and governance reforms to make sure charitable assets are not improperly used to privately benefit Pearson Inc.


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