Shareholders lob allegations at The Washington Post’s Kaplan unit

Premium content from Washington Business Journal - by Ben Fischer

Date: Friday, July 8, 2011, 6:00am EDT

Already besieged by federal and state investigations, The Washington Post Co.’s star subsidiary is staring down another gauntlet, this time in the courtroom.

In a new court filing, investors accuse the Post and two senior executives of hiding aggressive and potentially unlawful recruitment tactics of Kaplan Inc., and downplaying the risk that regulators would eventually target the operator of for-profit colleges. Those actions, the suit claims, artificially kept the parent company’s stock price high for a year before government investigations became public.

Citing 21 former Kaplan employees and one former client as confidential witnesses, the plaintiffs allege widespread company practices designed to maximize government-funded revenue at the expense of the students’ best interests, as well as tactics instituted to skirt regulations that govern recipients of federal student loans

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