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How a famous short-seller got embroiled in an ugly higher-ed legal battle

October 16, 2010, 1:37 AM UTC
Fortune

Steve Eisman was the star of Michael Lewis’ bestseller The Big Short, which chronicled the investors who predicted the subprime mortgage crisis and made fortunes by betting against housing. Now Eisman’s latest short has landed him in the middle of an ugly legal battle between two colleges in Florida.

Eisman has his money on the short side of the for-profit education sector, and he hasn’t been shy about publicizing it. But now a for-profit school called Keiser University has sued a competing nonprofit public institution, Florida State College, for spreading “injurious falsehoods” about Keiser. In its formal complaint, Keiser claims FSC and two of its administrators aimed to “derail” the for-profit education sector through a “false and misleading campaign.” That campaign, according to the complaint, was executed in part through a “conspiracy” with both advocacy groups and short-sellers like Eisman.

Perhaps unsurprisingly, the best parts of the complaint include some of the e-mail exchanges between the parties involved. “All right, my friend,” one FSC administrator wrote to an investor. “Here’s a bunch of good stuff to get you started in your exploration of greed, corruption and predatory schemes among Florida’s proprietary and for-profit career ‘colleges.’ It is a hideous spectacle, but one that really needs to be addressed.”

Read the story here.