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Pearson’s nonprofit arm agrees to pay $7.7 million to settle investigation

The education-publishing giant Pearson Inc.’s nonprofit arm will pay $7.7 million mainly to fund a teacher recruitment program in order to settle an investigation into whether it misused charitable money, officials announced Friday.

The state attorney general said the Pearson Charitable Foundation developed lucrative course materials for the for-profit Pearson Inc. and also paid for U.S. school officials to travel to overseas conferences that were attended by Pearson sales staff.

“The law on this is clear: Non-profit foundations cannot misuse charitable assets to benefit their affiliated for-profit corporations,” Attorney General Eric Schneiderman said in a statement.

In agreeing to the settlement, the foundation did not admit to any wrongdoing. On its website, it said that it and Pearson have always acted legally and “with the best intentions,” but that its relationship with the company at times “could have been clearer and more transparent.”

In addition to providing $7.5 million for 100kin10 – a program that aims to recruit and retain 100,000 STEM teachers by 2021 – the foundation also agreed to add three independent directors to its board who will audit any foundation transactions that could benefit Pearson. It will also pay the $200,000 cost of the attorney general’s investigation.

The settlement agreement is below.

Pearson Charitable Foundation Settlement