The nation’s second largest for-profit college chain with ties to former Maine Gov. John McKernan used improper recruitment techniques to obtain $11 billion in federal aid, according to a complaint filed this week by prosecutors with the U.S. Justice Department.

The Justice Department in May joined the multi-state, whistle-blower lawsuit against the Pittsburgh-based Education Management Corp. On Monday prosecutors outlined their case in a 122-page complaint alleging that the management corporation and its affiliates paid recruiters commissions as an incentive to enroll more students. That practice violates provisions for colleges that receive government-backed loans and grants.

The plaintiffs argue that the chain fostered a “boiler-room” sales culture that encouraged recruiters to enroll students who may have been unqualified to attend one of the company’s more than 100 affiliate schools. Prosecutors assert that the company’s practices led to higher student loan default rates.

McKernan isn’t named as a defendant in the suit. However, he is mentioned in the complaint and the recruiter-compensation allegations stem from his tenure as EDMC’s former chief executive officer.

McKernan, who is married to U.S. Sen. Olympia Snowe, R-Maine, was the CEO between 2003 and 2007.

He currently is EDMC’s board chairman.

The lawsuit has generated national media attention, stemming in part from an ongoing debate about the practices and efficacy of for-profit colleges. And, McKernan’s involvement has mobilized Snowe’s political opponents.

According to the Center for Responsive Politics, Snowe’s reported 2009 assets from EDMC were valued between $6 million and $25 million and divided among her and McKernan’s stock options and common stock holdings.

According to Snowe’s recent asset disclosure, the stock holdings were significantly reduced in 2010, valued between $2 million and $10 million.

The lawsuit was introduced in 2007 when Lynntoya Washington, a former EDMC admissions recruiter, filed a complaint in Western Pennsylvania District Court. The company was subsequently investigated by attorneys general in several other states, including Florida and Massachusetts, for “unfair” lending and “deceptive” recruitment practices, according to documents from the Securities and Exchange Commission.

McKernan’s ties to EDMC and the couple’s assets there have armed the senator’s political adversaries. In May Republican challenger Scott D’Amboise said Snowe should resign because she and McKernan had benefited from “the defrauding of taxpayers” of “millions of our hard-earned tax dollars.”

Snowe called D’Amboise’ comments “outrageous, false and libelous.”

On Tuesday, Snowe was under attack again, this time from the Democratic Senatorial Campaign Committee.

“The troubling allegations laid out in this suit suggests Olympia Snowe and her family profited by defrauding taxpayers and the federal government and victimizing low-income students,” Shripal Shah, a spokesman for the Democratic Senatorial Campaign Committee, wrote in a news release.

“These allegations couldn’t be more serious and Maine families should be rightfully concerned about Snowe’s connections to the company,” Shah wrote.

Snowe told reporters in Saco on Tuesday that she and McKernan were frustrated that federal prosecutors had intervened in the lawsuit because EDMC had taken extra steps to ensure it was in compliance with federal law.

The company claims it hired outside lawyers to develop a recruiter-compensation plan that complied with the law.

McKernan, through a prepared statement from EDMC, said the company “worked rigorously to ensure that the plan was properly implemented company-wide, wrote and distributed detailed training manuals and conducted training sessions on how to implement the compensation plan.”

Bonnie Campbell, a former Iowa state attorney general and U.S. Justice Department official who is now employed by EDMC, said the lawsuit was “flat-out wrong.”

Campbell also disputed allegations that the recruiters sometimes targeted unqualified students.

Plaintiffs claim the recruiters lured some applicants who could not write or were under the influence of drugs.

In a written statement, Tony West, assistant attorney general for the Civil Division of the Department of Justice, said, “Colleges should not misuse federal education funds by paying improper incentives to admissions recruiters.”

David J. Hickton, U.S. attorney for the Western District of Pennsylvania, said the suit was an attempt to recover federal tax dollars from abuse.

“This action against EDMC seeks to recover a portion of the $11 billion in federal student aid which EDMC allegedly obtained through false statements and which enriched the company, its shareholders and executives at the expense of innocent individuals seeking a quality education,” Hickton said.

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The Associated Press contributed to this report.

This story was updated to correct Snowe and McKernan’s combined stock holdings in EDMC.