North Carolina: Governor’s Appointee to State Board of Education Has Conflict of Interest

I posted last night that Governor Pat McCrory plans to appoint a man to the state board of education who has little experience in public education, but is known for his strong support for removing a book taught in a high school English honors class.

North Carolina teacher Stuart Egan points out that the nominee has a conflict of interest. His wife ran/runs a school that receives state-funded vouchers.

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Conflict of Interest: Former Top Obama Officials Plan to Cash in on For-Profit University

This story is shocking. Former officials in the Obama administration, once in charge of regulating predatory the for-profit higher education industry, now want in on the action themselves. Their financier is Obama’s best friend. The story was written by Michael Stratford and Kimberly Hefling. Please read this report as background for what follows.

Mercedes Schneider wrote about it here.

She writes:


Obama’s close friend, Marty Nesbitt, and others are seeking US Department of Education (USDOE) approval to purchase the fiscally-troubled for-profit, University of Phoenix. Nesbitt and former Deputy Secretary of Education, Tony Miller, run a Chicago-based private equity firm, Vistria Group.

Vistria Group is part of a small collective that wants to purchase University of Phoenix, and the for-profit school’s parent organization, Apollo Education, is apparently all in.

USDOE approval would keep the student loan and Pell grant bucks coming to University of Phoenix– which happens to be the subject of three state attorneys general as well as the Federal Trade Commission (FTC).

The price tag for Vistria et al. appears to be $1.1 billion. As it stands, University of Phoenix receives $2 billion annually in public money.

If University of Phoenix goes under, then all of those student loans are forgiven– which means taxpayers foot the bill. If Vistria et al. acquire University of Phoenix, then the goings-on at the school become private. No more requiring that that public be made aware of the salaries of the school’s executives, or that the public be made aware of litigation against the school, or that the public know about pending investigations.

The story was originally posted at PoliticoPro, which is an expensive subscription; fortunately, it is now available for free at politico.com. Here is an excerpt from the original story:

As the Obama administration cracks down on for-profit colleges, three former officials working on behalf of an investment firm run by President Barack Obama’s best friend have staged a behind-the-scenes campaign to get the Education Department to green-light a purchase of the biggest for-profit of them all — the University of Phoenix.

The investors include a private equity firm founded and run by longtime Obama friend Marty Nesbitt and former Deputy Education Secretary Tony Miller. The firm, Chicago-based Vistria Group, has mounted a charm offensive on Capitol Hill to talk up the proposed sale of the troubled for-profit education giant, which receives more than $2 billion a year in taxpayer money but is under investigation by three state attorneys general and the FTC.

What stands out about the proposed deal is that several key players are either close to top administration officials, including the president himself, or are former administration insiders — especially Miller, who was part of the effort to more tightly regulate for-profit colleges at the very agency now charged with approving the ownership change. For-profit college officials have likened those rules to a war on the industry, and blame the administration for contributing to their declining enrollments and share prices.

The proposed sale carries high stakes for taxpayers, students and investors: The University of Phoenix’s financial stability may depend on the $1.1 billion acquisition. If the company were to fail, more than 160,000 students could be displaced and the government would be on the hook for hundreds of millions in student loans.

But the investors’ effort to seek Education Department approval of the school’s ownership change also raises questions about potential conflicts of interest.

“There is at least a taste of unseemliness involved in this,” said Mark Schneider, a former top education official under President George W. Bush. “They regulate it. They drive the price down. …They are buying it for pennies on the dollar.”

Vistria Group said it isn’t seeking special treatment. “We expect the Department to evaluate this proposed transaction on the merits,” the company said in a statement.

Vistria is part of a consortium of investors involved in the proposed acquisition, which has already won over shareholders of the school’s parent company, Apollo Education Group. But now the investors need the Education Department and the school’s accreditors to sign off on the ownership change to keep the federal money flowing — most of it in the form of student loans and Pell Grants.

With those decisions looming, Miller and at least one other former Obama insider have met with staff to Sens. Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.) and Dick Durbin (D-Ill.), looking to reassure some of the loudest critics of for-profit colleges in the president’s own party, several Senate aides confirmed to POLITICO. Those lawmakers have pushed Obama’s Education Department to be even tougher on for-profit colleges.

Miller has also met with staff members working for other committee members, including Sens. Michael Bennet (D-Colo.), and Bob Casey (D-Pa.), as well as with Sen. Lamar Alexander, the Tennessee Republican who chairs the Senate education committee. Nesbitt was not part of those Capitol Hill meetings, according to the aides….

But the specter of former insiders pushing the sale of a company in an industry that has long been in the administration’s crosshairs is not lost on critics. For seven years, the Obama administration has waged a crackdown on poor quality and predatory practices at many for-profit colleges, with the president himself excoriating some schools for “making out like a bandit” with federal money, but saddling students with big debts and leaving them unprepared for good jobs. He did not name the schools.

“It’s ironic that a former senior official at the Department of Education — an agency that has intentionally targeted and sought to dismantle the for-profit college industry — would now take the reins at the country’s largest for-profit college,” said Rep. Virginia Foxx, a North Carolina Republican who leads the House Committee on Education and the Workforce’s higher education subcommittee….

The sale price, which shareholders approved last month after initially balking at a lower price, is considered a bargain by some industry observers. The day Obama was sworn into office on Jan. 20, 2009, the company’s stock closed at $86.54 per share. Today, it’s trading at around $9, although a recovering economy, unfavorable media coverage and the for-profit industry’s general slump have also contributed to that drop.

Some Senate Democrats said they are also uneasy with the investors’ plan to take the university private, which means it would no longer have to publicly disclose information such as executive compensation, lawsuits or when it’s a target of investigations. Those details are useful to prospective students, they say, at a time when the school faces inquiries from both state and federal authorities.

“Essentially, a company that receives more than $2 billion annually from federal taxpayers — nearly 80 percent of its revenue — is going dark, and it’s happening at a time when the University of Phoenix has come under increased scrutiny from state and federal regulators,” Durbin wrote in a March letter to the Education Department.

Republicans think that the Obama officials drove the price down by their regulatory actions, then moved in to buy it at a bargain price.

This transaction is unsavory. It should be stopped. The conflicts of interests and self-dealing are abhorrent.

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BOMBSHELL: Dark Money and the Fight to Defund Public Schools in California!

In 2012, Californians voted on Proposition 30, which raised taxes on the richest citizens in order to raise funding for public schools and charter schools. The measure passed, despite a well-funded effort to defeat it.

A group of unions and progressive activists released a list of nearly 80 wealthy Californians who secretly funded the campaign to defeat Proposition 30. One of them was billionaire Eli Broad, who publicly supported Prop 30 but donated either $500,000 or $1 million to the effort to defeat it.

The progressive activists–called California Hedge Clippers–dug into records to show where the money came from to fight the temporary tax to aid schools.

Individuals named in the group’s report include Silicon Valley tech and investment executive John H. Scully ($500,000), investor and Hyatt Hotel heir Anthony Pritzker ($100,000), developer Geoff Palmer ($100,000) and private equity investor Gerald Parsky ($50,000).

Donors, regulators concluded, contributed money to an out-of-state organization, which circulated funds through a series of other groups and eventually back to California. By then, the identity of the donors was beyond the reach of disclosure laws.

As the money was channeled to California, some transfers were not properly disclosed and therefore violated the law, officials said. Well after the election, a California investigation resulted in $16 million in fines to some of the groups as well as the disclosure of some donors, including Broad, who either gave $500,000 or $1 million, depending on how the source documents are interpreted. The donors were not fined….

Among the names to emerge in the California research is Nils Colin Lind ($50,000), who was at the time an executive at Blum Capital, the firm he co-founded with Richard Blum, California Sen. Dianne Feinstein’s husband. The larger contributions include $800,000 from machine-tool manufacturer Gene Haas. The researchers also uncovered additional money from the Fisher family, heirs to the Gap fortune and among the most generous supporters of charter schools; their revised total is $10 million.

The list also includes leaders of the charter school movement, such as Scully and Tony Ressler ($25,000), a former longtime board member of the charter group Alliance College-Ready Public Schools.

Like other public schools, charters reaped huge financial benefits from Proposition 30 after it passed in 2012. School officials across the state hope voters in the November election will extend the tax on the wealthiest 2% of earners….

The donors’ money traveled a circuitous path. They contributed to Americans for Job Security, a Virginia trade association. This outfit then passed the money to the Center to Protect Patient Rights in Arizona. The center next sent $11 million to a Phoenix group, Americans for Responsible Leadership, which provided it to the Small Business Action Committee. That committee spent the money on the California campaigns.

In another relay, the Center to Protect Patient Rights provided more than $4 million to the America Future Fund in Iowa, which passed the money to the California Future Fund for Free Markets, a campaign committee supporting Proposition 32.

Not all of the donated money made it back to California. About $10 million was captured by groups in other parts of the country, the researchers said.

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NC: Gov. McCrory Appoints Advocate of Censorship to State Board of Education

In reference to North Carolina, you can never say “it can’t get worse.” It always can, as long as Pat McCrory is Governor and the Tea Party extremists control the legislature.

Governor McCrory named a new member of the state board of education: J. Todd Chasten. His major qualification appears to be his role in efforts to ban a book from the English honors class in his district.

The North Carolina General Assembly will vote on his nomination tomorrow.

NC Policy Watch reports:

Governor Pat McCrory’s recent nomination of J. Todd Chasteen to serve on the State Board of Education has raised the eyebrows of some western North Carolinians.

A Boone resident who appears to have a thin record of experience with public education, Chasteen was deeply involved last year in efforts to ban a book from a public high school English classroom in Watauga County.

“We should reject Governor McCrory’s recent nomination of Wataugan J. Todd Chasteen to the North Carolina Board of Education,” said Appalachian State University English professor Craig Fischer at a public forum at the university earlier this week, objecting to Chasteen’s lack of experience in public education.

“Chasteen sided with would-be censors during last year’s battle over keeping Isabel Allende’s The House of the Spirits in the sophomore English Honors curriculum at Watauga High,” Fischer added. “He spoke on behalf of banning the book at a February 10, 2014 school board local forum about the controversy, claiming–inaccurately–that Allende’s book is full of ‘deviancy’ and child pornography.”

Chasteen, an attorney and executive with Boone-based international aid organization Samaritan’s Purse, not only spoke publicly for removing The House of the Spirits from the classroom, but also lobbied the eventual tie-breaking board of education member, Ron Henries, in person and via email in an effort to persuade him to vote for banning the book, according to emails obtained by N.C. Policy Watch.

This is the mission statement of his organization:

Samaritan’s Purse is a nondenominational evangelical Christian organization providing spiritual and physical aid to hurting people around the world. Since 1970, Samaritan’s Purse has helped meet needs of people who are victims of war, poverty, natural disasters, disease, and famine with the purpose of sharing God’s love through His Son, Jesus Christ. The organization serves the church worldwide to promote the Gospel of the Lord Jesus Christ.

He is obviously a man drawn to charitable, faith-based work. But he has no particular qualification to sit on the state board of education. His activity in the book-banning controversy was sufficient to recommend him to McCrory as right for the state board of education.

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Clear Title, Sell House, Plead Guilty

Veronica Washington was charged by information in the U.S. District Court for the District of Columbia and plead guilty to conspiracy to commit bank fraud. According to the information, Washinton purchased residential real estate at 123 57th Street SE, Washington D.C. on February 20, 2008 and obtained two mortgage loans for approximately $470,000 total from SunTrust […]

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Clear Title, Sell House, Plead Guilty

Veronica Washington was charged by information in the U.S. District Court for the District of Columbia and plead guilty to conspiracy to commit bank fraud. According to the information, Washinton purchased residential real estate at 123 57th Street SE, Washington D.C. on February 20, 2008 and obtained two mortgage loans for approximately $470,000 total from SunTrust […]

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Fraudulent Documents Basis of Vermont Indictment

Alison Gu, a/k/a “Alison Ling,” “Ally Koo,” “Ai J. Chen,” “Ai Jen Chen,” “Ai Chen,” “Jing Shao,” “Yijing Gu,” “Yijing Lin,” “Alison Yi Gu,” was indicted by a federal grand jury in Vermont on June 16 2016 and charged with bank fraud, false statements and fraud with identification documents. According to the indictment between March […]

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Former Pastor Convicted of Mortgage Fraud

Nelson Cristiano Machado, Jr. 50, Bradenton, Florida, was found guilty of three counts of wire fraud by a federal jury. He faces a maximum penalty of 30 years in federal prison on each count. His sentencing hearing is scheduled for September 26, 2016. According to evidence presented at trial, Machado knowingly participated in a scheme […]

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Indictments in HUD Flipping Scheme

Sergio Garcia, Sr., 46, Chicago, Illinois and Sergio Garcia, Jr., 27, Lowell, Indiana were indicted by a federal grand jury and charged with conspiracy to commit mail fraud and ten substantive counts of mail fraud.  The indictment also charges Timothy D. Greene, 29, Lansing,Illinois with submitting fraudulent information to HUD. All three were charged in connection with their part in a […]

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False SCRA Claims Lead to Indictment and Guilty Plea

David Bernier, 52, Fort Lauderdale, Florida, pled guilty to a federal charge stemming from a scheme in which he forged military records and made false statements in an attempt to collect over $700,000 under a federal law meant to protect active duty military members from suffering losses through mortgage foreclosures. The scheme involved Bernier’s claims that he […]

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