DeVos’ paperwork showcases an extensive web of investments, several of which raise eyebrows
On Friday, January 20, 2017, the U.S. Office of Government Ethics, or OGE, released the paperwork and pledge for President Donald Trump’s secretary of education nominee Betsy DeVos. The 108-page document is rife with private equity and hedge fund investments that are opaque to the public.
Overall, DeVos’ paperwork showcases an extensive web of investments, several of which raise eyebrows. She has investments in companies that hound students to pay their federal loan debts, as well as in psychiatric hospitals under federal investigation for Medicare fraud. She also has more than $1 million in an undisclosed venture related to education. And although her filings do not show any direct ownership stake in a private for-profit college, she has chosen to put some of her money into firms that are invested in that industry.
Unfortunately, senators could not ask DeVos any questions about what is in the OGE paperwork during her confirmation hearing last week. In an unprecedented move that applied to no other Trump nominee, DeVos’ hearing went forward before the paperwork was finished. Since members of the U.S. Senate Committee on Health, Education, Labor, and Pensions, or HELP, never had a chance to ask about it, here is what you need to know from the ethics paperwork.
DeVos profited from student loan misery
Before Devos’ confirmation hearing, The Washington Post reported suspicions that she had a financial stake in a company that, until recently, held a lucrative contract from the U.S. Department of Education to pursue the loans of defaulted student borrowers. Page 70 of the ethics paperwork confirmed that suspicion as fact. Located within a fund labeled “MCF CLO IV, LLC” is an investment in Performant Recovery Inc., which previously operated as Diversified Collection Services Inc. According to a Department of Education spreadsheet for the end of the 2016 federal fiscal year, Performant had more than $458 million in federal student loans in collections. It is not currently receiving any new loans because it lost out on a new contract last year—a decision it is currently challenging.
DeVos has a connection to a major for-profit college
Pages 15 and 45 of the ethics paperwork list investments in Avery Point VII CLO. While the full investments of that fund are not clear, it does show up as a key investment in an amended loan agreement with Laureate Education—a private for-profit college operator. Laureate is also the company for which former president Bill Clinton served as an honorary chancellor. Laureate, which has a substantial international presence, also owns Walden University—the largest recipient of federal graduate student loans. Laureate is expected to produce an initial public offering soon, which could mean substantial windfalls for the company. Notably, the ethics agreement that DeVos signed in relation to her nomination does not require her to divest her holdings in Avery Point VII…