DeVos' Investment Stakes Raise Democratic Concerns
Betsy DeVos' complicated investments continued to trouble Democrats on the Senate education committee even as DeVos' nomination as U.S. secretary of education was debated by senators last week.
"Your ethics-review process has revealed dozens of financial interests that you and your family hold through a complicated network of investment entities, assets, and trusts," said a Jan. 27 letter to DeVos spearheaded by Sen. Elizabeth Warren, D-Mass.
DeVos vowed in a Jan. 19 ethics letter approved by the federal Office of Government Ethics that she would divest her stakes in 102 assets that hold potential conflicts of interest should she be confirmed as education secretary. But she also stated in the letter that she will remain as a trustee and beneficiary of three family trusts, of which she and her husband, Dick DeVos, are the sole beneficiaries.
The lawmakers said in their letter that "we are concerned that if confirmed, you would continue to benefit from significant financial holdings in family trusts that may hold investments in companies affected by the Department of Education's activities."
In addition to Warren, the letter was signed by Democratic Sens. Tammy Baldwin of Wisconsin, Christopher S. Murphy of Connecticut, Sheldon Whitehouse of Rhode Island, and Margaret Wood Hassan of New Hampshire, as well as Independent Sen. Bernie Sanders of Vermont, who caucuses with the Democrats.
The Health, Education, Labor, and Pensions Committee voted 12-11 on Jan. 31 to advance the nomination, with the Democrats and Sanders voting in opposition.
Among the investments DeVos indicated she would divest are a direct stake in Knowledge Universe Education LP, which changed its name to KinderCare Education late last year and operates KinderCare Learning Centers. The financial disclosure says DeVos has an investment worth somewhere between $500,001 and $1 million.
Most items on the divestment list, though, are funds with diverse stakes in assets that include an education-related company among others.
Among the education entities that DeVos has indirect investments in through such funds are Varsity News Network Inc., which is described in endnotes to the disclosure as a developer of web software for K-12 athletics; U.S. Retirement Partners Inc., a financial-services company specializing in public school and government employee benefits plans; and N2Y LLC, which is described as providing cloud-based learning services for special education.
DeVos said in a written response to Sen. Patty Murray of Washington, the ranking Democrat on the education committee, that she and her husband had once owned shares of K12 Inc., an operator of virtual charter schools, but sold them in 2008.
Warren, at last week's committee voting session on the nomination, said she remained concerned because DeVos "plans to maintain financial ties that could create conflicts of interest" if she was confirmed.
DeVos' financial disclosure provides details on only one of the three trusts in which she would retain an interest—Family Trust 2, which appears to have indirect investments in education-related firms.
The senators' letter noted, for example, that DeVos would retain interests that are connected to Performant Financial Corp., which is involved in student-debt collection and has had contracts with the U.S. Department of Education in the past.
Other observers have also expressed qualms that DeVos would retain direct or indirect investments in some education-related companies, such as a stake valued at between $5 million and $25 million in Neurocore LLC, a Grand Rapids, Mich.-based company that has claimed its biofeedback technology helps children with attention deficit hyperactivity disorder and autism perform better in school.
Mary Bottari, the deputy director of the Center for Media and Democracy, in Madison, Wis., which publishes several ethics-watchdog newsletters on the web, said in an interview that DeVos' investments in education-related companies are "particularly concerning" despite her vow to divest of many of them.
"These types of financial ties present a conflict over the long term that is very difficult for the public to track," she said.
Ed Patru, the head of the informal group Friends of Betsy DeVos, said the Democratic senators' letter was "a political exercise through and through."
"The Office of Government Ethics has cleared Betsy and affirmed that she will have no conflicts," he said. "We think it would set a grave and dangerous precedent to substitute the OGE's nonpartisan guidance with the personal opinions of partisan lawmakers on Capitol Hill."
Vol. 36, Issue 20, Page 22Published in Print: February 8, 2017, as DeVos' Investment Stakes Raise Democratic Concerns