Billionaire hedge-funder and charter supporter Cohen tops Forbes 2013 scandal list

Cohen tops Forbes Scandal List

Net Worth: $9.4 billion

Nationality: American

Source of Wealth: SAC Capital Advisors (hedge fund)

What happened:  Cohen’s SAC Capital Advisors in November pleaded guilty to insider trading violations while agreeing to pay a $1.2 billion penalty and to stop managing money for outside investors. The U.S. attorney in Manhattan, Preet Bharara, described insider trading at SAC as “substantial, pervasive and on a scale without precedent in the history of hedge funds.” 

Back in July, I posted about scandal-ridden billionaire hedge-funder Stephen Cohen and revealed his ties to corporate reform and charter schools. I wrote then that Cohen and his wife Alexandria, turn out to be big players in the charter school world.

Through their tax-sheltered family foundation, they have given $35 million to "school choice" projects and more than $10 million over the last six years to Achievement First, Charter Network,as a way of pushing the development of  charter schools across Connecticut. Cohen, who strikes me as anything but a Robin Hood, is also on the board of the Robin Hood Foundation, which helped spawn Achievement First. He has also given $40 million to support his six charter schools operating in the Bronx.

Today, Cohen tops Forbes list of the biggest billionaire scandals of 2013. At least he's tops in his field, even if that field is fraud and insider trading.

As the old saying goes, “Where wealth accumulates, men decay.” Events of the past year bear this out. Never more so than in the case of Steven A. Cohen, the billionaire hedge fund chief who has been reduced to running nothing more than a family office. Cohen’s SAC Capital Advisors pleaded guilty to insider trading violations in November while agreeing to pay a $1.2 billion penalty and to stop managing money for outside investors. The U.S. attorney in Manhattan, Preet Bharara, described insider trading at SAC as “substantial, pervasive and on a scale without precedent in the history of hedge funds.”

Common Core has turned into a testing fiasco

The education world is scrambling to avoid its own version of a full-scale HealthCare.gov meltdown when millions of students pilot new digital Common Core tests this spring, writes Caitlin Emma at Politico. 

The tests will be given on a massive scale: Roughly 4.2 million third through eighth graders will test the exams in math and English this spring, and 29 million students nationwide will use them starting next school year.

CTB/McGraw-Hill apologized last spring for interruptions after its digital testing service disrupted exams in Indiana and Oklahoma. About 3,000 students in Oklahoma lost their connections to the testing provider’s servers. And nearly 80,000 out of a half million Indiana students who took the company’s tests in the spring had their testing postponed and about 30,000 were kicked off of the testing platform on a single day of testing. One Indiana charter school has said the errors are to blame for its F grade from the state.

“There will be bumps in the first couple years,” said Jeff Livingston, senior vice president of education policy and strategic alliances at McGraw-Hill. “There’s no question in my mind about that … It’s an engineering problem and a policy problem.”

Yes, "bumps". But as Emma points out, those bumps will influence teachers’ and principals’ evaluations and other decisions about their jobs. Schools will be rated on the results. Students’ promotion to the next grade or graduation from high school may hinge on their scores.

Inner-city schools, students being bypassed by college recruiters

Colleges and universities are systematically avoiding recruitment of black, Latino and poor students and telling their recruiters to bypass urban public schools. This according to a report in the L.A. Times, "College recruiters give low-income public campuses fewer visits."

A Times survey of public and private high schools across Southern California found that campuses with a high proportion of low-income and minority students had far fewer visits from college recruiters.

Big bucks to be made in K-12 ed

There's big money to be made in K-12 education, especially in the technology area. So says the New Schools Venture Fund which bankrolls much of what passes for school reform these days. According to the NSVF blog,

"Venture investment in K12 education technology was up 6% in 2013 totaling $452 million." 

But not everyone's playing the game, says WSJ. The main party-pooper is newly-elected N.Y. Mayor Bill de Blasio who has the privateers and charter operators worried sick. BdB is even threatening to make them pay rent.

Operators of New York City's publicly financed, privately run charter schools are bracing for changes promised by Mayor-elect Bill de Blasio — including the possibility of having to pay rent — that they worry could reverse 12 years of growth enjoyed under Mayor 

Moskowitz makes $475,244/year

Michael Bloomberg.

Bloomberg's charter patronage has meant windfalls for the operators including huge salaries. According to the Journal:

Critics note that more than a dozen New York City charter school executives are paid more than current New York City Schools Chancellor Dennis Walcott's $212,614. Harlem Village Academies chief Deborah Kenny earns $499,146. Eva Moskowitz, a former City Council member and founder of Success Academies, earns $475,244.

Pearson caught in the act. Says they're sorry.

Pearson, the textbook/testing publishing giant, was caught misusing its non-profit arm to bribe N.Y. and other state educators with international junkets. The British-based conglomerate which has made billions in profits as a result of its dominant role in Common Core testing, was fined a paltry $7.7 million and let off the hook for its misdeeds.

According to WSJ:

State Attorney General Eric Schneiderman opened the investigation in 2011 into whether the company mixed business with foundation work. The foundation put on conferences in countries from Brazil to Singapore, flying in state education officials for trips described by the foundation as educational.

 According to Schneiderman, Pearson executives believed the Common Core work performed by their nonprofit arm could later be sold by the for-profit organization and generate “tens of millions of dollars” for the company.

The Washington Post reports:

The adoption of the Common Core has created a lucrative opportunity for educational publishers, as states and schools rush to buy products “aligned” to the new standards.According to the settlement, Pearson used its nonprofit foundation to develop Common Core products in order to win an endorsement from a “prominent foundation.” The latter entity is the Bill and Melinda Gates Foundation, which helped fund the creation of the Common Core standards and announced in 2011 that it would work with the Pearson Foundation to create reading and math courses aligned with the new standards.

Behind the big money flowing into Common Core

The Common Core market is booming, especially for the tech companies and textbook and testing companies. Perhaps that is why self-interested and connected companies as well as power philanthropists like Bill Gates, are investing so heavily in it.

In the Dec. 10th Answer Sheet column in the Washington Post, ("Millions in private money poured into Common Core promotion") award-winning Principal Carol Burris of South Side High School in New York, documents the flow of private funding being used to promote Common Core Standards.

Among its biggest financial backers is The Committee for Economic Development (CED), a business-led, non-profit think tank that has education reform as a project. According to its website, CED exists to deliver “well researched analysis and reasoned solutions to our nation’s most critical issues.”

OED CEO Steve Odland

The CEO of CED is Steve Odland. Odland committed the organization to a two-year pledge to make sure that everyone understands the Common Core standards and to ensure that business leaders have what they need to support their implementation.

Writes Burris:

Mr. Odland, the former CEO of Auto Zone (2001-2005) and Office Depot (2005-2010), resigned from Office Depot in 2010, a week after the company announced it settled a U.S. Securities and Exchange Commission investigation for more than a million dollars. Odland himself agreed to pay a $50,000 fine without admitting or denying the findings. As the CEO of the Committee on Economic Development he now advises the nation on issues like the Common Core and teacher quality. Odland also blogs for Forbes about what to do on a “staycation,” and to express his concern for the people he sees who do not look healthy when walking around the malls.

As for Gates,

...The Bill and Melinda Gates Foundation gave the CED $865,593 to promote the Common Core. To put this donation in perspective, in 2012, the Committee for Economic Development received a little more than $3.5 million in total contributions for their work. For this think tank, this contribution from Gates (and it is not the first that they have received) is a substantial infusion of cash. The CED is hardly alone.  The Gates Foundation has given in excess of $173.5 million to promote the Common Core standards to an astounding number of organizations.  In New York, the Gates Foundation has contributed $3.3 million to the Regents Research Fund to support a think tank known as the Regents Fellows. 

Chancellor Merryl Tisch

Other contributors to the fund include the foundation of Regents Chancellor Merryl Tisch ($1 million), Regent Charles Bendit ($100,000) as well as millions from the General Electric, Tortora Sillicox Family and Ford Foundations.  Others donors to the Regents Research fund that supports the Fellows are New York City charities, The Robin Hood Foundation and the Tiger Foundation. Robin Hood and Tiger generously give to charter schools, including Uncommon Charters, the chain formerly led by New York State Education Commissioner John King.  The National Charter School Authorizers made a $135,000 contribution to the Regents Research Fund as well.

Mother Jones: Less crime, immigration reform and legalization of drugs could hurt Gates' bottom line

With an endowment larger than all but four of the world's largest hedge funds, the Bill & Melinda Gates Foundation is easily one of the most powerful charities in the world. According to its website, the organization "works to help all people lead healthy, productive lives." 

For those who still believe that the world's largest foundation, run by the world's richest plutocrat, is all about helping people, Mother Jones has news for you. Most of the investments made by the Bill & Melinda Gates Fund have nothing to do with curing disease or educating the poor but are directed to some of the worlds greatest polluters, war makers and jailers.

Perhaps the most odious of these investments are in a prison/industrial complex that depends constantly expanding mass incarceration of it's (mostly black and Latino) citizens for those profits. For example, the Gates Fund has $2.2 million invested in GEO Corporation, a private prison company.

In its most recent annual report to investors, private prison company GEO group listed some risks to its bottom line, including "reductions in crime rates" that "could lead to reductions in arrests, convictions and sentences," along with immigration reform and the decriminalization of drugs. 

Gates has put another $2.4 million into G4S, a UK-based private security company and operator of juvenile detention facilities in the U.S.

Other Gates investments include global polluters Exxon, BP, Shell, Peabody Coal and a host of companies involved in the production of nukes.

Military contractor DynCorp, meanwhile, has faced allegations of fraud, mismanagement, and even slavery from the Middle East to Eastern Europe.

Sen. Warren warns Duncan: Don't be a 'lapdog' to the banks

The U.S. Department of Education risks becoming a “lapdog” as a result of recent actions toward financial companies such as Sallie Mae, Sen. Elizabeth Warren charged Thursday.

“The Department of Education needs to be aggressive in watching out for students, not for profit-making loan servicers,” Warren said. “They’re there for our students, not to help loan servicers make a profit.”

Run, Elizabeth run!

Why doesn't Moskowitz pay rent?

From deutsch29, Mercedes Schneider's EduBlog:

Since 2006, Eva Moskowitz has been running a small charter empire that has at least $50 million in government per-pupil funding, at least $30.9 million in total, end-of-year assets, and the support of hedge fund millionaires. Why is it, then, that her Success Academies have never paid a dime in rent for the public school space occupied by her charter schools?

Recently-elected New York Mayor Bill de Blasio wants to put an end to the rent-free usage of public school space by charter schools.

Moskowitz’s response? Read the rest here