July, 2019
Washington -- Time was when federal and state racketeering laws applied mostly to mobsters with their numbers scams, protection shakedowns, and gambling enterprises.
No more. RICO (Racketeer Influenced and Corrupt Organizations) laws have become tools to fight corruption in educational settings. When a ring of public school employees in Atlanta, Georgia, corruptly conspired to change students' test scores, they were prosecuted successfully under the state's RICO law. In 2015, eight Atlanta educators went to prison.
Racketeering has many definitions, including money laundering; wire fraud; obstruction of justice; bribery; kickbacks; loan fraud; obstruction of state or local law enforcement; influencing, obstructing, or impeding a federal audit; and more. A key determinant is the existence of a pattern of racketeering activity. Violation of recusal and perjury would likely fit RICO offenses as well, as part of such a pattern.
Which brings us to the question of whether a network of individuals revolving through the U.S. Department of Education constitutes a corrupt organization in violation of federal RICO law, like the Atlanta educators.
To be sure, each of the offenses listed above has been committed at one time or another over several years by federal or federal contractor individuals linked to various for-profit school, lender, or loan servicer enterprises. The cumulative effect has been enormous and devastating to hundreds of thousands of citizens who have seen their consumer protections eliminated and their financial lives and futures ruined because of corruption in the administration of student loans.
The culmination of these activities has now peaked: defiant, scofflaw officials at the Department of Education continue to deny consumers their rights, under law, to fair and competent administration of the student aid programs of the Higher Education Act.
Consider:
• the class action lawsuit brought on behalf of at least 158,000 defrauded borrowers by the Harvard Law School Project on Predatory Student Lending, necessitated by the Department of Education's inaction on their behalf;
• the class action lawsuit brought on behalf of at least 73,000 participants in the Public Service Loan Forgiveness program by the National Student Legal Defense Network, required by the unwillingness of the Department to exercise proper oversight over its student loan servicers;
• seven actions taken by the Department of Education to roll back consumer protections, complied by an expert in student loan law, affecting over 40 million student loan borrowers with over $1.5 trillion in debt;
• the attempt to preempt state consumer law protections for student loan borrowers, which has now been struck down decisively by two federal courts but has not been retracted by the Department of Education;
• the failure to cooperate with the federal Consumer Financial Protection Bureau;
• the refusal to cancel the student loans of 42,000 "totally and permanently" disabled veterans, to which they are entitled by law, despite the pleas of fifty-one state and territory attorneys general;
• that on a rare occasion when the Department actually cancelled loans of defrauded students at a for-profit college, Secretary Betsy DeVos noted she signed "with extreme displeasure," evidencing alarming animosity toward the students she is under oath to protect and demonstrating her true intent to block borrowers from their due.
The persistent unwillingness to follow the law to cancel debt where required, and other willful acts to undermine the programs of the HEA, should be considered a violation of laws against racketeering by DeVos and her revolving-door network.
18 U.S. Code § 1962. Prohibited activities:
It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprises affairs through a pattern of racketeering activity or collection of unlawful debt.
"Unlawful debt" consists of loans for which the lender or servicer has altered the terms; that is, not cancelled them as required. As to a "pattern of racketeering" activity, lawsuits henceforth might well include such charges so as to lead to discovery, civil remedies,* and possible convictions. This pattern would include the failure to take action against loan servicers that practice misrepresentation as part of a strategy to retain loan revenues, as well as actions to protect servicers from a growing number of lawsuits. This pattern would include permissiveness toward grade-changing at for-profit schools to maintain eligibility for federal student loans, as revealed in a new Hechinger Group investigation. Washington, meet Atlanta.
It is clear to this observer, who has read every relevant GAO and IG report on these matters (and contributed to some of them) and who has been in the executive, legislative, and judicial arenas on federal student loans as perhaps no other, that there are more than policy differences and legal strategies at issue. There is corruption. It's time to identify it for what it is and put an end to it.
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* 18 U.S. Code § 1964. Civil remedies.
