Audit Reviews to Have Seminannual Reports the Wall Street Journal 2019

For years, Robert Shireman, shown here at his dwelling house in Berkeley, Calif., has been accused of corruptly sharing insider information with investors while serving every bit a federal official. Those claims aren't true. Just they live on. Carolyn Fong for NPR hibernate caption

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Carolyn Fong for NPR

For years, Robert Shireman, shown here at his abode in Berkeley, Calif., has been accused of corruptly sharing insider information with investors while serving equally a federal official. Those claims aren't truthful. But they alive on.

Carolyn Fong for NPR

Stymied at every turn, defendant of things he never did, Robert Shireman figured this summer that, finally, he knew how all-time he could reclaim his reputation. He asked The Wall Street Journal to correct a story it published most him dorsum in 2013.

Shireman was tired of what he says are false allegations. Claims that, as a top official in the U.South. Department of Pedagogy, Shireman illegally provided information to a hedge fund investor who was seeking to brand large money by betting against the stocks of for-profit colleges. Claims that he was corrupt. Claims that he left public life disgraced.

At that place'south no evidence — none — to back up any of those claims, despite two federal investigations. Then, Shireman argued, the newspaper was obligated to correct the story, or even re-report it.

The Wall Street Journal did not explicitly brand those allegations in that eight-year-old article. But its report suggested Shireman might be defenseless up in something decadent, despite the lack of any firm evidence to make that instance.

The words live on, as words do on the internet. And that'south fueled more false claims, including, years later on, in the pages of the Journal itself. Shireman's ordeal demonstrates how Washington hardball politics collides with the permanence of the web, where a false claim keeps being repeated — long after information technology's been disproven.

"Every six or 12 months, somebody — usually somebody who's probably in the for-profit college industry — decides to resuscitate these onetime, tired claims," Shireman says. "And they look for ways that they can ... effort to smear me. And they find this article and they cite it every bit bear witness of something, even though in that location'south nothing to information technology."

Shireman's critics still rely on Journal commodity

For decades, Shireman has labored to protect students from having to pay untenable levels of higher debt. Under former President Barack Obama, he sought to make it harder for for-profit colleges to enroll students with hefty federally financed loans into programs that won't prepare them for jobs that enable them to pay off those debts. Several people independently chosen him a "true laic" on this matter. (One called him a zealot.)

Attacks on Shireman accept arrived seemingly from many fronts — Republican senators, liberal public interest groups, corporate interests. And they accept connected equally recently equally this past spring, from a pro-industry grouping and a senior U.S. senator. These rebukes have often taken inspiration from and derived credibility from the Wall Street Journal's earlier written report.

The Journal has turned downward Shireman's request to postal service a thorough correction or a new article. "We are receptive and responsive to objections raised (no matter how old)," Steve Severinghaus, a spokesman for the newspaper, writes in an email for this story. "In this particular instance, we fully investigated the complaints Mr. Shireman brought to us, and after a full review concluded that no corrections were warranted."

Several news organizations have started reviewing some of their past news coverage when people question whether they were portrayed fairly in those stories. The Cleveland Plain Dealer, The Boston World and The Atlanta Periodical-Constitution, for instance, have recently instituted formal policies to review such coverage from many years ago, beyond narrow corrections.

Justin Hamilton, the chief spokesman for the U.S. Education Department while Shireman was there, says the Journal owes Shireman a public amends. And he argues the newspaper was used past others with motivations that were non clear until later on.

"It'south preposterous. Information technology'southward really preposterous," Hamilton says. "And what information technology is is typical Washington. When you are trying to kill an calendar that you don't concur with, yous will stop at nothing to do information technology."

These days, Shireman has a skillful life in Berkeley, Calif., working for the Century Foundation, where he continues to focus on college education and student debt issues. He remains highly influential in the field. Only that prominence and President Biden'southward nomination of a quondam colleague to a senior education post announced to have kept him in the line of fire.

Shireman does non debate that his life has been ruined by the Periodical article or the accusations confronting him. Merely the allegations go on to dog him. And the feel of dealing with them has worn him downwards. He typically presents every bit genial and hostage, but is periodically overcome past outrage.

"Articles," Shireman says ruefully, "seem to live forever on the internet."

A glory stock trader shared distrust of for-turn a profit colleges

At the dawn of the Obama administration, in early 2009, Shireman joined the U.S. Education Section equally a deputy undersecretary. He prepare the agenda for the new administration on higher didactics financing with a special eye on reforming for-profit colleges.

Around the same time, a big investor named Steve Eisman had too warned confronting the for-profit colleges. Eisman had made a proper noun for himself for making big profits by betting on the collapse of the housing bubble that led to the global economic crisis in 2009. (Michael Lewis chronicled his efforts in the book The Big Brusque; Steve Carell depicted his character in the movie of the same proper noun.)

By 2010, Eisman was not but alarm merely betting against the for-profit schools, through the financial markets, in a manner that would let him make coin if their stocks declined. That'due south called curt-selling.

Teaching Department officials heard Eisman out earlier he gave a major public speech and testified before a key Senate commission. And Shireman listened in by phone to Eisman'south presentation. Shireman says he later emailed Eisman a correction of a pocket-sized statistical mistake. So did a colleague.

Shireman had planned to work in authorities for xviii months and he left subsequently that period. Several weeks after he left, the Pedagogy Department released its proposed new regulations, which were not every bit restrictive as anticipated. The fact and timing of Shireman'due south departure would besides be used against him.

A liberal advocate goes on the attack

A leading liberal-leaning anti-corruption outfit pounced. Melanie Sloan, a old Democratic congressional staffer and lawyer who was then the executive director of the nonprofit group Citizens for Responsibleness and Ethics in Washington, embarked on a years-long campaign assailing Shireman, Eisman and the department.

"For me, the focus was never Shireman, it was Eisman," Sloan tells NPR. "I simply don't recollect we want brusk-sellers making policy on the bug in which they are shorting companies." (Eisman did not respond to NPR's request for comment placed through a spokesman.)

Because of his bets, Sloan noted, Eisman stood to gain many millions of dollars if the for-profit colleges confronted stricter regulations.

Notwithstanding her deportment explicitly called Shireman's integrity into question. Sloan called for formal investigations. She wrote articles focused on him. She tied him to Eisman and questioned his communications with The Constitute For College Access & Success, a student-debt policy constitute Shireman had founded. She even declared he unethically had received retirement, health and other insurance benefits every bit a federal contractor for the Education Department after leaving in July 2010.

'Government official plus short-seller equals scandal'

The section'southward then press secretarial assistant, Justin Hamilton, was a Democrat who had previously worked with Sloan on political issues. On this one, he argues, Sloan found a scandal where there was none.

"The idea was that if you said, 'Government official plus short-seller' [it] equals scandal," Hamilton says. "But the equation is flawed, because there was no hidden connection to short-sellers. There was no conspiracy to do the bidding of brusque-sellers in social club to make a quick cadet."

To underscore the point: The only connectedness ever turned upwards between the 2 was that Shireman listened into Eisman's presentation to section officials in spring 2010 and sent an email with a minor correction of one effigy.

Of Shireman, Hamilton says, "I think what you lot had here is a guy who defended his entire career to this result." (When Hamilton left the Education Department, he became a senior official at an education engineering science company endemic by the Wall Street Periodical's corporate parent, News Corp.)

Nevertheless, a drumbeat congenital. In October 2010, an influential fiscal analyst tweeted that the non-for-profit institute that Shireman had founded had distributed the final version of the regulation to short-sellers before it was released publicly, suggesting the institute had leaked inside information that could move markets and assist them reap huge profits.

Subsequently the Obama administration appear its policy to curb for-profit schools from piling too much debt on students, the printing coverage leaned heavily on the idea of a connexion between Shireman and brusk-sellers, sharply questioning the policy's motivation. The criticism was posted on bourgeois sites similar Breitbart, liberal outlets like Huffington Mail and mainstream ones like Fortune.

The Wall Street Journal story appeared to fan outrage

The Wall Street Journal would play a singular role.

In January 2011, the paper weighed in with a front end-folio story on Eisman's activities in Washington. Letters pointing to the article poured into influential figures in pedagogy, including the Teaching Trust, the American Federation of Teachers, the National Education Association, the American Clan of Academy Professors and the American Association of University Women. The messages cited the Journal repeatedly and claimed that the investigation was focusing on "stock cost manipulation by Shireman and Eisman."

Those lengthy letters, ostensibly past dozens of different people, were identical in content and even phrasing. Their senders' identities could non be verified by the the liberal news site that beginning revealed the alphabetic character-writing entrada in 2011, or by NPR this past summer. NPR sent a dozen emails to addresses used to send the messages seeking confirmation or comment; all just one bounced back.

Two influential Republican senators — Richard Burr of North Carolina and Tom Coburn of Oklahoma — triggered ii formal federal investigations.

Largely exonerated, then investigated again

The Educational activity Department's inspector general posted its report in June 2012. Information technology determined that sensitive textile had been handled appropriately and that there had been no disclosures of key information that was not yet public to interested parties. And the audit also found no problematic leaks ahead of the policy's announcements that could have helped Eisman or others with a financial interest in the specifics.

The U.Southward. Securities and Commutation Committee was brought in to wait at Shireman's and his colleagues' potential financial stakes. No education official, including Shireman, was establish to accept owned any investments aided past the policy, according to the inspector full general's later study.

The inspector general also investigated the ostensibly illegal benefits Shireman received, at the behest of the late Republican Sen. Mike Enzi of Wyoming. The report constitute Shireman received about $23 worth of life insurance benefits to which he was non entitled. But considering Shireman overpaid premiums by more than $45, the authorities ultimately sent him a two-figure check covering the difference.

That report did find, however, that Shireman had emailed six times with people from his previous employer, the policy plant. The fact that those emails occurred was potentially in violation of an Obama assistants ethics pledge for executive branch officials to non participate in matters directly involving former employers.

Senators Burr and Coburn declared the inspector general's inspect bereft. And the U.S. Justice Department undertook an investigation of Shireman's possible upstanding violation in 2012. A private letter to Shireman from the U.S. Chaser's Part for Washington, D.C., said that it was investigating him for potential criminal activeness or civil infractions and that he could be personally liable for its findings.

His attorneys say information technology was wildly overblown. "The investigation was trivial, not most textile breaches of any dominion or statute, and pursued in spite of lack of evidence," Stanley Grand. Brand, one of Shireman's attorneys, tells NPR.

Nothing always came of the investigation.

A scoop or innuendo

In jump 2013, the Journal learned of the Justice Department'southward investigation from a subpoena filed to secure records from the constitute Shireman had founded. And that triggered the reporting past the Journal to which Shireman took exception.

The Journal's ensuing story in May 2013 appeared unambiguous. Its headline read: "Former Instruction Official Faces Federal Investigation." The Journal's lead reporter on the article, Brody Mullins, has for years mined a rich vein of stories involving lobbyists, lawmakers and other players. His coverage of the civilisation of coin and power in Washington has won awards and explored how information circulates in the nation'due south capital.

The Journal reported that federal prosecutors believed Shireman "might have violated executive-co-operative ethics laws by allegedly discussing sensitive government information" with his former found. And the commodity squarely placed the investigation in the context of people potentially illegally trading on inside data.

The article mentioned the inspector general'south report that had wrapped almost a twelvemonth earlier, but did not reflect that it "constitute no improper disclosure of sensitive data" — non to short-sellers like Eisman, non to outside groups similar Shireman's former institute, not to anyone.

A 2013 the Wall Street Journal article suggested Robert Shireman had been under investigation for corruption, without a ground for that claim. In 2019, ii Journal opinion pieces claimed he had left Washington in a scandal. That claim had to be corrected. Carolyn Fong for NPR hide caption

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Carolyn Fong for NPR

A 2013 the Wall Street Journal article suggested Robert Shireman had been under investigation for abuse, without a basis for that claim. In 2019, two Journal opinion pieces claimed he had left Washington in a scandal. That claim had to be corrected.

Carolyn Fong for NPR

"The inquiry underscores how prosecutors are outset to clamp down on the fashion Washington handles sensitive government information," the Periodical article read. The chief counsel of Sloan'south organization was quoted alert about Shireman's possible conflict of interest. The article then included a long passage virtually SEC investigations into alleged insider trading by government officials and investors — leaving the stiff impression Shireman's potential misdeeds were coordinating.

Only they weren't. Justice Section documents obtained past Shireman show that prosecutors were focused on his contact with his former employer.

Shireman tells NPR he did not pay attention to the commodity at the fourth dimension.

"Information technology'south perplexing," says David Halperin, a liberal lawyer and activist who advocated for reform of the for-profit college manufacture and who, briefly, legally represented Shireman. "They wrote this thinking they were pursuing a legitimate article. The trouble was the story was full of innuendo. It was almost what [a scandal] could accept been about."

Critics held financial ties to for-turn a profit colleges

In 2014, Sloan one time more than accused Shireman of "coziness with Wall Street short sellers." She wrote in The Loma that he "improperly shar[ed] data with Wall Street investors" — something he already had been exonerated of doing.

Sloan's own financial ties were more articulate-cut. Shortly after Shireman left Washington, Sloan had decided to leave Citizens for Responsibility and Ideals in Washington for a task with former Clinton White House lawyer and Democratic lobbyist Lanny Davis.

Davis had written a Huffington Post piece attacking Eisman and Shireman and some other for The Hill. Sloan pulled dorsum from taking the chore when public outcry ensued later on Davis acknowledged he had been hired to represent a for-profit college trade group.

And and so, in 2014, a conservative outfit called the Centre for Consumer Freedom revealed that Sloan's own grouping had received $150,000 in 2010 and 2011 from a nonprofit funded by a longtime liberal benefactor named John Sperling. Sperling, who died in 2014, was the founder of the University of Phoenix, a giant for-profit university. Sperling had helped fund other liberal groups that had denounced Shireman and the Education Department rules likewise.

Sloan tells NPR those connections were immaterial to her pursuit of Shireman. "Sperling had been a long-time donor, of course. A major Autonomous donor," Sloan tells NPR. "People wanted to discover other reasons why we [pursued the Eisman-Shireman connection]. And then information technology had to be the Sperling affair or that it had to be the Lanny Davis thing."

Sloan says, "We evaluated it on the merits."

Debunked allegations take on a life of their ain

By the summer 2015, Shireman, intent on clearing his name, filed his own request for all relevant documents from the U.S. Justice Department virtually the investigation. He shared those documents and others with NPR for this story.

It would take years for him to acquire them. In the intervening period, the conventional wisdom had already set in. In 2016, then Rep. Jason Chaffetz, a Utah Republican who was chairman of the House Oversight Commission, publicly pointed to Shireman as an example of how the U.South. Instruction Department had trampled ethics.

In 2017, the president of Purdue University, Mitch Daniels, publicly dismissed Shireman as someone who had been "caught consorting with short sellers" and spoke of the "ongoing investigations into stock manipulation." Daniels, a erstwhile Republican governor and George W. Bush White House official, was promoting a program to enter a articulation operating understanding to run the for-turn a profit Kaplan University.

Attorneys for the university shrugged off Shireman's claims that those remarks defamed him, in exchanges read by NPR. Shireman says he didn't desire to sue and couldn't afford to. He simply wanted the remarks rescinded — on the record. He failed.

Robert Shireman says he respects the Journal. "I thought they would at least take some kind of corrective action," Shireman says, "And I'thou quite surprised that they did kind of less than null." Carolyn Fong for NPR hide explanation

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Carolyn Fong for NPR

Robert Shireman says he respects the Periodical. "I idea they would at least take some kind of cosmetic action," Shireman says, "And I'thou quite surprised that they did kind of less than nothing."

Carolyn Fong for NPR

In early 2019, the Wall Street Journal ran an editorial and an op-ed in short succession denouncing Shireman. The editorial said he was "caught playing footsie with a curt-seller betting confronting for-profit colleges." The op-ed wrongly said he had been "caught sharing information with a short-seller."

For-profit colleges help fund a Senate critic's campaigns

Shireman demanded corrections several weeks later on. The Journal's conservative editorial department — run separately from the newsroom — corrected the sequence of events and removed a phrase that said he had been "exiled" from the government. But information technology kept the imitation claim that Shireman had been caught sharing data with a short-seller in the cavalcade and kept the editorial's line about him playing footsie.

Then, this past spring, pro-business activists set up the website College Choice Killers that trashed Shireman and others who worked on the for-profit college loan policy. The Journal'southward article from 2013 was given place of pride. Conservative economist Richard Vedder even compared Shireman to the Taliban. (The site was taken downward later on Halperin repeatedly challenged its veracity.)

At a hearing a few weeks after, Sen. Burr warned a Biden education nominee about his past proximity to "potentially unethical acquit at the department nether the Obama administration." Burr spoke of emails sent from private accounts in "collaboration with short-sellers on market place moving information ... to try to hide the public scrutiny in furtherance of a partisan objective."

Burr noted no charges were filed by the Justice Department. He didn't mention Shireman by proper name, simply the senator's spokeswoman confirmed that was whom he was referring to. The nominee had been a senior Education Section official with Shireman and who for several years headed Shireman'southward quondam policy plant.

Like Sloan's former outfit, Burr has his own ties to the for-turn a profit college industry. Burr received more than than $47,000 in contributions from the industry toward his 2010 and 2022 Senate bids, co-ordinate to the campaign watchdog Open Secrets.

In belatedly June, disturbed past the College Option Killers site and Burr's remarks, Shireman emailed reporters and editors at the Wall Street Journal. In correspondence he shared with NPR, Shireman asked for corrections on its 2013 commodity.

The fact of the investigation was fair game, he says. But Shireman strenuously objected to the claims of the mishandling of "sensitive" material and the invocation of conflicts of interest and SEC investigations into investors being tipped off. He noted that his departure preceded the announcement of the policy and that he had aught to practise with the logistics of its public release. Furthermore, investigators said they found nothing wrong with the way the department's leadership and staff had handled sensitive information or the policy'due south release.

The Wall Street Journal responds

In late July, Shireman received a respond from Jay Sapsford, the Wall Street Journal'due south deputy Washington bureau chief.

In an email reviewed past NPR, Sapsford wrote that the paper and others at the time were covering "how financial actors were seeking information that would give them advantages in trading securities and how easily such data flows amid agency officials, congressional aides, lobbyists, purveyors of political intelligence and investors themselves." (Through the spokesman, Sapsford and Mullins declined to be interviewed for this story.)

Sapsford noted the inspector general study used the discussion "sensitive" 39 times.

"Nosotros determined this menses of data to be a useful background to the developments of this story. Nosotros stand by that judgment."

Shireman points to that response and well-nigh sputters in incredulity, peculiarly given his respect for the news side of the paper. The inspector general had explicitly exonerated department officials, including Shireman, of sharing sensitive information outside the section.

"I thought [The Wall Street Journal] would at least take some kind of corrective activeness," Shireman says, "And I'm quite surprised that they did kind of less than aught."

Melanie Sloan, the former anti-corruption crusader, tells NPR she was right to enhance questions almost short-sellers' influence on policy, and most Shireman, despite the lack of whatever serious findings against him.

"I don't take feelings about him now," Sloan says. "It'southward non an issue I idea virtually for x years. I only don't."

"In Washington, exercise people become hurt all the time?" she asks. "Yeah, all the time."

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Source: https://www.npr.org/2021/09/07/1027130578/for-8-years-a-wall-street-journal-story-haunted-his-career-now-he-wants-it-fixed

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