Author: Stop the Donald Trump

Eric Trump Says He Will Keep Father Updated on Business Despite ‘Pact’

Eric Trump has said he will give his father “quarterly” updates on the family’s businesses – which the president has refused to divest from – in spite of the sons’ promises to separate the private companies from their father’s public office.

In an interview with Forbes magazine, Donald Trump’s middle son at first said the family honored “kind of a steadfast pact we made” not to mix business interests with public ones.

“There is kind of a clear separation of church and state that we maintain, and I am deadly serious about that exercise,” he said. “I do not talk about the government with him, and he does not talk about the business with us.”

But he went on to say that he would keep the president abreast of “the bottom line, profitability reports and stuff like that, but you know, that’s about it”.

He said those reports would be “probably quarterly”.

“My father and I are very close,” he added. “I talk to him a lot. We’re pretty inseparable.”

Since their father handed day-to-day management of the Trump Organization to his adult sons, Eric and Donald Jr, the family has insisted they do not discuss the business with president. Ethics attorneys of both parties and the nonpartisan Office of Government Ethics have called the arrangement a failure to prevent potential conflicts of interest – for instance, Trump hotels selling rooms to foreign diplomats.

Eric Trump’s statement alarmed ethics experts, including Lisa Gilbert, a director at the not-for-profit watchdog Public Citizen. “It confirms our worst assumptions about the lack of separation between his business and current office,” she said. “There’s no way to reconcile quarterly updates from your son.”

Advertisement

Gilbert said there were signs that the Trump family was already profiting from the presidency, including increased business at his golf clubs. His south Florida club, Mar-a-Lago, doubled its entrance fee to $200,000 in January, and in February the first lady, Melania Trump, filed court documents arguing that the White House was an opportunity to develop “multimillion-dollar business relationships”.

“It’s not a single thing,” Gilbert said. “Their businesses are doing better because there is more cachet around them.”

The watchdog released a report this week analyzing the first two months of the Trump presidency. It concluded that Trump had broken several promises to “isolate” himself from the business, that his White House was “clouded by corruption and conflicts”, and that he had surrounded himself “with the same major donors and Wall Street executives he claimed he would fight if elected”.

A Washington DC wine bar sued Trump and his new hotel this month, alleging that his ownership provides an illegal competitive advantage. The president still holds direct ties to his businesses, DC liquor board documents show, as the sole beneficiary of a revocable trust.

The White House and Department of Homeland Security have declined to answer questions about whether taxpayer dollars have profited the Trump family, for instance through Secret Service rental payments to Trump properties.

“Eric Trump and his father the president are doing what we thought they would do all along,” said Richard Painter, who served as chief ethics attorney for George W Bush. “This of course makes no difference for conflict of interest purposes because it is his ownership of the businesses that creates conflicts of interest, regardless of who manages them.”

Painter added that Trump’s remarks show that “the businesses is an important concern for the president”.

Gilbert compared the arrangement to other possible conflicts in the White House. Trump has appointed his son-in-law, Jared Kushner, as a senior adviser, despite anti-nepotism laws, and the president’s daughter, Ivanka, has acquired a security clearance and an office in the White House, although she has no official role. In November, Trump denied that he had sought security clearances for his children.

“We don’t really have a mechanism to enforce the ethics rules,” Gilbert said. “It’s left us without a lot of ground to stand on.”

Like the president, Kushner and his wife have said they will separate themselves from their family businesses, but have only done so partially, if at all. Kushner retains parts of his billionaire family’s real estate empire, White House documents show, and Ivanka Trump has so far failed to resign, as promised, from the family business, according to documents acquired by ProPublica.

Possible conflicts have already arisen for both of the president’s family confidantes: Kushner’s family is negotiating a $400m deal with a Chinese firm connected to Beijing’s leadership, and one of Ivanka Trump’s brands was promoted, in violation of ethics rules, on national television by another of the president’s advisers.

In Dallas this month, Donald Jr told Republican fundraisers that he had “basically zero contact” with his father. His brother, similarly, told Forbes that he tries to “minimize fluff calls that you might otherwise have because I understand that time is a resource”.

But he also echoed an earlier boast about the family brand being “the hottest it has ever been”.

“We’re doing great in all of our assets,” he said, before arguing that being the family in the White House also entailed “great sacrifices” for the business, especially “when you limit an international business to only domestic properties, when you put hundreds of millions of dollars of cash into a campaign, when you run with very, very tight and strict rules and the things that we do every single day in terms of compliance.

“I don’t know,” he concluded. “You could look at it either way.”

(h/t The Guardian)

Donald Trump Jr. Criticizes London Mayor Just Hours After Parliament Attack

Before basic information about a terrorist attack in London was known, Donald Trump Jr. took to social media to blast the city’s mayor.

Roughly two hours after at least four people were killed near the UK Parliament, the President’s son reposted an article from last year where Sadiq Khan spoke about the dangers of living in world capitals.

“You have to be kidding me?! Terror attacks are part of living in the big city, says London Mayor Sadiq Khan,” Trump Jr. said alongside a piece from The Independent.

Khan’s statements last September came after the Chelsea bombing wounded 29 people with homemade explosives.

“Part and parcel of living in a great global city is you’ve got to be prepared for these things, you’ve got to be vigilant, you’ve got to support the police doing an incredibly hard job,” Khan said at the time.

It was not immediately clear what Trump Jr. found so offensive about Khan’s comments that he posted it six months later after an attack in the mayor’s city.

The leader of the Trump Organization was criticized online for his comments in the middle of an incident that resulted in the loss of several lives.

“Is this helpful @DonaldJTrumpJr? Did you even read the article before goading London’s Mayor during a live incident?” British journalist Ciaran Jenkins said.

“Khan is right. These things happen. We fight against them. But we don’t wildly over-react or let them change our way of life,” Londoner Tom Coates said, adding that he had lived through IRA bombings and the 7/7 attacks on the London Underground.

Later Wednesday, Trump Jr. retweeted an account identifying the attacker as Abu Izzadeen, a spokesperson for a terrorist-affiliated group in Britain.

But several news outlets that reported the same name eventually issued retractions and apologies after it was reveiled that Izzadeen has been in prison since 2008. As of early Thursday, Trump Jr. had not retracted his retweet or issued an apology.

London authorities reported that at least four people, including police officer Keith Palmer, were killed and 40 more were wounded when a car hit pedestrians on Westminster Bridge before crashing into a railing at Parliament.

The assailant allegedly got out of the car and fatally stabbed the officer before being shot by police.

Khan said in a statement on Twitter that his “thoughts are with those affected and their families” and expressed thanks to the police and emergency workers who responded.

(h/t New York Daily News)

Former Trump Campaign Chairman Paul Manafort ‘Offered to Help Putin’

Paul Manafort is said to have proposed a strategy to nullify anti-Russian opposition across former Soviet republics a decade ago.

AP says documents and interviews support its claims about Mr Manafort.

Mr Manafort has insisted that he never worked for Russian interests.

He worked as Mr Trump’s unpaid campaign chairman from March until August last year, including the period during which the flamboyant New York billionaire clinched the Republican nomination.

He resigned after AP revealed that he had co-ordinated a secret Washington lobbying operation on behalf of Ukraine’s ruling pro-Russian political party until 2014.

Newly obtained business records link Mr Manafort more directly to Mr Putin’s interests in the region, AP says.

It comes as Trump campaign advisers are the subject of an FBI investigation and two congressional inquiries.

Investigators are reviewing whether the Trump campaign and its associates co-ordinated with Moscow to interfere in the 2016 presidential election campaign to damage Mr Trump’s opponent, Hillary Clinton, a stern critic of Mr Putin.

Mr Manafort is said to have pitched the plans to aluminium magnate Oleg Deripaska, a close ally of President Putin.

In a confidential strategy plan in 2005, AP reports, Mr Manafort proposed to influence politics, business dealings and news coverage in the US, Europe and the ex-Soviet republics to advance the interests of the Putin government.

At this time, US-Russia relations were deteriorating.

“We are now of the belief that this model can greatly benefit the Putin government if employed at the correct levels with the appropriate commitment to success,” Mr Manafort is said to have written, adding that it would be offering “a great service that can refocus, both internally and externally, the policies of the Putin government”.

Mr Manafort signed a $10m-a-year contract beginning in 2006, AP reports. How much work he did under this contract was unclear.

Mr Manafort and Mr Deripaska reportedly maintained a business relationship until at least 2009.

When Donald Trump picked Paul Manafort to be his campaign chair last March, the political operative was a relatively minor player in Washington, consigned to working for deep-pocketed foreign benefactors. That those benefactors have turned out to include Russian oligarchs and Ukrainian politicians with ties to Vladimir Putin is sure to cause growing concern in the Trump White House.

Now it appears increasingly likely that Mr Manafort is one of the “individuals associated with the Trump campaign”, in Director James Comey’s words, at the heart of an ongoing FBI investigation.

This would explain why White House Press Secretary Sean Spicer recently downplayed Mr Manafort’s connections to the Trump team, saying he “played a very limited role” in the campaign for “a very limited amount of time”.

Mr Manafort could face legal consequences if the FBI concludes that he did not properly disclose his work for foreign leaders. That would at the very least prove embarrassing for Mr Trump, given the power he delegated to Mr Manafort last summer.

If it turns out that Mr Manafort’s contacts with foreign interests continued during his time at the top of the Trump campaign, the situation for the White House could go from embarrassing to full-blown scandal.

In a statement to AP, Mr Manafort confirmed that he had worked for Mr Deripaska in several countries but insisted the work was being unfairly cast as “inappropriate or nefarious” as part of a “smear campaign”.

“I worked with Oleg Deripaska almost a decade ago representing him on business and personal matters in countries where he had investments,” Mr Manafort said in the statement.

“My work for Mr Deripaska did not involve representing Russian political interests.”

A spokesman for Mr Deripaska in Moscow declined to answer questions from AP.

Further allegations have been made in Ukraine about secret funds said to have been paid to Mr Manafort.

Lawmaker Serhiy Leshchenko said he had evidence that Mr Manafort had tried to hide a payment of $750,000 (£600,800) by a pro-Russian party in 2009.

Mr Manafort’s spokesman said the claim was “baseless”.

Mr Manafort was an adviser to Ukraine’s ex-President Viktor Yanukovych, but denies receiving any cash payments.

(h/t BBC)

Trump Has Political Aides Monitoring the Loyalty of Cabinet Secretaries

As President Trump recently reminded us, when someone has been disloyal to him, he never forgets it. But now that he’s president, it’s become more difficult to keep track of those who have defied him — or who may potentially defy him. That’s why, according to the Washington Post, Trump has embedded political appointees in every cabinet agency and tasked them with keeping tabs on the secretaries’ fealty to the president. Unsurprisingly, this is not going over well with some cabinet members.

The Post is not the first to note the existence of these monitors. Last month, Politico reported that the Trump administration had created the new position of “senior White House adviser” within each agency, placing many former campaign aides in those jobs. Records obtained by ProPublica show that there are at least 16 of these advisers, with Trump loyalists stationed in all the major departments, as well as in some smaller agencies, such as NASA.

There’s some disagreement over who the advisers answer to. The Post says they report to the Office of Cabinet Affairs, which is overseen by White House deputy chief of staff Rick Dearborn. An anonymous White House official said the advisers technically report to the head of each agency, but the White House would not discuss the matter on the record.

The advisers’ ostensible mission is to act as a go-between on policy issues for the White House and the agencies, but eight officials tell the Post their primary task is to make sure agency staffers are carrying out the president’s agenda. Concerns about the president’s authority over the executive branch are not unusual, but no recent president has had such an arrangement.

As New York’s Ed Kilgore noted last month, “People like that can be described as political commissars, to use the term made famous in the Soviet Union for the agents sent to impose ideological discipline, particularly in military units.” Sure enough, the former Marine and fighter pilot assigned to Defense Secretary Jim Mattis is privately referred to as “the commissar” within the Pentagon.

But the attitude toward the senior White House advisers varies by agency. Aides at the Departments of Transportation and the Interior described the advisers as part of their teams, and some advisers are picking up the slack in understaffed departments. However, Environmental Protection Agency administrator Scott Pruitt has reportedly banned former Washington state senator Don Benton, who ran Trump’s Washington state campaign, from meetings. Per the Post:

These officials said Benton piped up so frequently during policy discussions that he had been disinvited from many of them. One of the officials described the situation as akin to an episode of the HBO comedy series Veep.

Behaving like a member of Selina Meyer’s team doesn’t sound so bad when the alternative is an episode out of Soviet history.

Trump Slams His Own SCOTUS Pick, “I’ll Criticize Judges!”

President Trump on Tuesday said the courts aren’t helping the administration in its attempts to strengthen the country’s vetting procedures to weed out potential terrorists.

“We’re also taking decisive action to improve our vetting procedures,” Trump said, speaking at the National Republican Congressional Committee dinner.

“The courts are not helping us, I have to be honest with you. It’s ridiculous. Somebody said I should not criticize judges. OK, I’ll criticize judges.”

Earlier this year, Trump blasted James Robart, the federal judge for the Western District of Washington who placed a halt on Trump’s initial travel ban. The president referred to Robart as a “so-called judge.”

During the campaign, he also attacked the judge hearing a lawsuit against Trump’s defunct real estate education program, Trump University, saying that his Mexican heritage makes him unable to be impartial.

On Tuesday, Supreme Court nominee Neil Gorsuch said during his confirmation hearing that he finds the president’s criticism of judges’ integrity “disheartening and demoralizing.”

“I know these people and how decent they are, and when anyone criticizes the honesty, integrity and motives of a federal judge, I find that disheartening and demoralizing because I know the truth,” Gorsuch told Sen. Richard Blumenthal (D-Conn.).

“Anyone including the president of the United States?” Blumenthal asked.

“Anyone is anyone,” Gorsuch replied.

Earlier this month, a federal judge in Hawaii issued a temporary restraining order on parts of the president’s revised travel ban.

(h/t The Hill)

Media

Ivanka Trump’s Expanded White House Role Raises Ethical Issues

After months of attending meetings of world leaders and visiting factories with her father, the role of first daughter Ivanka Trump is officially expanding – creating new ethical issues for an administration that has been heavily criticized over its potential conflicts of interest.

She will not have a specific title, but Trump will have an office in the West Wing, a government-issued phone and computer and security clearance to access classified information, and she will advise her father.

“While there is no modern precedent for an adult child of the president, I will voluntarily follow all of the ethics rules placed on government employees,” she told Politico in a statement.

But following the ethics guidelines should not be voluntary, said Richard Painter, a law professor at the University of Minnesota who served as chief ethics lawyer for George W Bush between 2005 and 2007.

“Given what she’s going to do, I don’t think she has any choice,” he said. “She has a West Wing office, she has equipment, she has a White House email address, she’s going to be doing policy work,” said Painter.

“For purposes of the conflict of interest statute, I believe she is a government employee,” he added.

Ivanka Trump’s lawyer, Jamie Gorelick, argues that since she will earn no salary and not be sworn in, she does not count as a government employee. There is no precedent for adult children whose father is president working in the White House, although two presidents – Andrew Jackson and James Buchanan – had their nieces serve in the role of first lady since Jackson was a widower and Buchanan a bachelor.

Trump has handed control over the day-to-day running of her eponymous clothing business to an executive and its assets are maintained by a trust managed by two of her husband’s siblings.

As part of the trust rules, outlined in the New York Times, Trump can veto any potential business deals for her clothing company that might create a conflict with her political work.

That means, points out Painter, that Trump has to know about any new deal that might put her at risk of breaking the statute, meaning she can be held responsible.

“She’s got accountability on that stuff. She can’t just blame the trustee,” he said.

Trump’s marriage to her father’s senior adviser, the real estate developer Jared Kushner, poses additional potential problems, because both could benefit financially from each other’s businesses.

Painter warned that the pair should avoid official political discussions involved with trade agreements regarding textiles, real estate and even bank deregulation, since that can affect real estate.

That means if the premier of China visits the White House – most of Ivanka Trump’s clothing line is made in China and Hong Kong – it is fine for her to attend the meeting, but she should not mention trade and if the discussion begins to focus on trade, she should excuse herself, says Painter.

The ethics expert noted approvingly that Ivanka Trump engaged Wilmer Cutler Pickering Hale and Dorr, the same legal services used by the secretary of state, Rex Tillerson, former head of ExxonMobil, to handle issues of conflict of interest. Kushner also used the DC-based lawyers to manage his potential conflicts of interest with his family business after taking the role of adviser in the Trump administration.

“It’s a criminal statute, so people better not mess up under it. But I think she’ll do the right thing,” said Painter.

(h/t The Guardian)

Trump Lawyers Go After to Teen Who Operates Site That Shows Kittens Punching Him

A new report indicates that Donald Trump‘s lawyers have gone after a teen who operates a gag site.

Interestingly, the report is from the Observer, which is owned by Trump’s son-in-law, Jared Kushner. Perhaps more interesting — the site that received the cease and desist order is one that shows the president being punched by kittens. We’d link to the site, but one of the URLs leads to a 404 error message and the other now leads to porn, courtesy of an opportunistic entrepreneur of some sort.

Anyway, it was created by a 17-year-old girl identified as Lucy. Lucy loves to code and created the site as a “fun little” project to show off her technical skills. The teen had this to say:

I was going to just let this go, but I think it’s, pardon my French, fucking outrageous that the President of the United States has his team scouring the internet for sites like mine to send out cease and desists and legal action claims if we don’t shut down. Meanwhile, he tweets about The Apprentice ratings and sends out power-drunk tweets about phone tapping. HOW ABOUT BEING THE PRESIDENT?

When The Hollywood Reporter caught up to her, Lucy said, “I really just want people to be aware that this is a president who’s clearly more concerned about what people think of him than doing things of substance.”

Litigation is common for the First Family. Melania Trump has sued over reports she was once an escort. Notably, she went after a 69-year-old blogger.

(h/t Mediate)

Trump Takes Another Jab at Ex-49ers Quarterback Colin Kaepernick

President Donald Trump on Monday reprised his attacks on former San Francisco 49ers quarterback Colin Kaepernick, telling supporters in Kentucky that “they like when people actually stand for the American flag.”

Standing before a cheering throng at the Exposition Center in Louisville, Trump referenced a report published Friday that anonymously quoted National Football League officials discussing Kaepernick’s slumping prospects as a free agent. Some loathed the police brutality-fueled protest that saw Kaepernick — and others — take a knee during the national anthem last season.

Others feared a backlash from their fans. Still others feared the president himself.

Or, as Trump put it during his Louisville rally: “They don’t want to get a nasty tweet from Donald Trump. Do you believe that?”

The crowd roared and Trump, grinning, continued.

“I said, if I remember that one, I’m going to the people of Kentucky because they like when people actually stand for the American flag.”

This is well-trod territory for Trump. During the campaign, he described Kaepernick as disrespectful, the protest as “a sad thing” and suggested that the quarterback move abroad.

“Maybe he should find a country that works better for him,” he told a radio host in August, according to The Hill.

Director Spike Lee, meanwhile, has come to the quarterback’s defense. In an Instagram post on Sunday, the two posed for a selfie while Lee described the league’s apparent disinterest as “subterfuge” and “skullduggery.”

“What Crime Has Colin Committed?” Lee wrote. “Look At The QB’s Of All 32 Teams. This Is Some Straight Up Shenanigans, Subterfuge, Skullduggery And BS.”

(h/t NBC News)

Media

https://www.youtube.com/watch?v=xcUeJHLnIss

Trump Winery Seeks Even More Foreign Workers This Season

A Virginia winery owned by President Donald Trump’s son has applied to hire foreign workers to pick grapes after the company was unable to find U.S. citizens who want the job.

Trump Vineyard Estates, better known as Trump Winery, has asked to bring in 29 workers this season through the federal H-2A visa program, The Daily Progress reported.

The Charlottesville-area winery is owned by Eric Trump, whose father has called on businesses to hire Americans.

The H-2A program enables agricultural employers who anticipate a shortage of domestic workers to bring foreign workers to the U.S. to perform agricultural labor or other temporary or seasonal services. To apply, employers say they’ve been unable to find American citizens to fill the jobs. At least three other local vineyards also applied to hire foreign workers.

“It’s difficult to find people,” said Libby Whitley, an attorney who has worked with employers, including Trump Winery.

Trump Vineyard Estates had initially applied for six foreign workers in December. Two months later, the company applied for 23 more. Both job orders for Trump Vineyard Estates say the primary tasks include planting and cultivating vines, adding grow tubes and pruning grape vines.

H-2A workers and U.S. workers in corresponding employment must be paid a certain rate — $10.72 an hour for vineyard farm workers in Virginia this year.

Whitely said she assumed her company would be flooded with people applying for the jobs because of all the media coverage Trump Winery has received for using the H-2A program.

“Guess how many applicants we had? … 13,” she said. “And they were all from places like the Philippines, Indonesia, Kenya, Nigeria. We did not have one American worker apply on (the first job order).”

Several people have sent emails to show they are outraged that Trump winery is hiring foreigners, Whitley said.

“I qualify every one of those responses and I say, ‘Are you interested in the job? If you are, please get in touch with us immediately,’” Whitley said.

Trump Winery didn’t respond to a request for comment.

(h/t Denver Post)

Betsy DeVos Hands Victory to Loan Firm Tied to Adviser Who Just Quit

Americans who default on some of their federal student loans are likely to pay more after Education Secretary Betsy DeVos reversed an Obama administration directive limiting some fees. But it turns out the Trump administration decision has some beneficiaries—including the father of a key DeVos lieutenant who just quit.

DeVos’s decision, announced Thursday in a memorandum to the student loan industry, allows companies known as guaranty agencies to charge distressed student debtors fees equivalent to 16 percent of their total balance, even when borrowers agree within 60 days to make good on their bad debt.

The reversal is almost certain to hand United Student Aid Funds Inc., the nation’s largest guaranty agency, a victory in its two-year legal battle against her department. The fees could translate into an additional $15 million in annual revenue for the company, filings in a related lawsuit suggest. Until Jan. 1, United Student Aid Funds was led by Bill Hansen, who served as Deputy Secretary of Education under President George W. Bush. His son, Taylor Hansen, a former for-profit college lobbyist, was until three days ago one of the few DeVos advisers with professional experience in higher education.

The younger Hansen resigned from the Education Department on Friday, department spokesman Jim Bradshaw said in an e-mail. Hansen couldn’t be immediately reached for comment on his departure.

Ben Miller, senior director for postsecondary education at the Center for American Progress, a persistent critic of the new Republican administration, said on Twitter the rule change was “an early Father’s Day gift in the Hansen household.” U.S. Senator Elizabeth Warren, a Massachusetts Democrat, was equally blunt: “There’s no question” that Taylor Hansen’s family ties posed a conflict of interest.

Tens of millions of dollars in revenue was at stake for companies such as United Student Aid Funds, which until 2015 had regularly charged borrowers the fee. A senior executive there last year warned in a court filing that the Obama administration’s decision to prohibit the fees—and to remind the industry that such fees had long been banned—generated “potentially massive retroactive liability” for companies such as United Student Aid Funds in the form of federal fines and lawsuits from aggrieved debtors. The company reckons it levied as much as $119 million in these fees from 2007 to 2015, or about $15 million annually.

Meanwhile, other companies active in student loan matters faced the prospect of having to reverse years of assessed fees and unravel tens of thousands of borrowers’ accounts to recalculate their balances, according to a legal filing last year by the National Council of Higher Education Resources, a Washington trade association. Had the Obama administration’s decision stood, a federal judge warned in 2015 that the entire student loan industry faced the prospect of being sued for allegedly violating anti-racketeering laws by imposing the fees.

DeVos’s decision is likely to put those concerns to rest.

With almost all senior positions at the Education Department vacant—and few political hires with professional experience in higher education—the younger Hansen may have wielded significant influence on DeVos’s policies. With his departure, the department has yet another post to fill.

“We have no idea what Betsy DeVos thinks about or wants to do on higher education policy. If one of the key people advising her is someone whose close family member is hoping to charge defaulted borrowers a lot more money, that’s not a good sign of her agenda,” Miller said before the department announced Taylor Hansen’s exit.

Both the Education Department and Bill Hansen’s current organization, of which he is chief executive, Strada Education Network (formerly known as USA Funds), said there’s no impropriety. Taylor Hansen recused himself from “all matters” related to United Student Aid Funds’ lawsuit challenging the Obama administration directive, Bradshaw said. “He served ably and without conflict and decided his service had run its course,” Bradshaw said Monday, declining further comment. But it’s unclear whether Taylor Hansen’s recusal extended to internal department discussions over the appropriateness of the fees. Bradshaw didn’t answer additional questions, and Taylor Hansen didn’t respond to emails, phone calls, and a message sent on social network LinkedIn seeking comment.

Bob Murray, a spokesman for Bill Hansen, said no one representing the company had asked Taylor Hansen to intervene on its behalf in its dispute with the department. Furthermore, he said, United Student Aid Funds is now owned by Great Lakes Higher Education Corp. Murray said that Bill Hansen declined to comment.

United Student Aid Funds said in court filings that the Obama administration unfairly changed longstanding Education Department policy when it announced in 2015 that fees added to quickly resolved defaulted loans were illegal. For example, according to industry lobby National Council of Higher Education Resources, the department had never flagged the fee as inappropriate in any of the more than 135 audits or reviews it conducted of companies such as United Student Aid Funds since 1992. The feds, the group said, “knowingly acquiesced for years.” In the eyes of the industry, DeVos is simply righting a wrong by reversing Obama’s move.

Bill Hansen nonetheless benefits from DeVos’s decision. Strada is still liable for potential costs stemming from United Student Aid Funds’ lawsuit against the Education Department, as well as a related class action lawsuit filed by borrowers over the same issue, said Richard George, chief executive of Great Lakes.

United Student Aid Funds reached a proposed settlement in January to resolve the proposed class action, filed by Minnesota resident Bryana Bible in 2013 on behalf of borrowers charged what she alleged to be illegal fees. The deal calls for 35,516 borrowers, and their lawyers, to split $23 million to partially reimburse them for as much as $119.1 million in fees assessed over eight years that, under Obama administration guidelines, they shouldn’t have been charged. A federal judge is due to decide on the proposed settlement in June.

The now-permissible fees could also beneficially impact Strada’s future revenue under an agreement that calls for Great Lakes to give Strada grants partly based on how United Student Aid Funds’ loans perform, a person familiar with the matter said. When annualized, the fees represent about 13 percent of United Student Aid Funds’ average annual income over the past five years, according to its financial reports.

For struggling borrowers, said Rohit Chopra, a senior fellow at the Consumer Federation of America who previously advised Obama’s Education Department and was the top student loan official at the federal Consumer Financial Protection Bureau, “this just adds insult to injury.”

(h/t Bloomberg)

1 … 290 291 292 293 294 … 382