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Betsy DeVos's Hiring Of A Former For-Profit College Dean To Head Fraud Unit Spurs Anger

"This is a joke, right?"

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Betsy DeVos has hired a former official at the for-profit college DeVry University to run a unit that investigates for-profit college fraud, according to an email obtained by BuzzFeed News.

The hiring of Julian Schmoke to head the so-called enforcement unit, which was first reported by Politico, prompted anxiety and frustration from some people inside the Education Department who had worked on fraud investigations, said a person with knowledge of the situation.

Reactions to the move are tied up in a record-breaking $100 million settlement against DeVry, reached last year with the Federal Trade Commission, over allegations that the school had misled students about their chances of getting a job. The company also reached settlements with the New York attorney general and the Education Department.

Despite the fact that Schmoke was not closely involved in DeVry's corporate operations, some staff at the Education Department were upset — concerned, one person at the department said, about the unit's ability to hold for-profit colleges, especially DeVry, accountable.

Schmoke will oversee a unit that is actively looking into DeVry's operations, according to two people with knowledge of the enforcement unit's work. And he will help determine the fate of more than 1,875 former DeVry students who filed claims saying they were defrauded by the university. Those students filed so-called "borrower defense" claims, saying that they were defrauded by DeVry and are entitled to have their student loans forgiven.

Schmoke and the Education Department did not respond to requests for comment.

Democrats were immediately outraged by DeVos's decision. "This is a joke, right?" tweeted Connecticut Sen. Chris Murphy. "Basically akin to nominating influenza to be the Surgeon General."

Schmoke was an academic at DeVry — not a corporate executive — and oversaw the university's science and engineering school, according to his LinkedIn biography. He left in 2012, long before the fraud allegations against DeVry were settled. He is now the director of campus operations at a technical college in Georgia.

The anger and anxiety over Schmoke's hiring were reflective of a broad fear among Democrats and some ethics experts that the Education Department is increasingly stocked with people tied to the for-profit industry, as well as student loan companies that similarly have made profits from Education Department operations.

The most prominent of those is Bob Eitel, the chief compliance officer at a for-profit college company that has repeatedly been investigated for deceptive practices. He took an unpaid absence from Bridgepoint Education to work as a special assistant to DeVos, where he advises on issues relating to the for-profit sector. Another DeVos adviser tied to an Education Department debt collector drew attention when his father's company was handed a major victory by DeVos.

And earlier this summer, DeVos hired the CEO of a private student loan company to run the department's student lending operations.

Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in Washington, DC. She covers the intersection of business and education.

Contact Molly Hensley-Clancy at molly.hensley-clancy@buzzfeed.com.

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