May 23, 2017

Warren, Murray Raise Concerns about Potential Ethics Violations by Education Dept. Advisor Eitel

Text of the letter (PDF)

Washington, D.C. - Senator Elizabeth Warren (D-Mass.) and Senate Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Patty Murray (D-Wash.), yesterday sent a letter to the U.S. Department of Education's Designated Agency Ethics Official regarding the Department's employee Mr. Robert Eitel and his compliance with federal ethics standards and President Trump's "Ethics Pledge". 

Given Mr. Eitel's recent resignation from Bridgepoint Education, Inc. and his joining the Department in a permanent role as Senior Counselor to Secretary Betsy DeVos, he is subject to ethics standards that apply to all federal employees, including President Trump's "Ethics Pledge". One of these ethics commitments states, "I will not for a period of 2 years from the date of my appointment participate in any particular matter involving specific parties that is directly and substantially related to my former employer or former clients, including regulations and contracts."

However, as the letter notes, recent reports suggest that Mr. Eitel is "actively working on an issue that is of significant interest to his previous employer, known as the "borrower defense" regulation." Mr. Eitel's former employer, Bridgepoint, is a for-profit college chain that has been fined millions of dollars by the Consumer Financial Protection Bureau and the Department of Education, and is currently under active investigation for potential misrepresentations and improper accounting by the U.S. Department of Justice, the Securities and Exchange Commission (SEC), and the state attorneys general of California and Massachusetts. The company admitted in a recent SEC filing that claims under the borrower defense regulation "could damage our reputation in the industry and have a material adverse effect on enrollments and our revenues, financial condition, cash flows and results of operations."

"The borrower defense rule provides student loan borrowers with the potential to have their loans discharged if they are defrauded," wrote the senators. "The Department may then recoup the funds from the school to pay for these discharges and refunds. Mr. Eitel's former employer is the subject of multiple state and federal investigations and lawsuits that could, in fact, require the company to repay the government under the regulation at issue. 

In their letter, the senators asked the Department to provide a description of which policy issues Mr. Eitel has worked on, and copies of his required ethics forms, to determine the extent of any ethical violation. The senators requested copies of paperwork pertaining to Mr. Eitel's financial disclosures, conflicts of interest, and other ethics requirements.

This letter responds to a May 8 letter to Senators Murray and Warren from the Department of Education's Designated Agency Ethics Official regarding Mr. Eitel, in which the Department of Education confirmed that Mr. Eitel has not been granted a waiver to federal ethics standards. 

In March, Senators Warren and Murray first raised questions about Mr. Eitel's involvement at the Department of Education while on a leave of absence from his position as Vice President of Bridgepoint Education, Inc.