Senator Chuck Grassley (R-IA), a prominent member of the Senate Judiciary Committee, is investigating whistleblower allegations of ethical violations and leaks of sensitive information from the Veteran Benefits Administration (VBA) that may have resulted in a number of publicly traded companies losing over $800 million dollars in stock market value. On April 6, Grassley sent letters to the Department of Veterans Affairs (VA), the Office of Inspector General of Veterans Affairs (OIG VA), and the Securities and Exchange Commission (SEC) requesting answers to pressing questions no later than April 16. The letters request information about how much the VA knew about a possible failure to disclose a critical conflict of interest by Chairman Bouge, the head of the VBA. The letters also ask that the VA commit to being more responsive to Freedom of Information Act (FOIA) requests in the future.
Whistleblowers have alleged that Chairman Bouge did not disclose that her husband, Barrett Bouge, was “engaged in employment and consulting arrangements for companies with business before her,” which may have resulted in an ethical breach. The whistleblowers allege that in February of 2018, VA ethics lawyers reported that Chairman Bouge should recuse herself from dealings with companies that her husband was involved in. One of Grassley’s most pressing questions asks if she recused herself, and if she didn’t, why not?
Barrett Bouge serves as a Senior Communication Advisor for the Veterans Education Success (VES), an outside interest group that pushed for the VA to limit veterans’ abilities to use GI bill benefits to pay tuition at some colleges. Whistleblowers allege that Chairman Bouge failed to disclose her husband’s ethically compromising position in mandatory ethics paperwork.
Grassley also brings up additional serious allegations that the VA knew about these ethical violations and has been actively trying to hide them. In his letter to the Secretary of the VA, he writes: “According to multiple whistleblowers and witnesses interviewed by my staff, the U.S. Department of Veterans Affairs (VA) appears to be sweeping under the rug a history of conflicts and ethical issues among senior officials at the Veterans Benefits Administration (VBA).” If true, these allegations may reveal further ethical breaches reaching beyond VBA. According to a current FOIA lawsuit, the VA is suppressing documents that would shed light on the Bouge’s controversy.
The heart of the alleged ethical violation lies in the FOIA lawsuit. The lawsuit alleges that in a January 2020 letter from VES to Chairman Bouge, VES proposed that the VBA “put four schools and a private company out of business” and asked her to “choke out the schools’ income flow.” VES suggested this be done by stopping veterans from using GI bill money at these schools. A March 3, 2021 email from an individual inside the VA cautioned against the lack of care taken to protect the information that the VBA was planning to restrict GI bill use for those 4 schools. The VA insider’s email stated that the information needed to be kept “‘close hold’ to prevent misinformed leaks, general panic, and insider trading.” Apparently, the individual’s warnings were not heeded.
While the official announcement that the VA was threatening to cut use of the GI bill for the schools came on March 9, the lawsuit alleges that the information was released to some insiders earlier than that, and that at the very least, VES knew that the VA planned to make this announcement. Although this does not prove that the information was illicitly released to some organizations and individuals early, one easily accessible metric that shows a suspicious link is the stock prices of the company that owned the schools. According to the lawsuit, between January and March, the stock price of Perdoceo Education Corp (Perdoceo), the company that owned the schools “fell from $18.83 to $7.96, a loss of 58 percent of its price and over $800 million in market capitalization.”
In July 2020, the VA decided not to enact the threatened restrictions on the use of GI bill money. But the $800 million was already gone, and couldn’t be recovered by individual investors. For these possible damages to potentially thousands of American investors, Grassley is requesting further information that may prove that the information was intentionally leaked by individuals or organizations that could have profited greatly from such a predictable movement of Perdoceo’s stock value. Any government decisions or information about what the government may plan to do with publicly traded companies can be hugely valuable to those in a position to take advantage of it. If elements of the VA did allow this information to be leaked, or even worse, intentionally leaked it, it would be a massively damaging case of insider trading.
Grassley’s letters also acknowledge further whistleblower claims of a larger culture of corruption and potential profiteering inside the VBA. “Whistleblowers further allege that the Bogues are indicative of a broader culture of corruption and cronyism at the VBA, one which is hostile to enforcing basic ethical standards, and punishes those who bring concerns to the forefront,” he writes in the letter. Grassley’s letter to the VA OIG provides recent examples of VBA officials who allegedly took bribes from “outside stakeholders” and yet remain in prominent positions.
This battery of serious allegations all stem from disclosures made by unnamed whistleblowers at the VA who are risking their careers to inform the public about wrongdoing in one of the federal government’s highest-funded departments. Grassley’s prompt attention to these allegations is commendable, as he is using his platform as a Senator and a member of the Senate Judiciary Committee to elevate and expedite these concerns. In all of his letters, Grassley has requested responses to his concerns by April 16.
Read Grassley’s letter to the Secretary of the VA here.
Read Grassley’s letter to the Inspector General of the VA here.
Read Grassley’s letter to the Chairwoman of the SEC here.
Read Grassley’s press release here.