Senator Chuck Grassley (R-IA), a ranking 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 publicly traded company 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 Charmain Bogue, the Executive Director of the VBA’s Education Service at the time. The letters also ask that the VA commit to being more responsive to Freedom of Information Act (FOIA) requests in the future.
Grassley’s inquiry was triggered by whistleblower allegations claiming that Charmain Bogue did not disclose that her husband, Barret Bogue, was “engaged in employment and consulting arrangements for companies with business before her,” which may have resulted in an ethical breach. Whistleblowers allege that in February of 2018, VA ethics lawyers reported that Charmain Bogue should recuse herself from dealings with companies that her husband was involved in. One of Grassley’s most pressing questions in his letters asks if she recused herself, and if she didn’t, why not?
During the time period for which Grassley’s letters request information, Barret Bogue served 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 certain colleges that were suspected of violating regulations governing for-profit college advertising practices. The whistleblowers allege that Charmain Bogue 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 the VBA. According to a current FOIA lawsuit, the VA is suppressing documents that would shed light on the Bogues controversy.
The heart of the alleged ethical violation is laid out in the FOIA lawsuit. In the lawsuit, a whistleblower describes a January 2020 letter from VES to Charmain Bogue, saying that VES proposed that the VBA “put four schools and a private company out of business.” The whistleblower also described the letter as asking Bogue to “choke out the schools’ income flow.”
According to the lawsuit, the letter justifies the move to disallow the use of GI bill money at schools owned by the Career Education Corporation, now known as the Perdoceo Education Corp (Perdoceo), by highlighting concerns about the schools’ advertising and enrollment practices. Perdoceo had come under fire before for recruiting practices that may have violated a law (38 U.S.C. § 3696) protecting veterans from damaging or misleading advertising practices. VES had also been involved in advocating for a March 2019 fix to a loophole in the Higher Education Act that previously allowed colleges to use veteran’s GI bill funding towards the 90/10 funding quota that for-profit universities must abide by.
The lawsuit also describes a March 3, 2021 email from an individual inside the VA that 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 (Grassley’s letter to OIG VA Exhibit B, page 27). The VA insider’s email stated that the information needed to be kept “‘close hold’ to prevent misinformed leaks, general panic, and insider trading.” “Unfortunately, the VA appears to have failed to observe that advice, and as the lawsuit alleges, retail investors, without access to this privileged information, were harmed as a result,” Grassley states in his letter.
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. The lawsuit also alleges that at the very least, VES knew that the VA planned to make this announcement. An excerpt from Grassley’s letter states:
“According to the complaint, “[o]n March 9, 2020, at 5:50 p.m., after the stock market had closed, the VA issued a press release announcing it was threatening to do exactly what VES had asked it to do . . . to choke off the schools’ income flow …”
“However, someone appears to have released market sensitive impending announcement during the trading day and may have done so in the months between the January letter and the March 9 announcement as well. At least one recipient of the early heads-up was Mr. Bogue’s employer, VES. “The VA gave early notice of its decision to some, including VES. During the trading day at 2:26 p.m. E.T., VES tweeted its own press before the official VA announcement.”
According to the lawsuit, between January and March, the stock price of 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 lawsuit states that 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. Grassley’s letter states that if elements of the VA did allow this information to be leaked, or even worse, intentionally leaked it, it could be a massively damaging case of insider trading.
Grassley’s letters also acknowledge further whistleblower claims of a larger culture of corruption 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. In all of his letters, Grassley has requested responses to his concerns by April 16.
A spokesperson for VES contacted WNN to deny the whistleblower’s allegations in the lawsuit and stated, “VES has never broken a government news embargo.”
4/15/21 4:45 EST Edit: Barret Bogue is no longer employed at VES. In a previous version of this article it was unclear that quotes came from whistleblowers’ interpretation of VES’s January 2020 letter and were not direct quotes from the letter itself. The article also previously did not describe VES’s justification for recommending that the VBA disallow use of the GI bill at Perdoceo colleges.
4/28/21 to include excerpts from Grassley’s letter and to add statement from VES.