Stymied at every turn, accused of things he never did, Robert Shireman figured this summer that, finally, he knew how best he could reclaim his reputation. He asked The Wall Street Journal to correct a story it published about him back in 2013.
Shireman was tired of what he says are false allegations. Claims that, as a top official in the U.S. Department of Education, Shireman illegally provided information to a hedge fund investor who was seeking to make big money by betting against the stocks of for-profit colleges. Claims that he was corrupt. Claims that he left public life disgraced.
There's no evidence — none — to support any of those claims, despite two federal investigations. So, Shireman argued, the newspaper was obligated to correct the story, or even re-report it.
The Wall Street Journal did not explicitly make those allegations in that eight-year-old article. But its report suggested Shireman might be caught up in something corrupt, despite the lack of any firm evidence to make that case.
The words live on, as words do on the internet. And that's fueled more false claims, including, years later, in the pages of the Journal itself. Shireman's ordeal demonstrates how Washington hardball politics collides with the permanence of the web, where a false claim keeps being repeated — long after it's been disproven.
"Every six or 12 months, somebody — usually somebody who's probably in the for-profit college industry — decides to resuscitate these old, tired claims," Shireman says. "And they look for ways that they can ... try to smear me. And they find this article and they cite it as evidence of something, even though there's nothing to it."
Shireman's critics still rely on Journal article
For decades, Shireman has labored to protect students from having to pay untenable levels of college debt. Under former President Barack Obama, he sought to make it harder for for-profit colleges to enroll students with hefty federally financed loans into programs that won't prepare them for jobs that enable them to pay off those debts. Several people independently called him a "true believer" on this matter. (One called him a zealot.)
Attacks on Shireman have arrived seemingly from many fronts — Republican senators, liberal public interest groups, corporate interests. And they have continued as recently as this past spring, from a pro-industry group and a senior U.S. senator. These rebukes have often taken inspiration from and derived credibility from the Wall Street Journal's earlier report.
The Journal has turned down Shireman's request to post a thorough correction or a new article. "We are receptive and responsive to objections raised (no matter how old)," Steve Severinghaus, a spokesman for the newspaper, writes in an email for this story. "In this particular instance, we fully investigated the complaints Mr. Shireman brought to us, and after a full review concluded that no corrections were warranted."
Several news organizations have started reviewing some of their past news coverage when people question whether they were portrayed fairly in those stories. The Cleveland Plain Dealer, The Boston Globe and The Atlanta Journal-Constitution, for instance, have recently instituted formal policies to review such coverage from many years ago, beyond narrow corrections.
Justin Hamilton, the chief spokesman for the U.S. Education Department while Shireman was there, says the Journal owes Shireman a public apology. And he argues the paper was used by others with motivations that were not clear until later.
"It's preposterous. It's actually preposterous," Hamilton says. "And what it is is typical Washington. When you are trying to kill an agenda that you don't agree with, you will stop at nothing to do it."
These days, Shireman has a good life in Berkeley, Calif., working for the Century Foundation, where he continues to focus on higher education and student debt issues. He remains highly influential in the field. But that prominence and President Biden's nomination of a former colleague to a senior education post appear to have kept him in the line of fire.
Shireman does not contend that his life has been ruined by the Journal article or the accusations against him. But the allegations continue to dog him. And the experience of dealing with them has worn him down. He typically presents as genial and earnest, but is periodically overcome by outrage.
"Articles," Shireman says ruefully, "seem to live forever on the internet."
A celebrity stock trader shared distrust of for-profit colleges
At the dawn of the Obama administration, in early 2009, Shireman joined the U.S. Education Department as a deputy undersecretary. He set the agenda for the new administration on higher education financing with a special eye on reforming for-profit colleges.
Around the same time, a big investor named Steve Eisman had also warned against the for-profit colleges. Eisman had made a name for himself for making big profits by betting on the collapse of the housing bubble that led to the global economic crisis in 2009. (Michael Lewis chronicled his efforts in the book The Big Short; Steve Carell depicted his character in the movie of the same name.)
By 2010, Eisman was not just warning but betting against the for-profit schools, through the financial markets, in a way that would let him make money if their stocks declined. That's called short-selling.
Education Department officials heard Eisman out before he gave a major public speech and testified before a key Senate committee. And Shireman listened in by phone to Eisman's presentation. Shireman says he later emailed Eisman a correction of a small statistical mistake. So did a colleague.
Shireman had planned to work in government for 18 months and he left after that period. Several weeks after he left, the Education Department released its proposed new regulations, which were not as restrictive as anticipated. The fact and timing of Shireman's departure would also be used against him.
A liberal advocate goes on the attack
A leading liberal-leaning anti-corruption outfit pounced. Melanie Sloan, a former Democratic congressional staffer and lawyer who was then the executive director of the nonprofit group Citizens for Responsibility and Ethics in Washington, embarked on a years-long campaign assailing Shireman, Eisman and the department.
"For me, the focus was never Shireman, it was Eisman," Sloan tells NPR. "I just don't think we want short-sellers making policy on the issues in which they are shorting companies." (Eisman did not respond to NPR's request for comment placed through a spokesman.)
Because of his bets, Sloan noted, Eisman stood to gain many millions of dollars if the for-profit colleges confronted stricter regulations.
Yet her actions explicitly called Shireman's integrity into question. Sloan called for formal investigations. She wrote articles focused on him. She tied him to Eisman and questioned his communications with The Institute For College Access & Success, a student-debt policy institute Shireman had founded. She even alleged he unethically had received retirement, health and other insurance benefits as a federal contractor for the Education Department after leaving in July 2010.
'Government official plus short-seller equals scandal'
The department's then press secretary, Justin Hamilton, was a Democrat who had previously worked with Sloan on political issues. On this one, he argues, Sloan found a scandal where there was none.
"The idea was that if you said, 'Government official plus short-seller' [it] equals scandal," Hamilton says. "But the equation is flawed, because there was no hidden connection to short-sellers. There was no conspiracy to do the bidding of short-sellers in order to make a quick buck."
To underscore the point: The only connection ever turned up between the two was that Shireman listened into Eisman's presentation to department officials in spring 2010 and sent an email with a minor correction of one figure.
Of Shireman, Hamilton says, "I think what you had here is a guy who dedicated his entire career to this issue." (When Hamilton left the Education Department, he became a senior official at an education technology company owned by the Wall Street Journal's corporate parent, News Corp.)
Still, a drumbeat built. In October 2010, an influential financial analyst tweeted that the not-for-profit institute that Shireman had founded had distributed the final version of the regulation to short-sellers before it was released publicly, suggesting the institute had leaked inside information that could move markets and help them reap huge profits.
After the Obama administration announced its policy to curb for-profit schools from piling too much debt on students, the press coverage leaned heavily on the idea of a connection between Shireman and short-sellers, sharply questioning the policy's motivation. The criticism was posted on conservative sites like Breitbart, liberal outlets like Huffington Post and mainstream ones like Fortune.
The Wall Street Journal story appeared to fan outrage
The Wall Street Journal would play a singular role.
In January 2011, the paper weighed in with a front-page story on Eisman's activities in Washington. Letters pointing to the article poured into influential figures in education, including the Education Trust, the American Federation of Teachers, the National Education Association, the American Association of University Professors and the American Association of University Women. The letters cited the Journal repeatedly and claimed that the investigation was focusing on "stock price manipulation by Shireman and Eisman."
Those lengthy letters, ostensibly by dozens of different people, were identical in content and even phrasing. Their senders' identities could not be verified by the the liberal news site that first revealed the letter-writing campaign in 2011, or by NPR this past summer. NPR sent a dozen emails to addresses used to send the letters seeking confirmation or comment; all but one bounced back.
Two influential Republican senators — Richard Burr of North Carolina and Tom Coburn of Oklahoma — triggered two formal federal investigations.
Largely exonerated, then investigated again
The Education Department's inspector general posted its report in June 2012. It determined that sensitive material had been handled appropriately and that there had been no disclosures of key information that was not yet public to interested parties. And the audit also found no problematic leaks ahead of the policy's announcements that could have helped Eisman or others with a financial interest in the specifics.
The U.S. Securities and Exchange Commission was brought in to look at Shireman's and his colleagues' potential financial stakes. No education official, including Shireman, was found to have owned any investments aided by the policy, according to the inspector general's later report.
The inspector general also investigated the ostensibly illegal benefits Shireman received, at the behest of the late Republican Sen. Mike Enzi of Wyoming. The report found Shireman received about $23 worth of life insurance benefits to which he was not entitled. But because Shireman overpaid premiums by more than $45, the government ultimately sent him a two-figure check covering the difference.
That report did find, however, that Shireman had emailed six times with people from his previous employer, the policy institute. The fact that those emails occurred was potentially in violation of an Obama administration ethics pledge for executive branch officials to not participate in matters directly involving former employers.
Senators Burr and Coburn declared the inspector general's audit insufficient. And the U.S. Justice Department undertook an investigation of Shireman's possible ethical violation in 2012. A private letter to Shireman from the U.S. Attorney's Office for Washington, D.C., said that it was investigating him for potential criminal activity or civil infractions and that he could be personally liable for its findings.
His attorneys say it was wildly overblown. "The investigation was trivial, not about material breaches of any rule or statute, and pursued in spite of lack of evidence," Stanley M. Brand, one of Shireman's attorneys, tells NPR.
Nothing ever came of the investigation.
A scoop or innuendo
In spring 2013, the Journal learned of the Justice Department's investigation from a subpoena filed to secure records from the institute Shireman had founded. And that triggered the reporting by the Journal to which Shireman took exception.
The Journal's ensuing story in May 2013 appeared unambiguous. Its headline read: "Former Education Official Faces Federal Investigation." The Journal's lead reporter on the article, Brody Mullins, has for years mined a rich vein of stories involving lobbyists, lawmakers and other players. His coverage of the culture of money and power in Washington has won awards and explored how information circulates in the nation's capital.
The Journal reported that federal prosecutors believed Shireman "might have violated executive-branch ethics laws by allegedly discussing sensitive government information" with his former institute. And the article squarely placed the investigation in the context of people potentially illegally trading on inside information.
The article mentioned the inspector general's report that had wrapped almost a year earlier, but did not reflect that it "found no improper disclosure of sensitive information" — not to short-sellers like Eisman, not to outside groups like Shireman's former institute, not to anyone.
"The inquiry underscores how prosecutors are beginning to clamp down on the way Washington handles sensitive government information," the Journal article read. The chief counsel of Sloan's organization was quoted warning about Shireman's possible conflict of interest. The article then included a long passage about SEC investigations into alleged insider trading by government officials and investors — leaving the strong impression Shireman's potential misdeeds were analogous.
But they weren't. Justice Department documents obtained by Shireman show that prosecutors were focused on his contact with his former employer.
Shireman tells NPR he did not pay attention to the article at the time.
"It's perplexing," says David Halperin, a liberal lawyer and activist who advocated for reform of the for-profit college industry and who, briefly, legally represented Shireman. "They wrote this thinking they were pursuing a legitimate article. The problem was the story was full of innuendo. It was about what [a scandal] could have been about."
Critics held financial ties to for-profit colleges
In 2014, Sloan once more accused Shireman of "coziness with Wall Street short sellers." She wrote in The Hill that he "improperly shar[ed] information with Wall Street investors" — something he already had been exonerated of doing.
Sloan's own financial ties were more clear-cut. Shortly after Shireman left Washington, Sloan had decided to leave Citizens for Responsibility and Ethics in Washington for a job with former Clinton White House lawyer and Democratic lobbyist Lanny Davis.
Davis had written a Huffington Post piece attacking Eisman and Shireman and another for The Hill. Sloan pulled back from taking the job when public outcry ensued after Davis acknowledged he had been hired to represent a for-profit college trade group.
And so, in 2014, a conservative outfit called the Center for Consumer Freedom revealed that Sloan's own group had received $150,000 in 2010 and 2011 from a nonprofit funded by a longtime liberal benefactor named John Sperling. Sperling, who died in 2014, was the founder of the University of Phoenix, a giant for-profit university. Sperling had helped fund other liberal groups that had denounced Shireman and the Education Department rules as well.
Sloan tells NPR those connections were immaterial to her pursuit of Shireman. "Sperling had been a long-time donor, of course. A major Democratic donor," Sloan tells NPR. "People wanted to find other reasons why we [pursued the Eisman-Shireman connection]. So it had to be the Sperling thing or that it had to be the Lanny Davis thing."
Sloan says, "We evaluated it on the merits."
Debunked allegations take on a life of their own
By the summer 2015, Shireman, intent on clearing his name, filed his own request for all relevant documents from the U.S. Justice Department about the investigation. He shared those documents and others with NPR for this story.
It would take years for him to acquire them. In the intervening period, the conventional wisdom had already set in. In 2016, then Rep. Jason Chaffetz, a Utah Republican who was chairman of the House Oversight Committee, publicly pointed to Shireman as an example of how the U.S. Education Department had trampled ethics.
In 2017, the president of Purdue University, Mitch Daniels, publicly dismissed Shireman as someone who had been "caught consorting with short sellers" and spoke of the "ongoing investigations into stock manipulation." Daniels, a former Republican governor and George W. Bush White House official, was promoting a plan to enter a joint operating agreement to run the for-profit Kaplan University.
Attorneys for the university shrugged off Shireman's claims that those remarks defamed him, in exchanges read by NPR. Shireman says he didn't want to sue and couldn't afford to. He just wanted the remarks rescinded — on the record. He failed.
In early 2019, the Wall Street Journal ran an editorial and an op-ed in short succession denouncing Shireman. The editorial said he was "caught playing footsie with a short-seller betting against for-profit colleges." The op-ed wrongly said he had been "caught sharing information with a short-seller."
For-profit colleges help fund a Senate critic's campaigns
Shireman demanded corrections several weeks later. The Journal's conservative editorial department — run separately from the newsroom — corrected the sequence of events and removed a phrase that said he had been "exiled" from the government. But it kept the false claim that Shireman had been caught sharing information with a short-seller in the column and kept the editorial's line about him playing footsie.
Then, this past spring, pro-business activists set up the website College Choice Killers that trashed Shireman and others who worked on the for-profit college loan policy. The Journal's article from 2013 was given place of pride. Conservative economist Richard Vedder even compared Shireman to the Taliban. (The site was taken down after Halperin repeatedly challenged its veracity.)
At a hearing a few weeks later, Sen. Burr warned a Biden education nominee about his past proximity to "potentially unethical conduct at the department under the Obama administration." Burr spoke of emails sent from private accounts in "collaboration with short-sellers on market moving information ... to try to hide the public scrutiny in furtherance of a partisan objective."
Burr noted no charges were filed by the Justice Department. He didn't mention Shireman by name, but the senator's spokeswoman confirmed that was whom he was referring to. The nominee had been a senior Education Department official with Shireman and who for several years headed Shireman's former policy institute.
Like Sloan's former outfit, Burr has his own ties to the for-profit college industry. Burr received more than $47,000 in contributions from the industry toward his 2010 and 2016 Senate bids, according to the campaign watchdog Open Secrets.
In late June, disturbed by the College Choice Killers site and Burr's remarks, Shireman emailed reporters and editors at the Wall Street Journal. In correspondence he shared with NPR, Shireman asked for corrections on its 2013 article.
The fact of the investigation was fair game, he says. But Shireman strenuously objected to the claims of the mishandling of "sensitive" material and the invocation of conflicts of interest and SEC investigations into investors being tipped off. He noted that his departure preceded the announcement of the policy and that he had nothing to do with the logistics of its public release. Furthermore, investigators said they found nothing wrong with the way the department's leadership and staff had handled sensitive information or the policy's release.
The Wall Street Journal responds
In late July, Shireman received a reply from Jay Sapsford, the Wall Street Journal's deputy Washington bureau chief.
In an email reviewed by NPR, Sapsford wrote that the paper and others at the time were covering "how financial actors were seeking information that would give them advantages in trading securities and how easily such information flows among agency officials, congressional aides, lobbyists, purveyors of political intelligence and investors themselves." (Through the spokesman, Sapsford and Mullins declined to be interviewed for this story.)
Sapsford noted the inspector general report used the word "sensitive" 39 times.
"We determined this flow of information to be a useful background to the developments of this story. We stand by that judgment."
Shireman points to that response and nearly sputters in incredulity, especially given his respect for the news side of the paper. The inspector general had explicitly exonerated department officials, including Shireman, of sharing sensitive information outside the department.
"I thought [The Wall Street Journal] would at least take some kind of corrective action," Shireman says, "And I'm quite surprised that they did kind of less than nothing."
Melanie Sloan, the former anti-corruption crusader, tells NPR she was right to raise questions about short-sellers' influence on policy, and about Shireman, despite the lack of any serious findings against him.
"I don't have feelings about him now," Sloan says. "It's not an issue I thought about for 10 years. I just don't."
"In Washington, do people get hurt all the time?" she asks. "Yeah, all the time."
AILSA CHANG, HOST:
A news story often records a moment in time, like a screen grab, yet the repercussions live on. You're about to hear about a man who asked The Wall Street Journal to revisit an article from eight years ago, an article that critics have used to trash his reputation. NPR's David Folkenflik tells us what happened next.
DAVID FOLKENFLIK, BYLINE: For decades, Robert Shireman has been focused on protecting students from unaffordable levels of college debt, looking especially at for-profit campuses. Shireman helped craft new policies as a senior education department official in the first years of the Obama administration. Yet, for our purposes, Shireman is less of interest as a policymaker than as a punching bag.
ROBERT SHIREMAN: Every six or 12 months, somebody - usually somebody probably in the for-profit college industry - decides to resuscitate these old, tired claims.
FOLKENFLIK: The colleges and their allies have used a Wall Street Journal article to shred Shireman's reputation for years. He says it's caused deep stress and wasted time. Shireman has been accused of corruption by pro-industry websites, conservative opinion pages of The Wall Street Journal, even liberal groups with financial ties to an industry leader.
SHIREMAN: And they look for ways that they can try to smear me. And they find this article, and they cite it as evidence of something, even though there's nothing to it.
FOLKENFLIK: In 2013, The Wall Street Journal reported that the Justice Department was investigating Shireman for violating a policy prohibiting communications with his former employer. And that much was true. The article went further, though. The Journal implied he might have been involved in insider trading, giving secret information to an investor who could have made money off it. A federal inspector general's report had already determined he had not. The Journal didn't report that. The inspector general had found his emails with his former employer were innocuous. The Journal didn't report that, either. The Justice Department investigation went nowhere, but the attacks kept coming, including one in April from Senator Richard Burr, a North Carolina Republican who cautioned a former colleague of Shireman's.
(SOUNDBITE OF ARCHIVED RECORDING)
RICHARD BURR: Finally, I want to carefully point out your close proximity to potentially unethical conduct at the department under the Obama administration.
FOLKENFLIK: Burr didn't use Shireman's name but accused him of...
(SOUNDBITE OF ARCHIVED RECORDING)
BURR: Providing deliberative and confidential regulatory information to short sellers on Wall Street.
FOLKENFLIK: The problem is that's just not true.
JUSTIN HAMILTON: It's preposterous. It's absolutely preposterous.
FOLKENFLIK: Justin Hamilton worked with Shireman at the U.S. Education Department. He was the spokesman for the department in 2010. That's when Shireman listened in by telephone as a Wall Street investor named Steve Eisman made a presentation. Eisman warned that student loans from for-profit colleges could collapse. That said, Eisman was a short seller. He stood to make money if the price of their stocks fell. Shireman later emailed Eisman to say he had gotten a statistic wrong. That's it. Again, Justin Hamilton.
HAMILTON: There was no conspiracy to do the bidding of short sellers in order to make a quick buck. I think what you had here is a guy who dedicated his entire career to this issue.
MELANIE SLOAN: For me, the focus was never Shireman. It was Eisman.
FOLKENFLIK: Melanie Sloan is the founder of a liberal watchdog group called CREW. Her group had been a key source for The Wall Street Journal.
SLOAN: I just don't think we want short sellers making policy on the issues in which they are shorting companies. I think that's dangerous for everybody.
FOLKENFLIK: Something to know about Sloan's outfit and many of Shireman's critics - they have ties to the for-profit colleges. Senator Burr received $47,000 in campaign contributions. And Melanie Sloan's group? It received $150,000 in 2010 and 2011 from the founder of the University of Phoenix. Sloan says she has no regrets about what Shireman went through.
SLOAN: In Washington, do people get hurt all the time, all the time?
FOLKENFLIK: This spring, the attacks kept coming, some still citing that 2013 Wall Street Journal story. Shireman went to the Journal. He hoped it would revisit its reporting, maybe with a correction or even an update. A political editor replied that the paper concluded no action was warranted.
SHIREMAN: I thought they would at least take some kind of corrective action. And I'm, you know, frankly, quite surprised that they did kind of less than nothing.
FOLKENFLIK: The Journal told NPR it reviewed Shireman's request seriously, despite the age of the article in question.
David Folkenflik, NPR News. Transcript provided by NPR, Copyright NPR.