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.
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“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.”
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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 Hamiton 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 coverage came from conservative outlets 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 Center for American Progress, the liberal news outlet 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.
