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Sen. Whitehouse Was Investor in For-Profit Charter School Company

Tuesday, January 10, 2017


Senator Sheldon Whitehouse

U.S. Senator Sheldon Whitehouse (D-RI), who is opposing President-elect Donald Trump’s pro-school choice nominee for Secretary of Education Betsy DeVos, has had substantial financial interests in for-profit charter school outfit Edison Schools dating back to 2000.

Rhode Island State Ethics filings show that Whitehouse held a 10% or greater ownership interest, or a $5,000 or greater ownership investment interest in Edison Schools a for-profit company that was launched by Christopher Whittle and whose leadership included Benno Schmidt - the former President of Yale. Whitehouse is a Yale grad.

"After four roller-coaster years as a publicly traded company, Edison Schools, the nation's largest for-profit manager of public schools, announced yesterday that its board had accepted a bid of about $174 million by its founder and chief executive, H. Christopher Whittle, to take the company private," the New York Times reported in 2003.

The Daily Caller was first to report the Edison relationship.

"The company's stock -- which made its debut on Wall Street at $18 a share in 1999 and closed as high as $36.75 a share in February 2001 -- fell to 14 cents a share by last October, after a blistering year of regulatory troubles, lifelong unprofitability and public opposition to its takeover of a number of troubled public schools in Philadelphia," reported the Times.

Senator Whitehouse's staff refused to set up an interview or answer questions about Whitehouse's investment in the company -- it is not clear if Whitehouse profited on the stock, when he originally purchased the stock and when he sold the stock.

"Like Senator Whitehouse, most people naturally and intellectually understand that school choice can help many students rise out of poverty. But, obviously, under pressure from teachers' unions, many lawmakers fold and take political positions that are contrary to their personal beliefs," said Mike Stenhouse, CEO of the Rhode Island Center for Freedom and Prosperity, who is a leader in the school-choice movement in Rhode Island. 

Whitehouse refuses to answer questions about his investments in for profit school

Whitehouse on the Record

Last December, Whitehouse, who as a member of the Senate Health, Education, Labor, and Pensions Committee will be holding confirmation hearings for DeVos this month, convened a roundtable of education stakeholders in Rhode Island. The roundtable only included those who have voiced opposition to DeVos nomination.

“President-elect Trump has nominated Betsy DeVos, a billionaire whose views on education seem to be out of line with many Rhode Islanders’ values, to set federal education policy,” said Whitehouse. “The President-elect seems to fill his cabinet with ultra-wealthy individuals with ties to political special interests.  The needs of Rhode Island students, parents, and educators will be front and center as I prepare for the hearing on this nomination.”

On Sunday, The Daily Caller reported, “Senator Dems Opposing Trumps Ed Sec Nom Attended Private schools," which included Whitehouse.

Six of the 10 Senate Democrats on the committee that will consider confirming DeVos attended private or parochial schools, or have children and grandchildren attending, according to information obtained by The Daily Caller News Foundation Investigative Group.

Whitehouse attended St. Paul School -- one of America's most exclusive prep schools. Whitehouse's children attended private school, including the Senator's son Alexander who is a 2012 graduate of St. George's School. Annual tuition at St. George's is approximately $60,000 a year.

Among the Democrats on the committee who never attended public school are Sens. Robert Casey, Jr., of Pennsylvania, Rhode Island’s Sheldon Whitehouse, and Colorado’s Michael Bennet.

Whitehouse’s office did not respond to request for comment on Monday, including whether or not he included Rhode Island school choice advocates at his roundtable. 

"It is further disturbing that the Senator would hold a public forum among so-called educational leaders and not include anyone who would actually put the interests of our children ahead of the preservation of the failed status quo system," said Stenhouse. 

According to the now-defunct Edison Schools' history:

Edison Schools Inc. is the leading for-profit manager of public schools in the United States. In July 2000 it was running 108 schools in 21 states, operating them under local school districts or charter-school boards. In return for administering these schools, Edison receives per-pupil funding generally comparable to that spent on other public schools in the same area.

Whitehouse has had significant stockholdings in major polluters

Whitehouse's Investment in Polluters

This is not the first time that Whitehouse's public position and private investments were inconsistent. In December of 2014, GoLocalProv.com unveiled that the Senator has had massive holding in major companies that are leading producers of greenhouse gases:

Sheldon Whitehouse (D-RI), the United States Senator who has now delivered more than 80 floor speeches about the adverse impact of global warming, has himself benefited financially from ownership in the public companies that are among the leading producers of greenhouses gases. One company that he has had substantial stock ownership, Exxon, is second largest public company producer of greenhouse in the world.

Whitehouse has given 80 plus speeches on the dangers of greenhouses gases, according to the Huffington Post.

According to a GoLocal examination of the Senator’s financial disclosure reports, Whitehouse owned Exxon stock both personally and realized benefits from a separate family trust that also owned stock in the mega-oil company. He was required to file RI Ethics Commission Financial Disclosure Reports in the late 1990s and early 2000s when he served as a top level staffer to then-Governor Bruce Sundlun and as Attorney General.

Whitehouse has had a distinguished career in government serving as a top gubernatorial aid, state attorney general, US. attorney and now U.S. Senator. He is widely recognized as a leading voice in Washington in the effort to curtail greenhouse gases.

Beyond his Exxon stock ownership, Whitehouse has owned tens of thousands of dollars in Duke Energy Stock, according to his 2013 filed United States Senate disclosure forms. Duke energy is a company still pushing for expansion of coal power plants. Duke Energy reported in its most recent annual report (2013), “In June, we put our $3.5 billion Edwardsport plant in Indiana into commercial service. This power station is the world’s largest of its kind and one of the cleanest coal plants ever built. It gasifies coal, strips out pollutants and burns the synthetic gas to produce electricity. After rigorous testing and tuning, Edwardsport should reach its full capabilities later this year.”

Whitehouse's economic interests over the past fifteen-plus years seem in conflict with some of his environmental pronouncements.

In December of 2012, as Whitehouse held stock in a company championing a new “world’s largest” clean coal plant, he was delivering a floor speech which challenged his Senate colleagues to take action and pushed for divestiture from fossil fuel investment by colleges and universities.

“Madam President, the public is ready for us to take action. But, we’re not. We are, as I’ve said in previous speeches, sleepwalking. As Congress sleepwalks, Americans are actually taking action on their own. In coordination with the non-profit organization 350.org, for example, students at more than 150 colleges and universities across the country are pressing those institutions to sell off the portions of their endowment portfolios invested in fossil fuel companies. They are forcing schools to divest from the polluters,” said Whitehouse.  

Whitehouse's spokesperson said the Senator has been divesting himself of stocks tied to fossil fuels. However, his office has refused to say what stocks the Senator has sold. "The Senator divested his investments from fossil fuels during the past couple of years.  He feels strongly about his work on environmental issues,” said Seth Larson, Communications Director for Senator Whitehouse. 

In June of 2013, Whitehouse received the National Marine Sanctuary Foundation’s Leadership Award for his work to protect oceans and combat climate change.  Just one of a number of environmental awards the Senator has received.

Whitehouse's holdings in energy company and petroleum company can be tracked as far back 1998 through to his most recent U.S. Senate economic disclosure filings.

According to RI Financial Disclosure forms for the years 1998, 1999, 2000, and 2001, Whitehouse reported stock holdings in leading petroleum companies Exxon, Phillips Petroleum, and Royal Dutch (Shell). These holdings were in addition to oil company stocks held by family trusts - specifically the Helen Chase Rand Residual Trust, which reported ownership of Exxon stock.

Whitehouse’s slow divestiture comes more than two decades after U.S. Senator John Chafee (R-RI) had divested in the 1980s from ownership in oil company stocks citing environmental issues. Exxon more than almost any other company is tied to the production of carbon emissions.

A 2013 report on Climate Change Study found that 90 companies around the globe were responsible for producing two-thirds of all man made carbon emissions. The greenhouse gas producers fell into three categories in the study and Exxon was second only to Chevron in the category of investor owned and state-owned companies. Exxon is responsible for producing 3.2% of all the CO2 and CH4 emissions from the year 1750 up through 2010.

According to financial records, beyond Whitehouse's holding in Exxon and other petroleum company stocks, he also realized investment interest income of greater than $5,000 from his Exxon stock. The financial disclosure reports only required disclosure of interest income above $5,000. It is unknown how much in interest income in total Whitehouse realized from his stock ownership while he has served in public office.

Whitehouse’s United State Senate Financial Disclosure Report for 2012 (filed in 2013) no longer lists Exxon as a stock that he personally owns, but it is unclear if the Helen Chase Rand Residual Trust that the Senator continues to benefit from has Exxon as a holding.

"I couldn't tell you about the status of the family trust, as I don't have that information at this time,” said Larson in a phone interview with GoLocal.

Editor's Note: A spokesperson for Senator Whitehouse provided an official financial disclosure form that includes the sale of Senator Whitehouse's Duke Energy stock in February 2013.  As reported in the story, he held the stock through 2012. 

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