Scandal at The Washington Post: Fraud, Lobbying & Insider Trading

[Valin]

Accuracy In Media:

 

Rusty Weiss

March 8, 2012

 

In the summer of 2010, business columnist for The Washington Post Steven Pearlstein lifted the veil on the little-known company operating procedure that involves an incestuous relationship between his own employer, and the scandal-plagued, for-profit university known as Kaplan.1 In his column, Pearlstein made the argument that while personnel in the newsroom may have nothing to do with Kaplan, they most certainly have “benefited from its financial success.”

 

So what is it about Kaplan that has been so beneficial to Post employees? Aside from being one of the largest for-profit colleges in the country, Kaplan is not only a subsidiary of The Washington Post, up until recently it has been the single most profitable aspect of the company. In 2009, the year prior to the Pearlstein article, Kaplan accounted for 58% of the Post’s revenue and generated the bulk of company profits, while newspaper and magazine publishing—in other words, journalism—accounted for a mere 19% of revenue and operated in the red.2 In 2010, Barron’s estimated that the value of The Washington Post company was roughly $8.5 billion, and that Kaplan represented about $5 billion.3 So it was no surprise when Pearlstein stated that Kaplan “has provided the handsome profits that have helped to cover this newspaper’s operating losses.”

 

With a financial resumé like that, and status as the cash cow keeping the Post afloat, why wouldn’t CEO Don Graham be singing the praises of Kaplan University? Perhaps because there is a longstanding history of allegations of fraudulent practices, with hundreds of millions of dollars of profits diverted to Kaplan executives. Perhaps it’s also Kaplan’s generation of such profit on the backs of poor students and returning war veterans, preying on their vulnerabilities only to later reward them with degrees of questionable value, massive student-loan debt, and little employment opportunity. Perhaps it is Kaplan’s curious hiring of lobbyists to influence legislation at the state and federal levels, including a former Obama staffer, Anita Dunn, just as the heat was being turned up on for-profit colleges to rein in out-of-control practices.

 

(Snip)