Bill Black: We Send Teachers to Prison for Rigging the Numbers, Why Not Bankers?

Yves here. One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Jointly published with New Economic Perspectives

The New York Times ran the story on April Fools’ Day of a jury convicting educators of gaming the test numbers and lying about their actions to investigators.

ATLANTA — In a dramatic conclusion to what has been described as the largest cheating scandal in the nation’s history, a jury here on Wednesday convicted 11 educators for their roles in a standardized test cheating scandal that tarnished a major school district’s reputation and raised broader questions about the role of high-stakes testing in American schools.

On their eighth day of deliberations, the jurors convicted 11 of the 12 defendants of racketeering, a felony that carries up to 20 years in prison. Many of the defendants — a mixture of Atlanta public school teachers, testing coordinators and administrators — were also convicted of other charges, such as making false statements, that could add years to their sentences.

This was complicated trial that took six months to present and required eight days of jury deliberations. It was a major commitment of investigative and prosecutorial resources. But it was not investigated and prosecuted by the FBI and AUSAs, but by state and local officials. In addition to the trial success, the prosecutors secured 21 guilty pleas.

Atlanta’s public schools, of course, did not engage in “the largest cheating scandal in the nation’s history.” The big banks’ cheating scandals left the Atlanta educators in the dust.

The two obvious questions are why the educators cheated and how they got caught. “High-stakes testing” cannot explain the scandal because we have had such tests for over 50 years. The article explains the real drivers – compensation, promotions, fear, and ego (aka “reputation”).

“Officials said the cheating allowed employees to collect bonuses and helped improve the reputations of both Dr. Hall and the perpetually troubled school district she had led since 1999.

Investigators wrote in the report that Dr. Hall and her aides had ‘created a culture of fear, intimidation and retaliation’ that had permitted “cheating — at all levels — to go unchecked for years.”

Any reader familiar with my work should be running over in their mind Citigroup’s vastly larger cheating frauds that senior managers produced by using exactly the same tactics to produce hundreds of billions of dollars in fraud.

How did people become suspicious and decide to conduct a real investigation? They realized that the reported results were too good to be true. That too is directly parallel to Citi, where massive purchases of “liar’s” loans known to be 90% fraudulent supposedly led to massive profits.

The dozen educators who stood trial, including five teachers and a principal, were indicted in 2013 after years of questions about how Atlanta students had substantially improved their scores on the Criterion-Referenced Competency Test, a standardized examination given throughout Georgia.

In 2009, The Atlanta Journal-Constitution started publishing a series of articles that sowed suspicion about the veracity of the test scores, and Gov. Sonny Perdue ultimately ordered an investigation.

Wow, a newspaper did a series of articles, and documented a scandal built on deceit. Imagine if the New York Times and the Wall Street Journal were to do an “unsparing” investigation into banking fraud – and into Attorney General Eric Holder’s refusal to prosecute. What if they actually looked at culpability in the C-suites?

The inquiry, which was completed in 2011, led to findings that were startling and unsparing: Investigators concluded that cheating had occurred in at least 44 schools and that the district had been troubled by “organized and systemic misconduct.” Nearly 180 employees, including 38 principals, were accused of wrongdoing as part of an effort to inflate test scores and misrepresent the achievement of Atlanta’s students and schools.

The investigators wrote that cheating was particularly ingrained in individual schools — at one, for instance, a principal wore gloves while she altered answer sheets — but they also said that the district’s top officials, including Superintendent Beverly L. Hall, bore some responsibility.

Dr. Hall, who died on March 2, insisted that she had done nothing wrong and that her approach to education, which emphasized data, was not to blame. “I can’t accept that there’s a culture of cheating,” Dr. Hall said in an interview in 2011. “What these 178 are accused of is horrific, but we have over 3,000 teachers.”

But a Fulton County grand jury later accused her and 34 other district employees of being complicit in the cheating. Twenty-one of the educators reached plea agreements; two defendants, including Dr. Hall, died before they could stand trial.

Of course, Hall’s “approach to education” did not “emphasize data” – it emphasized faux data – like Citi’s accounting alchemists under Robert Rubin who transmuted fraudulent net liabilities (liar’s loans) into supposedly wondrously valuable assets that had zero risk (Super Senior CDO tranches).

A more general point is in order. Atlanta is the culmination of destructive national trends and failing to mention Houston in the story was unfortunate. First, the “reinventing government” movement decided the public sector was bad and the private sector was magnificent and said that the public sector should adopt private sector approaches including quite specifically “performance pay” based on quantitative measures. This brought to the public sector the perverse incentives that were ruining the private sector and about to bring on Enron-era fraud epidemic and then the most recent three fraud epidemics. Second, we were assured by proponents of the change that a concern for “reputation” would trump any perverse incentives. What the proponents failed to see, of course, was that in both the private and public sectors the way to create a superb reputation was to report inflated data.

Reputation, instead of the “trump” ensuring good conduct, was a leading motive to engage in bad conduct. Third, we were told that giving public administrators far more power to squash teachers was the key to success in education. Lord Acton warned that absolute power leads to absolute corruption whether in Atlanta or Citi’s C-suite.

Houston should have been mentioned because the modern movement toward educational fraud began in Houston under Rod Paige – who became Secretary of Education based on massive fraudulent misrepresentation of data. Paige kicked off the testing insanity, claiming it would produce objective, fact-based policies based on what educational measures actually worked. As a famous takedown of Paige’s claims ends – the lesson is that it was too good to be true. President Bush, however, bought it hook, line, sinker, bobber, rod, and the boat Paige rowed out in.

In any event, if Fulton County, Georgia can jail educators who lie and gimmick the data, Holder can send the elite bankers to prison on the same grounds.

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    1. P Briers

      Not easier. The state can prosecute who it wants, when it wants, all it needs is the will. In this country the state lacks the will to prosecute bankers and we all know why. The old definition of an “honest politician” is one who when bought stays bought. We would appear to have too many “honest” politicians.

      1. Clancy

        Actually it is significantly easier since much more than will is needed. Prosecuting such cases is absurdly, preposterously expensive and takes huge amounts of time as well since the plaintiffs will delay and divert the court from its path by any means that they can contrive.

  1. NotTimothyGeithner

    But I seem to recall Eric Holder complaining that prosecuting financial and civil rights cases is just hard to do. My god, Holder could have to stay in the office past 5 o’clock doing work, and he is salaried. So let’s not rush to judgement.

  2. lakewoebegoner

    *** One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools. ***

    I believe it’s even simpler than that…..prosecuting teachers is perfect fodder for the local 11 o’clock news—you’re prosecuting publiclly paid low-hanging fruit, the crime is understandable (versus explaining accounting fraud or intentional misvaluation of assets) and of course—my gosh, think of the children!

    1. NotTimothyGeithner

      Local DAs have incentive to prosecute large cases, and Holder made sure to make token plea deals with the banks. A successful state AG who brought down a major financial player would destroy the Obama Administration just by existing two years into the first term because there would be no excuse. Plenty of loyal Team Blue voters if pressed will explain the lack of prosecution as a GOP plot, but with a counter example in the papers they would be more demoralized than they are.

      1. RUKidding

        Neither Team Blue or Team Red voters want to confront reality and truly see and acknowledge what’s going on. The crooks in the District of Criminals have perfected their Kabuki Show of “hiding” behind each other’s skirts and blaming the other side for all kinds of ills and perfidy. Tribalistic authoritarians can be lazy and not have to think for themselves and really DO something; just pass the clicker; lets all watch some “reality” tv show instead. Talk about the matrix….

        An example is my rightwing family members just recently celebrating quite a bit that Harry Reid has announced his retirement – as IF that’ll be this amazingly good thing. Like: what will happen then? HOW, exactly, will “things get better” just bc they can’t kick Harry Reid around anymore.

        Disclaimer: no love lost on my part vis Harry Reid. He’s as much of a crook and worthless waste of space as all of the others, no matter which Team Jacket they wear. My take? What possible difference will it make if Reid retires or stays in the Senate indefinitely?

        1. NotTimothyGeithner

          What I meant was Reid’s poor performance at achieving stated Democratic Party general goals should outrage Democrats and their voters if we lived in a slightly more just society. Local Democrats should be hounding Democratic elites a out Reid, and Reid’s continued status demonstrates the Democratic Party is nothing more than Team Blue. The man converted to Mormonism as an adult. He joined an institutional racist outfit as an adult.

          Reid should be a constant embarrassment for the rank and file for just being elected from Nevada. If the current Team Blue leadership was treated the way they deserve to be, it would demonstrate the Democratic Party has some standing within Team Blue.

      2. Mike

        I’m, in recent years anyway, a team blue voter. I blame the failure to prosecute on campaign finance laws that let the big banks payoff both sides. In concert with politicians that are more concerned about job security than doing the right thing, that’s plenty to screw everything up.

        1. hunkerdown

          Because the hierarchical authoritarian System you love was personally revealed by Gh0d HimSelf and absolutely no man shall tear it asunder? I mean, that’s basically what either party has to offer. There is simply no way to vote against the oligarchs, and quislings like yourself are the reason why.

  3. RUKidding

    Teachers have no money. Bankers have a TON of money. Sucks to be in the 99s.

    Good comments. Right now, too, teachers have been deliberately painted to be the evilest of the vile beccause unions! get paid too much! can’t be fired! blah de blah…. it’s something easy for the masses to grasp – all those dreadful overpaid teachers who can’t be fired “robbing” us of our taxes, while allegedly doing a totally shitty job. Yeah right. Of course privatized school teachers would most definitely do a “better” jawb.

    It’s all “look over there!!!!!” while the bankers are the ones robbing us blind deaf dumb stupid etc.

    And yes, Charter Schools! Another way for the crooks at the top to rip off the 99s! woot!

    And the beat down goes on…..

  4. djrichard

    I remember back when the Supreme Court was debating W vs Gore, I put it to my neighbors that W would be under the influence of big oil and other powers that be. One of my neighbors countered that Gore would be under the influence of teachers. I was the minority opinion in that conversation.

    1. RUKidding

      No love lost on my part vis Gore, but seriously??? LIke Gore is “under the influence” of teachers??? Yeah, unions, but really? Like it’s just so ridiculous. Teachers v Big Oil. Uh, er, that’s pretty much like David v Goliath, but in this case Goliath/BigOil has totally crushed David/the 99s.

      Gimme a break…

      1. djrichard

        I’m surprised I found this, but I think this captures it.

        Bush’s bully-boy campaign tactics play to his strengths, albeit unstated and unlovely ones. Many of the polls of the president have shown that while people don’t necessarily agree with the specific policies he’s pursued abroad many also intuitively believe that there’s no one who will hit back harder. There’s some of that ‘he may be a son-of-a-bitch but he’s our son-of-a-bitch’ quality to the president’s support on national security issues.

        This was from W v Kerry days. But I think the same principle was operating during W v Gore. During 2004, the idea was to continue to inflict W on the middle east. During 2000, I think the idea was to inflict W on the “deserving elements” inside the US (whatever those deserving elements are/were at the time).

        Teachers if anything represent a “big tent” mind-set, one in which there are no losers, or vice-versa one in which everyone is deserving of winning. Hence teachers weren’t divisive enough and therefore are/were seen as part of the “problem”.

        1. djrichard

          Sorry, I muffed up in doing the above link. The last two paragraphs are mine, not TPM’s.

    2. steelhead23

      Dear Dr. Black, I take issue with your analogy. It may be reasonable to compare the public impact of Bob Rubin’s fraudulent behavior to that of Atlanta’s teachers (not close, not even in the same universe), but the implied comparison of standardized testing of school children to forensic accounting of Citi’s CDO offerings is comparing something of questionable intrinsic value (standardized testing) to something of obvious value (forensic accounting). I recognize that such an implication was not the point of this piece, but I wish to bring it to light. I would encourage you to read Dr. Diane Ravitch’s work and strongly encourage all parents to Opt Out!

  5. shinola

    I may not be remembering correctly, but doesn’t Jeb Bush have some sort of financial interest in a company that benefits from the charter school movement?

    1. NotTimothyGeithner

      I thought it was Neil off the top of my head, but it is the Bush crime family after all.

    2. washunate

      Jeb Bush has been involved with education for a long time, and certainly has some financial interests, but he’s actually more of a true believer. The people in it for the money are more around him than Jeb himself.

      If anything, Jeb is more interested in undermining Democratic constituencies (unions, impoverished communities, etc.) than in financial gain.

      Which is a great example of how the Democrats have bean so unbelievably weird on areas like education policy. They have helped create the environment in which traditional Democratic constituents are now abandoning the party in droves. Rahm Emanuel and teachers unions are fighting each other in Chicago instead of fighting together against GOP policies.

      Almost as if that’s how national Democrats want things to work…

    3. Clancy

      Jeb is part of a web of “investors”, charter school cronies and others who stand to make huge profits via extraction of our tax dollars from our schools. If you search for Jebs connections to charter schools and education “reformers” you will find and article that traces all the lines of influence. Sorry for being on the device that doesn’t have all my links or I’d share it here.

  6. MyLessThanPrimeBeef

    Some people are special…exceptional.

    Bankers, abusive priests or, er, teachers…except maybe, say, street hot-dog vendors.

    They get no protection, unless they pay the local mafia.

  7. barutanseijin

    Get the little guys is a well established principle of ‘Merkin law enforcement & jurisprudence. Plus, people hate teachers so they’re an easy target.

  8. Blue Dawn

    No one will be going after the bankers even though any federal prosecutor with balls could charge the banks with wire and mail fraud.
    1) Foreclosures – banks and their lawyers routinely submit forged documents which are transmitted by wire and mail.
    2) MERS – The bundling of mortgages into “securities” through MERS to avoid local (county property transfer) is fraud.

    The feds have made a deal with banks -Especially note that some of the White House cabinet often call the banks (esp goldman sachs) when any policy decision is being considered.
    The deal is this no prosecution if the banks continue to play the charade.
    There will be no prosecution except of underlings who haven’t the means to resist.

  9. linda amick

    The Atlanta so called cheating incident calls to mind several increasingly common occurrences.
    1) Teachers are under the gun at all times and in all districts to be responsible for student performance on tests. Tests may or may not accurately measure performance.
    2) Big business via Charter schools see an easy revenue source.
    3) There are few white men involved. We much more regularly punish women and minorities in all situations.
    4) Trumped up crises are a great distraction from real issues for Americans.
    5) Looks like shock doctrine. Create a crisis so the predators can move in.
    6) More dismantling of public infrastructure.

  10. Rosario

    This cheating “scandal” is a symptom. American’s Neoliberal education is the disease. This show trial indicates a deeper misunderstanding of America’s education system. When an entire school’s funding (and its employee’s livelihood) is hinged on standardized testing without the controls of the school’s number of impoverished students, number of students, number of education programs (ECE, ESL, etc.) there will always be the potential for corruption. I suppose we can apply an inverted version of this to banking as well. When enormous wealth can be had by gaming a system illegally (or nearly so) then it will happen. However, teachers, compared to bankers, do not have the money, thus the power, so they will get the stick treatment with every transgression. Same can be said for union workers the world over.

    1. jrs

      There’s always the temptation to corruption regardless but with all this: “without the controls of the school’s number of impoverished students, number of students, number of education programs (ECE, ESL, etc.) ” there is also the Moral Justification for corruption, to help the kids in one’s school district etc., who will otherwise lose money right?

  11. Paul Tioxon

    The cities of America are the warehouse of poverty. The schools inside of those cities are the very worst not because teachers are lazy and do not care or because the students are stupid, but because of poverty. You will find no vast movement in the suburban school districts to close down public schools and open brand new privatized charter schools paid from local real estate taxes. The suburban public schools are well funded due to the fact that the highest incomes can be found there across the nation. Only in the areas where everything else is failing, underfunded, neglected and paid lip service with broken promises and disinvestment on an epic scale. The most expensive and elite of private schools are also found in the suburbs. The better parochial schools are found there as well, along side the well funded gleaming public schools. But in areas of poverty, marked by blight, substandard housing, poor municipal services, joblessness, drugs, crime, litter and graffiti across vacant factories and homes, you will find a disproportionate number of minorities who have no chance of meeting testing standards that after school private tutoring corporations and SAT prep classes easily prepare the way in middle class suburbs.

    These teachers were supposed to fail and they were then threatened with the loss of their jobs if the scores were not satisfactory. This is extortionate, holding people accountable over an outcome they have NO power or authority to ensure in the face of impoverished student bodies with little social support, poor cultural connections to the larger, well adjusted middle class curriculum of two parent families, homeowners, employed, with health insurance and the ordered, structured lives of a materially better off suburban America.

    2009 poverty rate in Atlanta GA: 27.7%

    1. hunkerdown

      This is extortionate, holding people accountable over an outcome they have NO power or authority to ensure

      No, that’s employment.

  12. economicminor

    Thanks again for another nice piece.

    What most seem to over look is the difference between local state and federal. People still want justice. It wasn’t right what those teachers did. The fact that the system sucks and isn’t working isn’t really an excuse. Those teachers took the easy way out and just cheated rather than working thru their union and/or party to get reforms done that actually worked. Laziness and greed sure are two human characteristics. The quick and easy over the long road of doing what’s right.

    I also agree that Holder is a bought and paid for worthless piece of …. There appears to still be some form of justice at the local level, even though it is IMHO not right either when the poor are preyed upon by law enforcement, sanctified by the justice system. What a FU world where the elite and their comrades/cohorts get to be highly paid predators with virtually no consequences and the rest of society is held in their contempt and either put out of work, fined or put in prison.

    Its just not right!

    1. hunkerdown

      Secular Augustinism? If we only try hard enough, we can win, therefore it must be our fault.

      Cheating in rigged games is absolutely a moral necessity, as far as I’m concerned.

  13. B. Examiner

    With mostly only virtual* liabilities, the accounting of the banking cartel as a whole is rigged, deliberately so.

    *One reason is lack of a risk-free storage and transaction service (eg. a Postal Savings Service) for what is, after all, the monetary sovereign’s money, fiat; the population is forced to lend its money to the banks or else risk burglary of their physical cash, not to mention suffer extreme inconvenience compared to modern electronic transactions. Another reason is a fiat(!) lender of last resort, the central bank, for the sake of so-called private banks.

  14. Jim in SC

    There are so many un-examined assumptions floating around about education today, beginning with the STEM movement. Our kids are supposed to learn more and more science and math so that we can outdo the Indians, Singaporeans, and Chinese, and companies will want to locate here rather than there because our children are so smart. So the schools fall in line teaching more and more math and science at younger and younger ages. Can the result be anything but anxiety for kids? Is this why 23% of tenth graders reporting drinking alcohol in the past month?

    From my perspective as a fifty something, it seems that the subjects that might be really useful to the majority of students: literature, philosophy, history, and the social sciences, are given short shrift. When they’re past thirty, these subjects will be more useful to them than calculus.

    1. norm de plume

      ‘Can the result be anything but anxiety for kids? Is this why 23% of tenth graders reporting drinking alcohol in the past month?’

      David Foster Wallace explicitly drew the link between the rise of addictions in line with the increase in parental and societal expectations, with TV being the carrier of that virus. I would argue that nowadays parental expectations are giving way to a primal fear of poverty or worse for their kids, hence the math and science coaching. Probably it is a mixture of both, with a healthy dollop of cues from the media we are immersed in.

      ‘From my perspective as a fifty something, it seems that the subjects that might be really useful to the majority of students: literature, philosophy, history, and the social sciences, are given short shrift. When they’re past thirty, these subjects will be more useful to them than calculus.’

      Perhaps, but I wonder if we’re not, in bemoaning the lack of a broader basis for education, missing an even more urgent need. I wrote this in a discussion on this theme at another blog:

      ‘Primary school children should learn the three Rs first and foremost, and participate in sport, but they should also be introduced to basic food gardening, animal husbandry, cooking and preserving, carpentry, and as they mature electrical circuitry and software design, nutrition and phys ed, accounting/finance and money/economics (these last of course need to be freed from the neolib mainstream to emphasise alternatives to the current elite-serving set-up). While we still need to produce masters of each trade, we must produce more jacks of all of them, at least the most vital. We might as a corollary end up with more masters… certainly I think we would end up with a more resourceful populace.’

      Re Professor Black’s sobering report, the ‘perverse incentives’ he speaks of, imported from the corporate world into education, bring to mind the ‘Gresham’s dynamic’ I learned about from him. If you put people in situations where they lose if they don’t cheat, they will cheat. Pity for the educators they don’t enjoy the immunity the bankers, er, bank on.

  15. Sam Adams

    It makes sense to dumb down the herd. Until and when the sheep catch on, the blood will flow down scaffolds.

  16. washunate

    One has to wonder if the prosecutorial investment in bringing down a public school test-cheating ring has less to do with concern about the students and more to do with charter schools.

    Right on. This cannot be said enough.

    The concept of public education has been under sustained assault by our bipartisan political leaders for years. We are nearly to the point where only the wealthiest and most lucky local school districts are going to survive. Public schools look nothing like they did 20 or 30 years ago.


    To explore one specific example in some detail, one thing I noticed national Democrats never connected the dots on was the situation in Ferguson with the larger context of what had been happening in the Ferguson-Florissant School District. It is currently the largest fully accredited majority minority school district in the state of Missouri. I say currently because they are probably next in line for losing accreditation now that most of the surrounding districts have been whacked. Because monitoring crap like attendance and testing have become more important than actually educating students.

    But the genius of the Democratic pundit world is that to complain about unfunded mandates and federal regulations and state meddling and inflexible standards and public private hybrids and so forth is to be branded a ‘conservative’ or a ‘libertarian’ or whatever…as if Common Core is some kind of public commons because it has the word common in it and the drug war is some kind of leftist utopia because it involves federal spending and power and jobs.

    Which is another interesting connection to Ferguson where national Democrats avoid connecting dots: the intersection of environmental destruction, corporate interests, and the national security state. Not only is Bill Gates connected to Common Core, he’s also connected to Republic Services, which has been engaged in a multi-year effort to avoid responsibility for trouble at a waste dump near the airport in Saint Louis county. After WW2, a lot of radioactive waste was dumped in northern Saint Louis county, the consequences of which are still being dealt with (or not) today. For example, by people not wanting to live in the area, which depresses real estate values, which undermines school districts dependent upon our absurd practice of local property tax funding. Especially when the public policy response to such trends in our build moar society is to create TIFs and other tax credits and incentives. Which further reduces property taxes paid to school districts.

    I highly recommend googling Bridgeton landfill, West Lake landfill, Coldwater creek, and For the Sake of All if you’re interested in a concrete example of the social context in which our public school districts are being undermined.

  17. Clancy

    Another topic that should have been raised here is that a similar test cheating scandal occurred in DC under Michelle Rhee and the investigation was a pathetic whitewash. In case you don’t know, Rhee was THE spokesmodel for all things reformy until she became too toxic due to the truth being told and going slowly viral at the grassroots level. She and all who cheated under the exact same circumstances as the Atlanta teachers were never at risk because Rhee had the protection of the reformers who did not want their policies to be exposed for the blatant frauds that they continue to be. John Merrow did a comprehensive investigative report on this. “Michelle Rhee’s reign of error” or something very close to that.

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