‘Awash in Cash’ Ed-Tech Firms Still Vie for PPP Cash

By Courts Monitor Publisher, Sara Schinella

courts blogCollective eyebrows have been raised across several industries as the government discloses just who received those Paycheck Protection Program (PPP) loans/grants, and education providers are no exception.

The controversy falls well short of Shake Shack returning that $10 million, but several online-education providers have drawn attention. Of course, that could change with California and other states headed to a fall back-to-school period like no other; even edtech firms may find themselves facing more pressure.

For venture-backed companies, the stakeholder-shareholder divide could become a sticking point.

Obviously, the public policy question arises: When a company has access to capital from publicly traded equity, why would they need to access government funds meant to provide a lifeline to small businesses? Yet, as one report noted, “… even an investment firm that has supported dozens of edtech startups appeared on the [PPP] list.”

To make the point more clear, note the opening words of a story in the education community news website EdSurge, where Managing Editor Tony Wan wrote: “Even the biggest names in the education technology industry, awash in private capital, are seeking public support during the pandemic… a review of the data by EdSurge for notable education technology software and service providers found more than 60 for-profit and nonprofit organizations that were approved for a PPP loan between $150,000 to $5 million. (ISTE, the parent organization of EdSurge, was also approved for such a loan.)”

(I should note that ISTE, or International Society for Technology in Education, is a nonprofit educator-membership organization and EdSurge, launched in 2011, is now an “independent news and research” initiative of ISTE. I might also note that PPP approvals offer a range of “up to” an amount and it remains unclear just how much of the approved money firms have accessed and used.)

After setting the table, Mr. Wan underscores his point: “And though the program was designed to help small businesses, some education organizations approved for loans have previously raised hundreds of million from private backers. Even an investment firm that has supported dozens of ed-tech startups appeared on the list. . . investors themselves are also split over whether internet startups should take advantage of an essential lifeline targeted toward local mom-and-pop shops that operate in-person businesses without venture capital support or connections.”

Some companies that seemed to illustrate Wan’s point were called out for special attention, like Altitude Learning, which EdSurge noted has raised the most capital among the listed firms: some $176 million. EdSurge said the San Francisco-based company, “. . .which now offers an online education platform to schools and families, was approved for a loan between $2 million to $5 million.”

In addition, Sphero, the former consumer robotics toy firm that pivoted to the education market, reportedly raised $148 million from investors — and was also approved for a loan between $2 million to $5 million.

RaiseMe, described as “a provider of an online scholarship platform for high school students” that previously raised $31.5 million from investors, was also approved for a PPP loan in April.

I noticed that tutoring outfit Noodle Pros, also made the EdSurge list of potential shame. They were approved for up to a million dollars of PPP funding while listing among the most funded of the firms, at $36.3 million. I know about the Noodle education companies mostly through Noodle Partners, an online program management company, and because Noodle founder John Katzman was also a high-profile founder of 2U, the big OPM that fuels the University of Southern California program I’m attending this fall. Mr. Katzmann left that company several years ago, and Noodle Partners is now a competitor.

So, EdSurge has previously reported that the four Noodle companies have been collectively funded for more than $40 million and that Mr. Katzman determines how that money gets allocated among several of the “Noodles.” It might be argued that, with that sort of clout, it’s another million from Uncle Sam? To its credit, EdSurge has previously disclosed that Mr. Katzman has been an investor in their company.

In June, it was reported that the Noodle raised another $16 million to address the Covid pandemic-fueled interest in remote learning that “significantly accelerated interest in its services.” That was raised through a Series B round led by ValueAct Spring Fund and joined by Lumina Foundation and existing investors.

The industry-focused among us may recall that, way back in April, the Small Business Administration issued guidance for PPP that companies applying for coronavirus relief funds must certify that the loans are necessary and that they cannot tap their sources of funding. The Noodle $16 million was raised through what’s called Series B fundraising, led by Value Act Spring Fund, the Lumina Foundation and existing investors. Clearly, access to venture capital might qualify Noodle companies as seeming to “have other access to funding.”

Actually, we should be slow to judge. Anyone in finance will tell you it remains easy to make the case for even those “awash in private capital” to take the PPP money, and multi-entity setups like Noodle illustrate new advantages for taking taxpayer money in one entity and raising capital in another. We might assume that tutoring and online education companies are enjoying windfalls right now, but could the future be more uncertain? If your job is to “extend the runway,” then an extra million here and there has to be considered.

Now, the only challenge will be if the edtech venture-funded companies must endure the social pushback of other such firms, like chain restaurants or Trump-affiliated operations. My guess is not, because except for very fine industry watchdogs like EdSurge, the public gaze is focused elsewhere.

So, perhaps the lesson is that PPP offers the well-funded an even longer runway, as they say. But that doesn’t mean the runway lacks the occasional pothole.

Update: Court sides with Mary Trump

The Washington Post reports that one day after imposing a restraining order to allow the parties to present arguments at a hearing about whether or not Mary Trump, the President’s niece could publish her tell-all book, “A New York court on Wednesday lifted a temporary restraining order against the publication of a book by President Trump’s niece, enabling publisher Simon & Schuster to continue printing and distributing the explosive insider account by Mary L. Trump.”

Publication of Trump Tell-All Book Halted by New York Judge

The book jacket for “Too Much and Never Enough” by Mary Trump. Image credit: Simon & Schuster as published in The Washington Post.

The book jacket for “Too Much and Never Enough” by Mary Trump. Image credit: Simon & Schuster as published in The Washington Post.

Originally filed in Queens County (New York) Surrogate’s Court but rejected, President Donald Trump’s brother, Robert Trump, then filed a petition with the New York State Supreme Court to request an injunction that would halt the publication of a tell-all book scheduled to be published by the President’s niece on July 28.

According to The Washington Post, “A New York judge on Tuesday temporarily blocked the publication of Mary L. Trump’s scathing book about her uncle, President Trump, which describes him as the ‘world’s most dangerous man,’ saying no copies can be distributed until he hears arguments in the case.”

The article explains that Judge Hal B. Greenwald ordered a hearing next month and that Robert Trump has argued that Mary Trump is not allowed to publish anything about her family as part of an inheritance settlement.

Given the temporary restraining order, it is uncertain whether the book, “Too Much and Never Enough: How My Family Created the World’s Most Dangerous Man,” will publish in late July. The book is already topping the bestseller lists in presales.

Roundup Settlement Announced

Pille_BayerWhen Bayer took over Monsanto in 2018 for $63 billion, it inherited myriad legal disputes around its glyphosate-based weedkillers, including its best-known product, Roundup. Bayer announced earlier this week that it will settle those disputes.

“Bayer AG, after more than a year of talks, agreed to pay as much as $10.9 billion to settle close to 100,000 U.S. lawsuits claiming that its widely-used weed killer Roundup caused cancer, resolving litigation that has pummeled the company’s share price,” Reuters reports.

“Bayer wisely decided to settle the litigation rather than roll the dice in American court,” said Ken Feinberg as reported by Reuters. Feinberg was appointed settlement mediator by a federal judge over a year ago and has mediated other high-profile legal disputes, including the September 11th Fund, the BP disaster, and Volkswagen’s diesel emissions violations.

California’s AB3070 promises to address discrimination in jury selection

Sacramento State Capitol building on Capitol Way. Photo Credit: Jason Doiy/ALM as reported by The Recorder, 6/16/20.

Sacramento State Capitol building on Capitol Way. Photo Credit: Jason Doiy/ALM as reported by The Recorder, 6/16/20.

AB3070 easily passed the California State Assembly this month. The legislation targets the discriminatory use of peremptory challenges in jury selection.

Cheryl Miller for The Recorder explains, “The measure would bar the use of peremptory challenges to remove potential jurors on the basis of race, ethnicity, and gender. The bill would require attorneys trying to strike a would-be juror to show by clear and convincing evidence that their rationale is not related to the person’s group identity. Appellate courts would be required to review the strikes de novo.”

The next step for the bill is a policy committee hearing in the California Senate.

Avenatti uses COVID-19 as excuse to move trial to California

Photo credit: Mark Lennihan/ AP as reported by Law.com.

Photo credit: Mark Lennihan/ AP as reported by Law.com.

“Michael Avenatti has again asked a Manhattan federal judge to transfer his pending criminal case to California, where he is also under federal indictment, arguing that complications from the COVID-19 pandemic made it impractical to proceed with separate trials on two coasts,” reports Law.com.

Avenatti became a household name when he represented adult-film star Stormy Daniels in her lawsuits against President Donald Trump. Avenatti wants to move the case accusing him of stealing from Daniels from New York to Los Angeles, where he is charged with “tax fraud, bankruptcy fraud and other offenses in a 36-count indictment alleging that he had stolen from former clients.” 

In a six-page transfer motion he argues both cases should be tried together due to court backlogs and public safety. 

Court Case in California will resume in spite of COVID-19

Even while admitting that it will be unlikely that jurors will be available, prosecutors trying a criminal case against Yevgeniy Aleksandrovich Nikulin, a Russian man charged with hacking into Bay Area tech companies, have told a federal judge in San Francisco they’re prepared to resume a criminal trial that’s been delayed due to COVID-19.

According to Law.com, “U.S. District Judge William Alsup pressed pause on the proceedings in the trial last month after a potential witness in the case came into contact with someone displaying symptoms of a COVID-19 infection… After the government filing hit the docket Alsup changed Thursday’s telephonic status conference into an in-person hearing, signaling that the judge could be contemplating making a substantive ruling like declaring a mistrial that would require Nikulin to be present.”

Read more.

Hunter Biden, A Liability on the Precipice

Photo: Visar Kryeziu/AP, as published in CityWatch LA, 12/30/19.

Photo: Visar Kryeziu/AP, as published in CityWatch LA, 12/30/19.

By Sara Corcoran, Courts Monitor Publisher (Originally published in CityWatch LA, 12/30/19)

 

DC DISPATCH-Amidst Trump campaign slogans calling for Hunter Biden’s location, one thing is clear. . .we all know where Hunter is — Los Angeles — and hope he is enjoying his new life in Citywatch’s backyard.
But in wishing him well, we would be remiss if we did not mention the serious threat he presents to his father’s presidential prospects. Hunter Biden (photo above, left) is an unpredictable tracking cookie who follows his father’s campaign, displacing bytes of data wherever he travels. Furthermore, he appears to be a liability that the campaign or its leader has strongly overlooked in assessing Biden’s chances of winning the presidency. Absent a credible strategy to block Hunter’s cookie trail, he will continue to diminish the fungibility of his father’s candidacy — stonewalling or calling members of the audience on the campaign trail “damn liars” will just not work. 

Let me start by saying that I admire Joe Biden as a candidate and public servant. This courageous American has dedicated his entire life to the American people both domestically and abroad. He has endured unimaginable tragedies which makes his ability to connect with fellow survivors genuine. I do not question his patriotism nor his frontrunner status in national and swing-state polling, but I am left feeling very uncomfortable that his former partner in the Executive Branch has failed to endorse him. 

According to some media reports, Obama is not convinced that Biden has what it takes to clinch the nomination and beat Donald Trump. Absent the overt and covert blessing of Obama, we are left to infer that he knows something about the former Vice President that the general public does not. What can it be? His health? His age? Or some secret information that he’s gleaned from classified intelligence reports? 

Obama, during the last year of his presidency, had the insider track when it came to monitoring the impact Donald Trump was having on the U.S. elections — he may have underestimated the impact, but he knew that the Russians were working to harm Hillary Clinton and to push for Donald Trump. In hindsight, I’m sure he feels his administration should have acted more forcefully as a former member of his cabinet was eviscerated by a very successful Putin-led assault. Obama is likely flustered at the prospect of witnessing another member of his former cabinet suffer the same tortious interference and I suspect he thinks that possibility is very real. 

As the activist, silent investor in the Democratic party, Obama knows the assets and liabilities of each candidate on the debate stage. When the former president speaks publicly about the 2020 contest, it has been to caution the party against going too far left. So, when he was reported to be telling top democratic donors that “Elizabeth Warren is a capable candidate,” it seems as if he was steering wealthy donors to look elsewhere — a definite slight to Biden, who served him loyally for eight years. 

While out on the campaign trail, Joe Biden has failed to competently address questions and concerns related to his son. While many candidates have previously enjoyed the rule that family is off-limits, in the age of Trump and his tweets, this is no more, and candidates must adapt. Nothing is off-limits and everything is on the table, including Hunter on a platter. 

Hunter Biden’s ongoing child support and paternity case illustrate the type of prey that Trump, a known carnivore, will pounce on, feasting on every savory morsel of output. If Trump had known that Hunter would risk gravely harming his father by engaging in an open-source civil matter, our President would not have needed to risk abuse of power and obstruction of Congress by mining for dirt in Ukraine. Trump could simply have waited for Lunden Roberts, Biden’s baby momma, to produce a trove of public and humiliating documents. 

This case cried for a quiet settlement, but for some reason, Hunter first refused to acknowledge paternity and then to make steady payments to the child he knew he had helped produce. By his arrogant conduct, Hunter managed to anger the judge who has denied a protective order in part and compelled him to appear for a deposition in Arkansas in early 2020. Hunter will now be forced to supply five years of financial documents (instead of three) which include his time as a Burisma board member, his work in China and who knows where else he has been conducting business. These will be made public in redacted form. 

D & A Investigators, a private, Florida-based company is assisting with the effort of digging up dirt on Hunter and has filed a series of salacious documents with the court.

These allude to a series of criminal investigations that have tenuous links to Hunter at best, but they have become part of the court record. More importantly, it is not known who is footing that bill. In all likelihood, the T-shirt catchphrase, “Where is Hunter” will soon give way to, “I’ve got the Dirt on Hunter” from the Trump campaign. 

Hunter’s recent claims of poverty, rebuked by the purchase of an upscale home in the Hollywood Hills of Los Angeles, does not help his credibility. And though he lives far from Little Rock, it is clear that Hunter Biden will have to deal with this now very public proceeding and discovery process. It would have been the more prudent move to shield his father, his 18-month-year-old infant, and his newly pregnant wife, Melissa Cohen Biden, the pain of a public display by reaching an out of court settlement. 

In the current political environment, where dirt and kompromat have more value than the actual record, the younger Mr. Biden will continue to be an onus to his father’s campaign. Trump has demonstrated time and again that he will risk all to mine for valuable “oppo” data. Since it will now be available in plentiful supply in Little Rock, Trump won’t have to rely on Ukrainian cutouts. He will soon learn the utility of having an open legal proceeding out there for the press to dissect. The current Commander in Chief will benefit greatly from the subpoena of Hunter’s financial records, emails, and other communications and he won’t even have to show a trace of the clumsy machinations he and Giuliani used in Ukraine. 

The Biden family must address this unresolved liability head-on even if it involves acknowledging wrongdoing and errors of judgment. Candidate Biden cannot plead the loving father, asking no questions of his errant son. Hunter can no longer claim his finances are a private matter. There are simply too many areas of questionable conduct — from allegations of shady business dealings and child support obligations. Both Bidens need to sit down together for a lengthy, no-holds-barred interview and explain to the American people how they erred in the past and how they both intend to behave in the future. If Biden is to be elected President, it is the only way to take a step back from the precipice. If successful, they will be able to assuage voters’ fears and blunt the onslaught of oppo dirt that Trump and his campaign will keep hurling their way.

(Sara Corcoran writes DC Dispatch and covers the nation’s capital from Washington for CityWatch. She is the Publisher of the California and National Courts Monitor and contributes to Daily Kos and other important news publications.)

 

Dr. Dre, USC Among Those Disrupting Online Education

Sara Corcoran is correspondent, contributing editor, and founding publisher of the National Courts Monitor & California Courts Monitor.

Sara Corcoran is correspondent, contributing editor, and founding publisher of the National Courts Monitor & California Courts Monitor.

Courts Monitor Publisher Sara Corcoran takes an interest in Dr. Dre and ongoing higher education at CityWatchLA. See the story here:

Dr. Dre, USC Among Those Disrupting Online Education

Trump Games the Legal System but Will It Last?

Photo: AP/Alex Brandon, as published in CityWatch LA, 12/2/19.

Photo: AP/Alex Brandon, as published in CityWatch LA, 12/2/19.

by Sara Corcoran, Courts Monitor Publisher (Originally published in CityWatch LA, 12/2/19)

DC DISPATCH-In a normal judicial proceeding, when the Court speaks, it does so through orders. A court order is a command issued by a judge. If a judge orders you to appear for your speeding ticket hearing, failure to do so can result in a bench warrant or a default judgment. Penalties can also include jail time and fines. 

A subpoena, also an order of the court, can be issued by either of the parties to a civil action and, if approved by the judge, can require a person to produce documents or appear in person to provide testimony. And like most CityWatchers, when faced with a court order, a subpoenaed party would cooperate. For many of us that may mean paying a speeding ticket or getting current on child support, because the fear of being held in contempt of court or jailed would frighten most people, especially given their unfamiliarity with judicial process. 

Could you ever imagine being completely immune from any court order and/or subpoena? Life would be very different for most of us, if we thought that the arm of the law could in no way reach out and touch us. Yet, this is the position that Trump is claiming. He maintains that he is basically above the law and needs to answer to no one for his conduct. He also argues that anyone who works for him is similarly exempt — in effect, claiming absolute immunity from any legal process. We are witnessing in real-time what life is like for a person who believes this. In a country that promotes the rule of law, this monarchical conduct is simply not sustainable if Congress and the Courts are to have a role in running the country. 

In his recent book, “The Warning,” Anonymous notes President Trump’s familiarity with the legal system. When Trump became President, he had something like 3000 outstanding cases to his name. Anonymous recalls a conversation Trump had with a group of staffers when he paraphrased, “If you want to irritate someone threaten to sue, but if you really want to scare someone, file a lawsuit against them.” Trump is in the luxurious position of being able to rely on an army of Justice Department lawyers to bring his claims, however frivolous, and he no longer has the check of legal fees to control his conduct. He also has a group of lawyers led by Rudy Giuliani who work for him pro bono. Talk about carte blanche. No wonder he is tempted to abuse the American legal system. 

We have a litigious expert in the White House and while rules of civil procedure may not be his strength, he is very familiar with the benefits of delay. Trump is now for the first time in his life concerned with outcomes. Even if he loses in the lower courts, there is always a higher court to appeal to and more time to prevent the public from getting access to whatever information he is hiding. When coupled with his constant attacks on Twitter and in the press designed to undermine whatever position his opponents may take, Trump has manipulated the legal system to his ultimate advantage — likely assuring that he can defer any negative court decisions until after the election of 2020. 

There are a few risks on the horizon for the President, however. The litigation calling for him to produce his tax returns is advancing at a faster than expected pace and is already pending review by the Supreme Court. The Court could decide to take one of the cases and stall a resolution until next year, or it could decline to hear the cases, letting the lower courts’ decisions stand — in which case, the President could find himself suddenly exposed and forced to produce his taxes. 

The House Permanent Select Committee on Intelligence (HPSCI) has issued countless subpoenas for both testimony and documents. Trump has instructed his subordinates at the Department of State, the Department of Defense, the Department of Energy, and the Office of Management and Budget (OMB) not to cooperate in any way, citing an unfair impeachment process. This obstruction of Congress is unprecedented and exceeds even the Nixonian example. 

While the Democrats have managed to build a credible case working around the top layer, the testimony of Secretary of State Mike Pompeo and OMB Director Mick Mulvaney under oath, should under normal circumstances present the President’s defense that his conversation with President Zelensky of Ukraine was a proper exercise of his foreign affairs powers and not, as Congress is alleging, an improper request to a foreign government for Trump’s personal benefit in a political campaign. By refusing to cooperate in any fashion, it is logical that Congress would infer guilt from these parties’ obstruction. Congress has also wisely refused to engage with Trump in the courts in trying to enforce subpoenas against these parties. The Congressional figures pressing Trump’s indictment know his game and are pressing on without them. 

Even though Trump and his legal counsel expressly ordered parties not to appear before the HPSCI, it is amazing how many people have shown extraordinary courage to testify both secretly and in public notwithstanding the Presidential orders. The recent conviction of longtime Trump confidant Roger Stone for lying to Congress may also have served as a harbinger. When there is a conflict between the Congress and an Executive branch leadership that may be engaged in wrongdoing and covering up that wrongdoing, it may be prudent to comply with the subpoena. While the long arm of the law has not yet reached into the White House and taken hold of our President, it has caught up with some of those around him. If individuals very close to the President are now concerned that the blanket claim of executive privilege won’t protect them indefinitely, the President himself should be worried as well.

(Sara Corcoran writes DC Dispatch and covers the nation’s capital from Washington for CityWatch. She is the Publisher of the California and National Courts Monitors and contributes to Daily Koz and other important news publications.)