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Update: Researcher on For-Profit Schools Says She Disclosed Tie to Investment Firm

Last week, we reported that an unnamed investment firm had paid a researcher to draft a letter to U.S. Education Secretary Arne Duncan alleging that for-profit colleges and universities were signing up students from homeless shelters.

Several shelter officials who the researcher recruited to sign the letter told us they were unaware she was working for a firm that might stand to profit if Duncan's department cracked down on the schools, as it is considering under rules proposed today to protect students from taking on too much debt.

Now the researcher, Johnette McConnell Early, has provided an e-mail she wrote to one of the letter's signers, Neil Donovan, the executive director and president of the National Coalition for the Homeless, in which she refers to "the investment firm that is paying me for my time while I do this research."

Early coordinated 20 executives from homeless shelters and services around the country to sign the letter. She has declined to name the firm that paid her, but Donovan told us that an attachment to Early's e-mail identifies it as CPMG Investment Management Company of Dallas. The firm did not return calls, and Early would not comment.

Donovan initially told ProPublica that he did not know Early was working for a firm that potentially could benefit if stocks for for-profit schools took a dive. Short sellers' interest in the sector has been growing, according to Will Duff Gordon, an analyst with the research firm Data Explorers. Prominent short-seller Steven Eisman has likened for-profits to the subprime mortgage industry.

Asked about Early's May 12 e-mail, Donovan stated that, while he noted that she was being paid by an investment firm to do the research, he did not understand that the firm might have a direct financial stake in the issue.

Instead, he said he assumed Early was an independent researcher and had succeeded in securing funding. "That's how I do my job," he said. "I do research and we find companies to fund our research. We say, 'Can you give us $10,000 to do this report on homelessness and food.' And they say, 'Yeah.' And then we do the research and we'll give them credit for it."

Early provided the e-mail through her lawyer and hung up when ProPublica called for explanation.

Donovan said he stands by his earlier statements that he was angered to learn of Early's connection to the investment firm. Both Donovan and Early's lawyer declined to provide the e-mail attachments.

Donovan said the attachment about the investment firm "didn't make sense."

"I'm not an investment person, so it's kind of jargon that is not familiar to me," he said. "I think it's a real stretch to assume that I would sit down and I would connect all these dots and assume the worst," he said.

ProPublica's Nicholas Kusnetz contributed to this post.

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