Federal Judge Holds DeVos in Contempt for Illegally Collecting on Corinthian Loans - $100K Fine

U.S. Magistrate Judge Sallie Kim held Education Secretary Betsy DeVos in civil contempt of court on October 24, 2019, for violating a preliminary injunction barring the Department of Education from collecting on loans from 16,000 former Corinthian Colleges students and fined the Department $100,000. The extraordinary contempt finding against a sitting Cabinet secretary documented that DeVos’s Education Department had illegally seized wages and tax refunds from defrauded students in direct violation of a court order—a stunning example of kleptocratic governance where powerful officials ignore judicial orders that protect fraud victims.

Judge Kim’s ruling found that DeVos and the Education Department had made “only minimal efforts to comply with the preliminary injunction” and that “there is no question that defendants violated the preliminary injunction.” After the court ordered collection to stop in 2018, more than 16,000 borrowers were erroneously told they owed payments, and many had payments garnished from wages or seized from tax refunds by the federal government. The Department blamed a “miscommunication” and claimed the violations were inadvertent, but the court rejected these excuses.

The contempt finding was extremely rare for a Cabinet secretary and revealed DeVos’s systematic obstruction of relief for defrauded students. Despite court orders, investigations by 20 states, findings of systematic fraud by Corinthian, and the Obama administration’s commitment to full debt relief, DeVos’s Education Department continued collecting on loans from students who attended a college that defrauded them, collapsed, and filed for bankruptcy. The collections occurred while DeVos simultaneously froze borrower defense regulations and implemented partial relief formulas that denied full discharge.

The $100,000 fine was nominal—a rounding error for the Education Department—but the contempt finding documented DeVos’s lawlessness. She had violated regulations, ignored court orders, and continued collecting from fraud victims while protecting the for-profit college industry. The case exemplified regulatory capture so complete that the agency designed to protect students actively victimized them in violation of law and court orders. DeVos’s defense—that the violations were mistakes by low-level employees—was rejected by the court, which found systematic failures of compliance.

The contempt ruling came after years of DeVos blocking relief: freezing borrower defense rules in June 2017, implementing partial relief formulas in December 2017, overruling her own Department’s fraud findings, and slow-walking processing of claims. Project on Predatory Student Lending, which represented the students, documented a pattern of deliberate obstruction. The ruling forced some debt relief but DeVos continued fighting in court to minimize relief and protect for-profit colleges. The contempt finding showed that in Trump’s kleptocracy, even judicial orders couldn’t stop officials from serving industry over public interest—officials simply ignored courts, paid nominal fines, and continued the conduct.