OIG: Office of Inspector General
   Current Section

Investigative Report

  U.S. Department of Justice

United States Attorney for the
District of Columbia

Judiciary Center
555 4th Street, N.W.
Washington, D.C. 20530

Monday, March 19, 2007
For Information Contact Public Affairs
Channing Phillips  (202) 514-6933


Washington, D.C. - The United States has reached a settlement in a conflicts-of-interest matter with Dr. Eugene W. Hickok, Jr., a former high-ranking Department of Education official who served in the Department from 2001 to 2005, announced U.S. Attorney Jeffrey A. Taylor and U.S. Department of Education Inspector General John P. Higgins, Jr. today. Under the terms of the settlement, Dr. Hickok admits liability and has agreed to pay $50,000 for continuing to hold bank stock that he was required to sell under conflict-of-interest rules.

An investigation revealed that Dr. Hickok owned over 800 shares of stock in Bank of America, a financial institution that participates in and benefits from the Federal Family Education Loan Program (FFELP). Under the FFELP, students receive loans from participating banks to pay their costs of attending college; and banks receive federal guaranties to insure them from loss. Banks also receive interest subsidies on loans while students are still in school. The Department of Education is responsible for ensuring that banks comply with program requirements and that payments to banks are accurate.

In March 2001, Dr. Hickok was confirmed by the U.S. Senate as Under Secretary of Education, the number three position in the Department. In January 2004, Dr. Hickok was nominated to be Deputy Secretary of Education, the number two position; and, in April 2004, with the U.S. Senate not having acted on his nomination, Dr. Hickok received a recess appointment to be Deputy Secretary. When he was nominated, in January 2004, Dr. Hickok was ordered by ethics officials in the Education Department, and by officials in the White House, to sell his bank stocks if he were to become the Deputy Secretary of Education and even if he were to remain as Under Secretary.

Dr. Hickok reluctantly agreed to sell his bank stock, and did sell other bank stock owned by his family; but he did not sell his more than 800 shares in Bank of America, despite repeated questions from ethics officials in the Education Department asking him whether he had divested all of his bank stocks and despite being informed by a financial adviser that his Bank of America shares had not been sold at the time his family's other bank shares had been sold.

While Dr. Hickok held Bank of America stock, he participated in policy matters that came before him in his official capacity that may have had a direct and predictable effect on Bank of America. Dr. Hickok admitted liability by virtue of his failure to divest his Bank of America shares, and he agreed to pay $50,000 to settle the matter.

In announcing the settlement, U.S. Attorney Taylor and Education Department Inspector General Higgins praised the outstanding investigative efforts of Office of Inspector General Special Agents John J. Hendrickson and James W. Roberts. They also commended Assistant U.S. Attorneys Rudolph Contreras, Keith V. Morgan, and Timothy G. Lynch, who handled the investigation and settlement discussions.

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Last Modified: 03/21/2007