Former Starbucks CEO Howard Schultz was a co-founder of Maveron, a venture capital group that invested in a for-profit university and a financial firm that helped the wealthy dodge capital gains taxes. | Jason Redmond/AFP/Getty Images 2020 Elections Schultz's toxic investments: For-profit college, tax shelter for the rich The coffee mogul's finances have come under scrutiny since he floated an independent bid for president.

Howard Schultz, the billionaire former Starbucks CEO and possible independent presidential candidate, invested millions of dollars and personally owned stock in Capella University, a troubled for-profit college that overcharged the federal student loan program hundreds of thousands of dollars, records show.

Schultz, a co-founder of the venture capital group Maveron, invested in the Minnesota-based university in 2003 and exited when the online institution went public in 2006, according to an analysis of federal records, press releases and Maveron’s website.


Schultz touted the relationship in a 2003 news release announcing Maveron’s $7.5 million investment in Capella’s online education programs.

“Maveron was attracted to Capella's passion and vision for higher education,” Schultz said, giving Seattle-based Maveron a minority stake in Capella and making it a resource for its management team. “Capella wants to transform education for working adults by making the online experience as compelling and rewarding as possible.”

COUNTDOWN TO 2020 The race for 2020 starts now. Stay in the know. Follow our presidential election coverage. Email Sign Up By signing up you agree to receive email newsletters or alerts from POLITICO. You can unsubscribe at any time. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Schultz’s own financial ties to the education chain run deeper. A filing with the Securities and Exchange Commission in 2008 shows the coffee mogul personally reported owning 50,000 shares of Capella stock.

Schultz has taken heat since announcing he’s considering a White House run as an independent. Leading Democrats say he has no chance of winning and will help President Donald Trump win reelection by playing spoiler. While Schultz has pledged he won’t run if that’s the case, in the days since he launched his book tour, operatives and journalists have been scrubbing his record. The investments, which currently appear on the Maveron website along with descriptions, were flagged to POLITICO by a critic of Schultz’s potential candidacy.

For-profit colleges have become a political flashpoint as the cost of education rises and student debt soars. Government watchdogs have found several instances of the for-profit colleges abusing federal loan programs and over-spending on advertising and recruitment, while presiding over low completion rates.

Democratic Sen. Kamala Harris, as attorney general of California, led a crackdown against the institutions and has publicized her effort early in the 2020 campaign. In the Senate, she joined with Sens. Elizabeth Warren, Bernie Sanders and others in calling for more student protections.

Capella has not been spared.

The Office of the Inspector General in a 2008 audit found it overcharged the student aid program by $588,000 for the school years between 2002 and 2005 — and recommended that Federal Student Aid officials require the university to return the improperly retained funds. Capella, in its response, acknowledged it failed to return the money it received for students who dropped out early, but pegged the number at $278,883.

A Senate Health, Education, Labor and Pensions committee examination of the university in 2012 identified other problems. Its report cited a "serious concern" about Capella's student withdrawal rate and found that the university spends "an unusually high portion of revenue on marketing and a relatively small amount on instruction for its exclusively online program,”

In addition to Schultz's close ties to the for-profit college, records show that Maveron also invested in a financial firm that housed a unit dedicated to helping the wealthy dodge hundreds of millions in capital gains taxes.

Maveron’s website describes Quellos Group, which was acquired by BlackRock in 2007, as among the largest fund-of-funds managers in the world, with more than $20 billion of assets managed across the spectrum of alternative investment products. Maveron began investing in Quellos in 2000, and Schultz’s Maveron co-founder, Dan Levitan, served on its board.

The New York Times reported in 2010 that Quellos’ co-founder, Jeff Greenstein, admitted the tax shelters, which were sold from 1999 to mid-2006, cheated the IRS out of $240 million in taxes. A federal judge the following year sentenced Greenstein and a Quellos attorney, Chuck Wilk, to four years and two months in prison for devising and executing the scheme.

Schultz acknowledged the investments in a statement, but said he divested from them before any issues became public. But in both cases, the problems were occurring while Schultz was an investor.

