Missouri Treasurer Vivek Malek is reviewing the state’s contract with ClassWallet after a recent data breach in Arizona linked to the company exposed sensitive student information prompting security, accountability, and cost concerns related to its education funding platform.
ClassWallet, a financial technology provider contracted by Missouri to manage various education-related accounts and public fund disbursements, came under scrutiny in July 2023 when Arizona officials revealed that its platform had compromised the names and disability categories of thousands of students enrolled in that state’s Empowerment Scholarship Account (ESA) program.
The breach triggered an investigation by the Arizona Department of Homeland Security, which questioned why parents had not been notified and whether any laws had been violated. Arizona Superintendent of Public Instruction Tom Horne insisted the breach was isolated and resolved, claiming only one user had been affected, a conclusion that has been challenged by critics citing a lack of transparency.
Arizona’s ESA program, just like Missouri’s, which uses ClassWallet to disburse funds to families for private school tuition and homeschooling, has also been criticized for spiraling costs and limited oversight.
ClassWallet’s Role in Missouri
In Missouri, ClassWallet manages the digital platform used to distribute funds for the MO Scholars Program, the state’s tax credit scholarship initiative. The program provides private school tuition assistance to eligible K–12 students, including those with disabilities or from low-income families.
“The ClassWallet contract was initiated under the prior treasurer’s administration and awarded through the state’s formal procurement process, managed by the Office of Administration’s Division of Purchasing,” stated the Treasurer’s office. “ClassWallet was the sole bidder and received the contract accordingly. The contract is set to expire on June 30, 2026, and a new procurement will be required before that date.”
Through ClassWallet, families access and spend scholarship funds on approved educational expenses. The platform was adopted to streamline fund distribution and reduce paperwork, but recent concerns from other states have prompted Missouri officials to reassess whether the increasingly woke vendor remains the right fit for a state that Missouri Republicans repeatedly claim is ending wokeness.
Chinese Foreign Investment Links Raise National Security Concerns
Beyond children’s security questions, ClassWallet’s early funding sources have sparked additional concerns. In an article written by 48 State News, the company received investments twice from Sinovation Ventures, a Chinese-based venture capital firm co-founded by former Google China president Kai-Fu Lee. The U.S. Department of Defense has identified Sinovation as part of China’s “technology transfer strategy,” which aims to acquire foreign innovations to strengthen China’s economy, military, and surveillance capabilities.
Sinovation counts Chinese government entities among its investors, including the Xiamen Municipal Finance Bureau, which contributed $68 million. The firm invests heavily in artificial intelligence, robotics, and education technology, sectors the Chinese Communist Party prioritizes. Two of Sinovation’s portfolio companies, including facial recognition firm Megvii, have been sanctioned by the U.S. government for their roles in human rights abuses against Uyghur Muslims and supporting Chinese military modernization.
These connections underscore Treasurer Malek’s wider efforts to divest Missouri’s public pension funds and 529 college savings plans from Chinese investments. He argues this isn’t just a symbolic gesture but a necessary move grounded in both financial prudence and national security. Malek points to China’s aggressive posture toward the United States and the risks that American assets in China could be seized amid geopolitical conflict. “If this isn’t the time to divest from China, then when is?” he said.
While some leftists in academia have dismissed the push as political grandstanding, Malek maintains it reflects sound judgment. He has also criticized certain fund managers for resisting divestment despite data showing portfolios without Chinese exposure often perform better. “As a fiduciary, I need to ensure funds are invested in safe, secure markets,” Malek said.
It appears Malek is preparing to practice what he preaches as he prepares to divest his office of vendors with connections to the Chinese Communist Party, such as Classwallet.
Political donations from ClassWallet leadership have added another layer to Missouri’s review.
If worries over data breaches and ties to the Chinese Communist Party weren’t bad enough, the cherry on top looks to be the company’s political contributions.
Company founder and executive chairman Jamie Rosenberg has made several contributions to Democratic-aligned political groups, including ActBlue, the Democratic National Committee, and the “Stop Republicans” campaign between 2017 and 2024. The Stop Republicans Campaign is part of the Progressive Turnout Project, which focuses on “resisting the Republican Party and Donald Trump’s right-wing legacy” and reportedly invested heavily in Democratic campaigns during the 2024 election cycle.
Other ClassWallet board members have similar histories:
- Anil Arora, a board member, donated to Kamala Harris’s 2020 presidential campaign and the Harris Victory Fund.
- Andy Kaplan contributed to Democratic committees, including Biden for President and the Harris Victory Fund.
- Rob Stein made donations to Democratic candidates and PACs between 2018 and 2022.
Some conservatives have also raised concerns over how ClassWallet chooses to use larger corporations, with liberal dispositions, over smaller businesses who tend to have a more conservative mindset.
Kehoe Signs EO 25-18 and Rooting Out DEI
While these donations are not illegal or unusual for private executives, Missouri officials are weighing whether they conflict with the state’s current contracting standards under Executive Order 25-18, signed by Gov. Mike Kehoe earlier this year. That order prohibits state agencies from spending public funds on diversity, equity, and inclusion (DEI) initiatives and requires a review of all vendors for ideological alignment with Missouri’s policy priorities.
“Treasurer Malek has made it clear to our partners that the Missouri State Treasurer’s Office will not support practices that elevate Diversity, Equity, and Inclusion (DEI) criteria above fiduciary duty or merit-based decision-making,” the Treasurer’s Office added “As he has been quoted as saying: “[t]he notion that success is only possible with DEI policies is both patronizing and false. Victimhood mentalities limit potential; merit-based systems unleash it.”
Treasurer Malek is not unfamiliar with taking on left-wing organizations in his pursuit to defend Missouri taxpayers. This February, Treasurer Malek led a coalition of state financial officers in raising concerns about Vanguard’s attempt to quietly install a slate of trustee nominees with ties to climate activism, DEI advocacy, and partisan political activity. He warned that such moves risk subordinating fiduciary responsibility to ideological aims. As Chair of Missouri’s 529 Education Plan Board, Treasurer Malek ultimately abstained from voting in the election, citing a lack of transparency and accountability in the process.
“His actions made clear that investment partners doing business with Missouri should focus on delivering value, not advancing political agendas,” stated the Treasurer’s Office.
One of the key reasons that conservatives point to as to why ESA-type programs are needed is the way they force innovation and effective decision-making. Traditional schools are often trapped in old ways of doing things and extremely slow to change.
Though no final decision has been made, the Missouri Treasurer’s office is actively reviewing contractual commitments to ClassWallet. The decision comes as part of a broader effort by the state government to ensure public funds are not directed toward firms seen as opposing the state’s conservative values.
Jake Kroesen is a Jackson County native and a graduate of the University of Central Missouri. He holds a B.S. in Political Science.
