Fishy finances: 5 universities where inappropriate spending became an issue
It's no secret that colleges and universities are facing a variety of funding issues today, but what happens when those threats to funding come from within? Rogue faculty, staff or administrators can damage a school financially just as easily as state or federal funding cuts.
A University of Pittsburgh professor's alleged use of funds to buy narcotics that he later injected made headlines last month, but this isn't even one of the most egregious examples of university funds being misused. Whether they involved large-scale embezzlement or lavish spending, the following set the bar for poor fiscal management at a time where funding cuts and high student loan debt are the status quo.
LAMAR UNIVERSITY'S $66,000 GIFT CARD BUDGET
A leaked internal memo in February 2012 brought to light the concerns of Lamar University Police Chief Jason Goodrich and Associate Vice President of Finance Vicki Ward over what they called a culture of waste, abuse and unaccountability. At the center of the questionable spending was over $66,000 spent at Sam's Club and Barnes and Noble on gift cards and other expenses, such as birthday cakes, paper plates, napkins, employee meals, snacks and textbooks. Whether it was gross negligence or possibly even criminal misuse of funds, the gift cards themselves could have been considered violations of the Texas Constitution, as well as NCAA, federal Department of Education and IRS regulations. Ward later claimed the leaked report resulted in her losing her job.
COLUMBIA MISDIRECTS KNIGHT FELLOWSHIP FUNDS
Sylvia Nasar—tenured John S. and James L. Knight professor of business journalism in Columbia University's Graduate School of Journalism, co-founder of the journalism business program and author of "A Beautiful Mind"—sued the university in March for allegedly misdirecting funds from her $1.5 million Knight Foundation endowment. The endowment was awarded with the expectation that Columbia match it to fund Nasar's salary, with the award itself funding additional salary, benefits and research. Nasar, however, said that she spent $174,000 of her own money on additional expenses after the university used the grant for her base salary. To top it off, she also said she received $70,000 in "phantom IT charges" in 2010, and a KPMG audit revealed that the school's "misappropriations and defaults" on the endowment amounted to up to $4.5 million.
NYU ISSUES LOANS FOR VACATION HOMES
This June, New York University raised eyebrows when it was revealed that the school issued private loans to star professors and administrators so they could buy vacation homes in such locations as East Hampton, Fire Island and Litchfield County, Conn. The practice was a little too sexy for some lawmakers and complicated the confirmation process for U.S. Treasury Secretary Jacob Lew, the school's former executive vice president and recipient of now-forgiven loans worth several hundred-thousand dollars. The end of the loans in August was among other changes made as NYU President John Sexton announced he would step down in 2016 following five no-confidence votes from faculty this year.
U OF L OFFICIAL WRITES HIMSELF CHECKS IN EXCESS OF $2M
Currently under investigation by the IRS, Perry "Chad" Vaughn, the executive director of the University of Louisville's Department of Famly & Geriatric Medicine, allegedly wrote checks to himself for more than $2 million. The money is said to not only come from the department, but from medical practices affiliated with it. Federal prosecutors haven't charged Vaughn criminally, but they have filed a civil complaint against him. The school is currently in the process of hiring an independent auditor to investigate its financial management and is also consolidating several offices to prevent future incidents.
WESTFIELD STATE PRESIDENT'S LAVISH SPENDING RESULTS IN FUNDING FREEZE
Westfield State University President Evan Dobelle came to the former teachers college looking to build it into a premier higher education institution, and his ambition was met with a credit card from the university's private foundation. What the foundation thought would be things like meals for donors turned out to be $8,000 stays at a luxurious Bangkok hotel, $883 worth of designer clothes from Louis Boston and over $4,000 in limo rides. By 2010, they had closed the credit card (not before $200,000 in charges had been made, though), and Dobelle moved on to using his executive assistant's university card. Fast forward to this August, and a donor canceled a $100,000 donation over the excessive spending. Dobelle defends himself by saying he's built the school into "the hottest college in New England," but the state of Massachusetts is now freezing the school's funding. Dobelle could potentially face suspension without pay following a trustees meeting next week.
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