The criminal division of the Attorney General’s office has launched a wide-scale probe into the University of Louisville Foundation, the nonprofit that manages the public university’s nearly $800 million endowment.
The move comes a month after the release of a scathing audit that found the nonprofit made questionable loans to foundation subsidiaries, padded executive salaries with secretive deferred compensation plans and hid numerous financial transactions from members of the foundation’s board.
Kentucky Attorney General Andy Beshear announced last month he was looking into whether the foundation broke the law, but this is the first news the entity is officially under investigation.
John Moberly, commissioner of the attorney general’s Department of Criminal investigations, sent a letter to interim U of L president Gregory Postel requesting access to documents detailing the legal rationale for executive bonuses and a real estate deal. Moberly also sought former president James Ramsey’s computer hard drive.
“Access to this hard drive is necessary for a complete review of all matters related to the ULF matter,” Moberly wrote in a letter dated June 30.
Moberly also requested copies of emails between Ramsey, his chief of staff Kathleen Smith and the foundation’s chief financial officer Jason Tomlinson.
Last month, the school released a scathing 132-page examination of the foundation’s operations conducted by outside firm Alvarez & Marsal.
The $1.7 million audit portrayed the foundation’s finances in disarray, controlled by a handful of former leaders who kept colleagues and board members in the dark.
Ramsey was president of both the foundation and the university for more than 14 years, but resigned amid scrutiny over his hefty compensation, a series of scandals at the school and increased pressure from the school’s board of trustees.
Among the findings from last month’s audit:
- The foundation liquidated $42 million of its endowment to cover unbudgeted spending.
- Foundation staffers failed to properly account for transactions and lowballed the numbers on investments that were underwater.
- The foundation overpaid for real estate to the tune of $10.3 million.
- The foundation bought properties for the University of Louisville Athletic Association in exchange for cash and waived required ticket donations.
Interim President Postel said the school is fully cooperating with the investigation.
“It is important to our students, faculty, staff, supporters and community to determine if any wrongdoing took place and to hold accountable any individuals who are found to have been involved,” Postel said in a statement.
“Our focus, though, is and will remain providing an outstanding education to our students, conducting leading-edge research, improving our community through service and continuing to build one of America’s finest metropolitan research universities.”