Attorney General Andy Beshear evaluating whether 'mismanagement' - WDRB 41 Louisville News

Attorney General Andy Beshear evaluating whether 'mismanagement' of U of L Foundation warrants criminal charges

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Kentucky Attorney General Andy Beshear, June 12, 2017 Kentucky Attorney General Andy Beshear, June 12, 2017

LOUISVILLE, Ky. (WDRB) --  Kentucky Attorney General Andy Beshear said his office is “carefully reviewing” whether the “gross mismanagement” revealed in last week’s forensic investigation of the University of Louisville Foundation warrants criminal charges.

Speaking to reporters in Louisville, Beshear said his office would likely ask for more documentation in the coming weeks before making a decision.  

“The findings are disturbing enough to where we need to carefully review it to see if there is criminal activity,” Beshear said.

The audit, completed by a private consulting firm under a $1.7 million contract, found that under former U of L President James Ramsey, the foundation depleted the university’s endowment by $42 million to cover over-spending on things ranging from extra administrator payments to football tickets.

It also found that the foundation overstated the endowment’s value by $72 million because of money it withdrew from the $790 million fund for additional spending, including up to $1.7 million in employee salaries. The withdrawals were booked as a loan to the endowment that was supposed to be repaid.

Ramsey ran the university and the foundation for 14 years before being pushed out last year.

Beshear, the top law enforcement official in the state, cautioned that his office would have jurisdiction only if any potential criminal cases dealt with state funds or the abuse of the foundation’s charitable nonprofit status.

The Jefferson County Commonwealth’s Attorney Office might also have jurisdiction, Beshear said. But commonwealth’s attorney spokesman Jeff Cooke said the office is not looking at the report because no local law enforcement agency has made a referral.

Stephanie Collins, a spokeswoman for the U.S. Attorney’s in Louisville, declined to comment. Federal authorities would have jurisdiction over any matters involving federal funds.

For months, U of L officials have been looking at whether they might have grounds for a lawsuit against any former foundation officials or board members.

Leslie Strohm, the university’s general counsel, told a legislative committee in April that the university would have an additional $500,000 in bills from a law firm for work related to the forensic audit.

David Grissom, chairman of the U of L board of trustees, said last week that the board hasn’t decided on legal action and that it would discuss the audit further at its next meeting Thursday.

“I see the potential for civil litigation, absolutely,” Beshear said Monday, adding that “breach of fiduciary duty” might be a cause of action.

Schnatter: Audit helps "turn the corner"

Papa John’s International CEO John Schnatter, a member of the trustee and foundation boards, said in an interview Monday that the report helps “turn the corner” as both boards look to clean up the foundation and restore donors’ confidence in giving to the university.

Schnatter made headlines in April when he implied during a public meeting that U of L athletics director Tom Jurich was “invisible” to the university’s governing board.

The report said the foundation had a relationship with the athletics department that was “not transparent” and which benefited athletics, with the foundation selling investments in the endowment to buy a golf course for athletics and premium football and basketball tickets.

The foundation also provided the vast majority of senior associate athletic director Mark Jurich’s roughly $160,000 salary from 2013 to 2016 – which the athletic department did not know until the audit was released, spokesman Kenny Klein said. Mark Jurich is Tom Jurich’s son.

“Now we’ve got all the cards out on the table,” Schnatter said, declining to comment further.    

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2017 WDRB News. All rights reserved.

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