LOUISVILLE, Ky. (WDRB) – Former University of Louisville board of trustees chairman J. David Grissom said in a deposition last month that the millions of dollars former U of L President James Ramsey and his chief of staff Kathleen Smith were paid by the nonprofit U of L Foundation was “tantamount to fraud and embezzlement,” even as Grissom acknowledged the payments were approved by the foundation’s “rubber stamping board.”
“There was no hold up here; there was no bank robbery. But the fact is that, the behavior of Ramsey and Smith resulted in a loss of assets at the foundation level that would have the same effect as if somebody had walked into the foundation offices on a Friday afternoon with a .357 Magnum and said, ‘give me all your cash,’” Grissom said in the July 26 deposition.
Grissom’s sworn testimony was taken as part of the 2018 financial fraud against Ramsey, Smith and other former administrators, in which U of L and its foundation are jointly seeking to recover about $80 million in alleged damages to the university’s endowment.
In the deposition Grissom, the octogenarian former banker and lawyer, offered by far his most colorful and direct public comments about U of L since he took charge of the university’s governing board in 2017 in the wake of Ramsey’s ouster.
Smith’s attorney, Ann Oldfather, said Friday that Grissom’s comment about the bank robbery is “so absurd it does not need a response.”
“That one comment says more about Mr. Grissom’s character, in that he would use that analogy against two people who, despite what you think of them, have done so much for the University of Louisville,” Oldfather said.
Ramsey's attorney, Steve Pence, called it a "reckless statement." He said Grissom admitted in his deposition that he didn't know basic pieces of information, including that the university and foundation boards have historically had members in common.
"I think the sheriff doesn’t know all the facts," Pence said.
Grissom, who remains a university trustee after giving up the chairman role last month, said in the deposition that he does not question that Ramsey and Smith’s compensation from the foundation was approved. But he claimed the former board members did not have “full knowledge and appreciation of what was really going on.”
“Everything that President Ramsey and Kathleen Smith put in front of them, they never turned it down,” Grissom said.
In fact, Grissom said he agreed with a lawyer’s characterization that board members from the Ramsey era were “basically a bunch of bozos that didn't know what they were doing.”
“Couldn’t have said it better,” Grissom said in the deposition.
Yet, Grissom offered only U of L’s party line as to a key question in the case: Why didn’t the university sue the former foundation board members and U of L trustees?
The lawsuit names only Ramsey, Smith, former foundation vice chairman Burt Deutsch, former university chief financial officer Michael Curtin, former foundation chief financial officer Jason Tomlinson and the Louisville law firm that advised the foundation, Stites & Harbison.
In the deposition, Grissom invoked attorney-client privilege so as to not explain why Ramsey and Deutsch were the only board members named in the lawsuit.
“We believe we brought suit against the culpable individuals, or the individuals who were most culpable in spending millions of dollars in restricted funds for other purposes,” said Andy Campbell, the Birmingham, Alabama lawyer handling the case for the university and foundation, in a phone interview on Friday.
U of L’s case against its former president and his associates hinges on the high rate of spending from the university’s endowment, which the foundation manages. Among other claims, the university and foundation contend Ramsey and Smith were complicit in getting “excessive” compensation from the foundation.
During the Ramsey era, which began in 2002, the foundation offered the deferred pay to nine high-level university administrators as an incentive to remain in their jobs. It sweetened the payouts with interest earnings mirroring those of the university’s endowment and “gross up” payments meant to cover the administrators’ personal income tax liabilities.
The foundation paid Ramsey $7.2 million, and Smith $2.6 million, in deferred compensation under the plan from 2010 to 2016, according to a 2017 forensic investigation commissioned by the university. That was in addition to regular salaries from the university and other payments from the foundation.
In the deposition, Oldfather peppered Grissom with questions about a May 24, 2016 letter signed by seven former foundation and university board members, which touted the university’s increased graduation rate, fundraising and other accomplishments under Ramsey and defended their use of deferred compensation to keep Ramsey from being poached by another university.
“What is absolutely clear is that the university’s return-on-investment has been stellar during the Ramsey Administration,” the former board members said in the 2016 letter.
Grissom said he does not accept as fact any of the statistics relayed in the letter.
“If they were produced by President Ramsey -- and I’m sure they were produced under his supervision at the minimum -- I have a deep distrust about the dependability of any of these numbers,” Grissom said, while acknowledging he has no specific ways to refute the information.
Grissom: Pitino should have been fired for ‘fornicating on the table’
Grissom also said in the deposition that he thought former Hall of Fame basketball coach Rick Pitino should have been fired for his late night sexual affair in a booth at the Louisville restaurant Porcini in 2003.
The incident became public in 2009 when the woman, Karen Sypher, tried to extort Pitino to keep quiet.
“Let’s start with Coach Pitino fornicating on the table. In my world, that would have been reason to have him dismissed the next morning. That wasn’t done,” Grissom said, offering the incident as an example of bad publicity that harmed fundraising.
Grissom was chairman of the board when university fired Pitino and athletics director Tom Jurich in 2017 when U of L got caught up the national pay-for-play basketball recruiting scandal.