The Kentucky Office of the Attorney General has informed University of Louisville leadership it has commenced an investigation into the UofL Foundation in the wake of last month’s scathing audit report, with interim President Greg Postel indicating that the university is “cooperating fully” with the investigation.
UofL provided IL with a copy of a letter sent to Postel on June 30 from John Moberly, commissioner of the Department of Criminal Investigations under the attorney general’s office, informing the university of its intention to conduct a review of the foundation after examining the June 8 audit report of Alvarez & Marsal. Noting that the report documented “several areas of concern” that the office “has determined needs to be addressed,” Moberly asked for assistance from officials with the university and foundation.
The items requested in the letter were as follows:
- Any documents authorizing and/or justifying any compensation or payments by the foundation to former President James Ramsey, his top aide Kathleen Smith and foundation CFO Jason Tomlinson
- Any documents authorizing and or justifying the $38 million loan to the UofL Real Estate Foundation by the university, which was subsequently transferred to the foundation
- Access to James Ramsey’s computer hard drive
- Copies of emails from or to between Ramsey, Smith and Tomlinson from June 1, 2016 to Sept. 30, 2016
In the request for documents on the compensation of Ramsey, Smith and Tomlinson, Moberly noted that these should include “any legal authorization” by the foundation for the specific amounts paid to each, as well as “any commentary by ULF and/or UofL on whether such authorization or justification was legal and sufficient.” Moberly also stated that he would appreciate similar commentary from foundation and university officials on whether the authorization of the $38 million loan was legal and sufficient.
As for the request for Ramsey’s computer hard drive, the Alvarez & Marsal report stated that the university’s IT department had erased and repurposed Ramsey’s hard drive prior to the firm’s investigation commencing. Moberly added that “access to this hard drive is necessary for a complete review of all matters related to the ULF matter.”
Under intense pressure, Ramsey resigned from his position as president of the university last summer, and then resigned from his position leading the foundation in September. Smith was placed on paid administrative leave the same month, but was fired in June before her contract — signed by Ramsey just before his resignation — was to expire at the end of July. Tomlinson has been on paid leave since June, though foundation officials will not comment on why, and Tomlinson’s attorney says he is only on vacation.
Moberly also requested that authorization be granted for representatives of Alvarez & Marsal to meet with investigators from the attorney general’s office to discuss the audit report findings and share any documents used to prepare the report. UofL board of trustees chairman J. David Grissom and university counsel Leslie Strohm also were sent copies of the letter.
The report by Alvarez & Marsal — initiated by a previous iteration of the university and foundation board last year — examined the foundation’s finances and management under the Ramsey administration from 2010 to 2016. The report documented how UofL’s endowment managed by the foundation suffered millions of dollars of losses related to failed lines of credit and investments in startup companies, in addition to exorbitant spending on compensation for top staff, real estate investments, and the UofL Athletic Association. The report also found that much of these actions took place without proper disclosure to the foundation board, as well as efforts to shield such information from the public.
UofL interim President Greg Postel issued a statement to IL saying the university “is cooperating fully with the Office of the Attorney General’s investigation into findings of the forensic audit of the UofL Foundation. 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 added: “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.”
Attorney General Andy Beshear stated on June 12 that his office was reviewing the audit and weighing the possibility of filing criminal or civil charges, but dismissed complaints saying that he should recuse himself from any investigation of the foundation, as David Saffer of Stites & Harbison was the external attorney for the foundation at the same time Beshear was a partner at the same firm. Beshear has countered that he did no legal work for the foundation at Stites & Harbison before taking office as attorney general.
Beshear’s spokesman Terry Sebastian issued a statement that “at this time the office can only confirm that it has sought additional information from the university.” He added that Beshear is not recusing himself from any potential investigation or prosecution in this matter.