May 11, 2005 in Idaho

Former UI leaders won’t be sued

Associated Press
 

MOSCOW, Idaho – The University of Idaho Foundation will not sue former UI President Robert Hoover and former financial vice president Jerry Wallace, two of the people at the heart of the UI’s failed attempt to build the University Place satellite campus in Boise.

Both resigned in 2003 after unauthorized loans from the UI to its nonprofit foundation were revealed.

The foundation filed a $25 million lawsuit in 4th District Court in Boise on Friday against four Boise attorneys and their firms, alleging legal malpractice and breach of fiduciary duty while they helped set up University Place’s financing.

But foundation President Keith Riffle said similar action won’t be brought against Hoover and Wallace since they probably don’t have the money to pay a claim against them.

“That would be like we’re just going to rub their nose in it, teach them a lesson,” Riffle, a Seattle businessman, told the Lewiston Tribune newspaper. “We are only trying to recover monies that belong to the foundation.”

Hoover and Wallace were named as key players in the University Place scandal in an Idaho State Board of Education investigation. Conceived in 1999, the planned $136 million, multi-building complex was seen by many UI supporters as critical to maintaining the school’s clout against the rising influence of Boise State University.

But when an economic downturn soured demand for downtown office space, the UI and the foundation used restricted funds to pay for the project’s pre-development costs. Eventually, the project was scaled back to a single $50 million building that now houses the state Water Resources Department.

Along with various civil suits, the entire University Place project continues to be the focus of both federal and county criminal investigations.

Riffle said the lawsuit against the law firms that advised the foundation on the deal is an attempt to recover some of the $26 million the foundation lost on the failed development. The foundation is suing Roy Eiguren, Edward Miller and Frank G. Lee of Givens Pursley and Ryan Armbruster of Elam and Burke.

An attorney representing the law firm Givens Pursley said Riffle’s rationale not to sue Hoover and Wallace because of their limited financial resources is telling.

“His comment speaks volumes about how they’re trying to manufacture claims against people who might have money, rather than accepting responsibility for the foundation’s actions,” said Seattle attorney Bradley Keller.

Riffle said the idea to sue the attorneys came from the foundation’s insurance companies.

“Initially we said we’re not going to sue any lawyers,” Riffle said. “And they (the insurance companies) said ‘are you going to handcuff us? Because it looks like that’s where you have to go.’ So we finally begrudgingly said ‘OK, we’ll consider that.’ ”

Riffle said the foundation board bears no responsibility because they trusted their lawyers to give sound advice.

“People on the foundation, such as myself, were picked not because we’re so smart or so beautiful, but because we’d given money” to the UI, he said. “We got a legal opinion from both firms saying that it’s OK to use these (trust) funds this way.”

Keller balked at that assertion.

“The foundation board members are some of the most sophisticated and savvy business people in the state of Idaho,” Keller said. “They were not mushrooms on the University Place deal. They were fully aware of the risks, and need to accept responsibility for the business choices they knowingly made.”

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