UI Foundation told to refill funds
BOISE – State Attorney General Lawrence Wasden is demanding that the University of Idaho Foundation restore $18 million to three scholarship and education program accounts to cover losses associated with the University Place scandal.
In a letter delivered last week to the foundation’s Seattle-based attorney, Beth Andrus, Wasden’s chief deputy, Sherman Furey, claims the board violated its duty to protect the funds intended for scholarships and education programs in order to pump money into the foundation’s “Boise Initiative.”
A spokesman for the attorney general’s office, Bob Cooper, said the demand sets in motion a process to begin insurance claims.
The letter also outlines 13 specific instances in which he alleges that the board broke Idaho laws relating to investment policy, due diligence, conflicts of interest and other errors of judgment.
Andrus did not immediately respond to a telephone message seeking comment.
Foundation interim executive director Michael Wilson released a prepared statement Thursday, saying the formal demand did not come as a surprise because he has been working with the attorney general’s office for months.
The statement said the foundation will make a formal reply soon and will emphasize that “all financial transactions involved appropriate use of funds donated for the betterment of the University and its students.”
Cooper called the demand letter “a civil matter, not a lawsuit or threat of a lawsuit. It’s a claim being made to recover the assets of the trust, and it’s being done under the attorney general’s supervisory authority over trusts and foundations.”
The 13 specific allegations that the board broke Idaho laws in its management of the trust accounts are the underlying basis for the financial claims, Cooper said, but they are not an indication of future criminal charges to be brought by the Idaho attorney general against individual board members.
Wasden has recused his office from the case, citing conflicts of interest, as has U.S. Attorney for Idaho Tom Moss.
The state’s portion of the case is officially still under the jurisdiction of Ada County Attorney Greg Bower, but the U.S. Department of Justice has assigned a special prosecutor from Oregon to investigate and prosecute possible violations of federal law.
The allegations reflect initial findings of an investigation report earlier this year by Boise attorney Larry Prince, conducted at the request of the state Board of Education.
The foundation said it has received $3.5 million recently from the Idaho State Building Authority to be used to pay down a portion of the $18 million.
When it was conceived in 2000, supporters of the University Place project hoped it would increase the University of Idaho’s profile in the capital city.
The $136 million, multi-building complex just east of downtown Boise was seen by many University of Idaho advocates as critical to maintaining the school’s clout against the rising influence of Boise State University.
The project was conceived while the economy was strong, and questionable loans to cover upfront costs were made by the University of Idaho and its foundation. But the project’s breadth quickly overwhelmed the financing plan, especially as the economy declined.
University of Idaho President Robert Hoover resigned after the loans were disclosed, and the project was scaled back to a single $50 million building that will house the state Water Resources Department and some federal and university related operations.