New federal officers will take over UI probe

Citing conflicts, the U.S. Department of Justice has removed its Idaho office from the criminal review of the University of Idaho Foundation’s multimillion dollar failed real estate venture to build a satellite campus and rental space in Boise.

The project, backed by the private, nonprofit foundation, was intended to raise the University of Idaho’s profile in the state capital, but for a variety of reasons – including a turn in the economy, mismanagement and poor planning – the effort foundered. The result was the loss of about $28 million from the university foundation and the 2003 resignation of UI President Bob Hoover.

Now federal officers from Oregon are stepping in.

“The U.S. Attorney’s Office for the District of Idaho had to recuse itself. We’ve been asked to take over the federal aspect of the investigation,” said Allan Garten, Assistant U.S. Attorney in the District of Oregon. “A team of federal investigators will work together on the case,” he said, listing Oregon-based agents from the FBI, IRS and Postal Service. Garten said he would be in Idaho next week.

The attorney wouldn’t comment further on what the federal agents would be looking for but added that they’re reviewing the 600-page independent audit of the project by Holland & Hart of Boise. The report, which was released last year, points to problem areas including that the university’s vice president of finance was also the project manager and involved in loaning money from the university’s general fund into foundation accounts. The audit also mentions two law firms with possible conflicts of interest advising both the foundation and the university on the project.

The auditors ran into a number of concerns during their review including that computer hard drives and e-mails on campus had been erased or reformatted. They also had trouble getting information from Civic Partners West, LLC, a private vendor that worked with the foundation and was paid about $6.5 million in questionable costs, said the report.

The Idaho DOJ office isn’t the first to opt out of the investigation. Because of widespread involvement and because Idaho isn’t a populous state, many of the players in the project have had some role or relationship with investigators. In December, Idaho Attorney General Lawrence Wasden announced that since the Ada County Prosecutor’s Office had conflicts in the case, his office would take over the criminal prosecution in Ada County. The Latah County Prosecutor’s office is conducting a third review, though it is sharing resources with the state AG investigators.

So far, there’s no word on the status of the state attorney general review.

“We don’t comment on any ongoing criminal investigation,” said Bob Cooper, spokesman for the AG’s office. “If a conflict arose in the course of our investigation, we would have to refer it back to the Ada County Prosecutor.”

At this point no conflict has come up, he said.

Meanwhile on campus, the university is struggling to recover from the Idaho Place financial debacle, as well as other budget problems, and move ahead. Of the $5 million gap in the operating budget next year, the Idaho project impact comes to $1.7 million. The school also is losing about $1.8 million in support from the UI Foundation.

At the same time, the school is trying to hire a new vice president of finance.

“We’re negotiating to make a hire,” said UI Spokeswoman Kathy Barnard. “The goal is to have someone come as soon as possible.”