Former AMU CFO speaks
Fri, Sep29, 2006 - Category: Foundation
Sworn testimony from a former AMU Chief Financial
Officer makes strong allegations on whether Tom
Monaghan and his Ave Maria Foundation are properly
treating the targets of his/its philanthropy as the
independent non-profit institutions they claim to be.
"That (the examination of student files) was brought to my attention, which was very troubling because that’s a violation of FERPA laws. No one who’s a lender should have the right or access to those particular files."
"Someone, if they wanted to bring a legal claim against any one of the (academic) organizations, could sort of go right to the Foundation."
"Mrs. Healy had spent ninety thousand dollars using the College’s credit card in order to furnish the house without prior authorization or knowledge by me."
"That (the examination of student files) was brought to my attention, which was very troubling because that’s a violation of FERPA laws. No one who’s a lender should have the right or access to those particular files."
"Someone, if they wanted to bring a legal claim against any one of the (academic) organizations, could sort of go right to the Foundation."
"Mrs. Healy had spent ninety thousand dollars using the College’s credit card in order to furnish the house without prior authorization or knowledge by me."
Quotations from the March 30, 2005 deposition
of the former Chief Financial Officer of Ave Maria
University (Roy v. Ave Maria College)
(added clarification in parentheses)
Institutional finances and investing are completely tied to AMF
“At the time I started, I didn’t have even signatory authority over the investment back accounts for the College. Paul Roney from the Foundation did. And I was only ever granted the ability to move the money from money market account to the checking account to fund daily operations. I was never given authority to direct the asset allocation or investments for the College – when I tried to get that, Paul indicated to me that the investment for the College were basically he looked at the entire portfolio’s investments for all the Foundation’s entities and did his asset allocation based upon that whole, not the individual needs of the College.”
“I told Nick (Healy, AMC/AMU President) the following problems that need to be corrected. Number one, we needed to remove the Foundation employees as signatories from the College’s investments and bank accounts because there were numerous Foundation employees who actually have signatory authority over that. Secondly, I said that the board itself should – we should actually create a board of advisors and specifically that board of advisors should advise us on investment management and that board of advisors should be individuals that are wholly independent from the Foundation and from the present composition of the board because they were – in fact, in this report and in another report written by Father Burchel, who also did his own separate independent assessment, he was on the board of Notre Dame for, I don’t know, more than twenty years, he specifically brought this point up as well, where essentially he indicated that we needed to have people that did not have financial interests with Tom Monaghan, which would compromise their ability to be independent, but specifically to create an advisory board who would then set investment management policy based upon the needs of the College and that then the officers of the College, myself in particular, would be then responsible for executing that policy and very specifically those policies would include the asset allocation of the investments for the College.”
“Well, of course, that board (AMC’s) wasn’t independent at that particular point in time either, so I also recommended that we actually change the composition of that board so that the board could be independent. … Specifically, it was mentioned in this report and specifically it was mentioned in Father Burchel’s report in fall of 2000…”
“Essentially both this report, Father Burchel’s report and my own observations, was that the composition of the board itself was made up of either Ave Maria Foundation employees, friends, or people who had business interests with Tom Monaghan and very few independent academic – people that were academics and so the report here, Father Burchels’ very direct report indicates that you had – that you needed to change the composition of the board so that these individuals could truly act independently and give independent advice and not merely rubber stamp the decisions that were made by Tom Monaghan and the members of the Ave Maria Foundation, which is exactly what occurred.”
“The [Burchel] report was very blunt and very direct regarding the improper influence that the Foundation had on the governance of the College. It was also very blunt in suggesting that Nick Healy was good as an interim choice, but we needed to get a seasoned academic to replace him and that Nick Healy was also treating, because he was a lawyer by training, was treating Tom Monaghan as his client and was basically working at his beck and call and he (Burchel) also took issue with the entanglements that we had with St. Mary’s Collegge, Ave Maria College of the Americas… The report was very blunt as it was my understanding that Nick Healy decided never to deliver this report to the Foundation because he thought it was too blunt and inflammatory, so we never – he buried it, to my understanding. We never heard anything more about it, but that was verbal, so I don’t know what he actually did.”
Small AMF group makes decisions for institutions
“In fact, most of the major (College) decisions were made at (Foundation) ET meetings that I saw. Executive team (ET) meetings where Tom Monaghan would basically have the senior members of all his founding organizations, Ave School of Law, Credo, Ave Maria College, et cetera, would go to – almost like they were board meetings where he would chair them and were either subsidiary presidents or franchises or whatever. There would be discussions at those meetings, decisions made at those meetings, decisions made at those meetings that were essentially then rubber stamped by the board of the College.”
“I can give you several (examples of issues that were rubber stamped after the ET meetings). One relates to the fact when Dominic Aquila was actually summarily demoted from provost and that was done actually outside of a board meeting without – outside of any kind of academic review. That was actually discussed at an ET meeting prior to its execution. … And then I saw there was an email that went out to the College informing them of the change and then a communication that went to the board that communicated the change prior to – before the formal board approval, actually informed the board I had to do this.”
“(Another example) was a policy recommendation that was made at the ET – by the ET, that was then conveyed to all of us and was brought up at a board meeting. That essentially said that the Foundation was going to be permitting individuals who transferred from any one of their (Foundation) entities, whether it was Credo, Ave Maria College or whatever, to carry over seniority from one group to the next and also be able, for things like vacation, 401K benefits, metical, et cetera and that – and also to tell us that we had to adopt the human resource policies of the Ave Maria Foundation. I found that quite troubling in light of this kind of a report… the AALE report and also from my own knowledge, the fact that we were supposed to be an independent organization and by – by doing something like that, it would give a lot of evidence that you were, in fact, a single employer. And essentially, I got that same legal opinion from Liz Dumouchelle (Butzel Long) … Someone, if they wanted to bring a legal claim against any one of the organizations, could sort of go right to the Foundation. It also was very troubling to me in the fact that we were supposed to be an independent, non-profit organization and that also caused – also caused me to call into question things like we’re going to have problems with our tax status and things along these lines because essentially, you know, if you’re not a non-profit organization, you are a for-profit organization and things start getting called into question related to that.”
“One example (of the Foundation’s authority) that comes to mind was where the Ave Maria Foundation requested that the St. Mary’s College board fill out a very detailed salary survey and portfolio of all the professors and academics that were at the College so that they could be evaluated in light of all the other Foundation-related entities and Ted (Radzilowski, St. Mary’s College President) responded immediately to it, saying this is unusual, this should be under the governance of St. Mary’s College board and you really shouldn’t be getting involved in those kind of activities, pushed back kind of hard in that process and suggested that if the Foundation was going to provide any kind of services, that they (St. Mary’s) ought to enter into contracts with the Foundation that could be administered by the board separately with the Foundation, with them, to have the ability to go out and get competitive bids and things like that, so I saw him reacting to the attempt to try and control that board…”
Financial irregularities and FERPA
“My personal opinion related to that, to that deterioration of the relationship (with Nick Healy), had to do with my unwillingness to attempt to portray to the AALE accreditation board that was going to be coming in on a return visit (to AMC) that the – that the degree of independence (from the Foundation) that was outlined in that report that I was there to execute was, in fact, in place…. there was also friction as it related to some of my questioning of some of the usual transactions and relationships that I’ve outlined in previous testimony…”
“There was quite a few (irregularities at Ave Maria College of the Americas). One of the things that came to my attention was an unusual transaction related to the funding for the chapel down in Nicaragua. … it came to light that there was a liability in order to repay a Father Fessio ($240,000) for construction for the College chapel. When I inquired as to why there was no liability on the financial statements for that, I was told that the liability was, quote, off balance sheet. Well, I’ll explain what that means. Is that essentially that the funding, which I still never knew where it all really came from, essentially had somehow flowed – had come from Father Fessio, from some source and actually the money was deposited in Humberto Belli’s (President, AMC of the Americas) private bank account and the expenditures were made from that bank account in order to fund the construction of the College campus – or the College chapel. … At the end of the day they (auditors) did not review those records. Humberto Belli suggested that these records were private and he ended-up having Martin Bunge (AMC of the America’s financial administrator) review the records and he ended-up giving me the assurances that they were all in order or whatever. I brought this to the attention of Nick in writing. I thought it was very unusual and it just raised eyebrows for me and the issue just died when Martin Bunge gave me this report.
“Henry Howard at the time, I believe, was the president of – he was the president of a bank that provided federally guaranteed student loans and he was the exclusive lender of those loans to the (AMC of the Americas) Nicaraguan students and I want to say he was the U.S. Education Finance Corporation, something like that. The thing that made the whole experience with Henry Howard quite unusual was his high degree of involvement not only with the campus, but with the financial aid processing with the campus. That was highly irregular and as I pointed out to Nick in numerous memos and also from the separate legal opinions from outside financial aid service companies, was basically a violation of the federal statutes governing this behavior.”
“It is my understanding… apparently Nick (when he was a member of the Franciscan University board of directors), Father Fessio, and Henry Howard had endeavored to get the Franciscan University to actually buy the (Nicaragua) campus… when (the University of) Mobile decided to close it (their Nicaraguan campus). This was, and by the way, this was conveyed to me verbally by both Nick and by Bob Hickey… The (FUS) board decided for Steubenville not to execute the sale. Apparently that was one of the factors that led to Nick’s leaving the board of directors from Steubenville and he and Henry Howard then took the proposition to Tom Monaghan and convinced Tom Monaghan to basically go ahead with the execution of the sale.”
“(After the sale to AMC) The Nicaraguan campus called in a panic wanting to get federal student loans for their students and wanted to go through the whole application process, et cetera, and I started getting calls directly from Henry Howard and I thought it was kind of unusual that an individual who was a primary lender for these loans would be so intimately involved with these kind of transactions.”
“The way that financial aid departments, my understanding, are supposed to run, I found that out when I got there, was that a financial aid officer, basically they take the applications from the students, they’re supposed to then be able to offer a portfolio of potential lenders for the students to be able to choose who they want to actually have the loan against, so they offer them you can get a loan here, you can get a loan there. … Henry Howard… represented himself initially as a board member for the College of the Americas and as such, it turned out later, all he had was a board of advisors and he was on the board of advisors. And he also represented himself as one of the principle benefactors for the College of the Americas. He made significant at his own commentary about personal donations to the campus and the reason why that – both Ave Maria College and Ave Maria College of the Americas. The reason why that raised some eyebrows is that lenders who are part of the federal guaranteed program are not supposed to be doing anything that would lead one to believe that there’s influence, meddling or preferential treatment and one of the things that could indicate that would be donations to the College and that – so essentially that raised some eyebrows and I raised that issue with Nick on numerous occasions…”
“[Henry] basically wanted me to hire a financial aid officer of his choice because we didn’t have one at that point. He also indicated very strongly that he wanted to be the preferred lender of choice not only for the College of the Americas, but for St. Mary’s College, Ave Maria College in Ypsilanti and he also indicated in conversations that he eventually wanted to get that for the Ave Maria School of Law. … I mean, picture yourself, you’ve got a lender who’s basically involving himself directly with the College, basically trying to tell them how they’re going to do their financial aid. There’s supposed to be a huge separation between the financial aid officers and the College that – from their primary suppliers. Some of the activities that Henry’s employees engaged in is they went on campus of the Ave Maria College of the Americas, went into the financial aid office, examined individual student files because those student files were --- apparently these were loans that were granted when they were students under the University of Mobile. … That was brought to my attention, which was very troubling because that’s a violation of FERPA laws. No one who’s a lender should have the right or access to those particular files.”
“… what I ended up doing… was writing Nick a very detailed memo regarding my concerns regarding Henry Howard’s activities, Henry Howard’s requests to fly our financial aid consulting officers down to Nicaragua in our private jet, taking donations, also comments that Henry Howard had made to me regarding the fact that he was married to the relative of the chief of police or somebody down in Nicaragua and he could make arrangements for individuals to either if they got in trouble, to get them out of it or subtly, if you got in trouble, you, I wouldn’t help you kind of thing. Comments were made to me like that, which I thought were very unusual or bizarre.”
“They (Bob Hickey and Brendon Purgey) were canvassing other banks so we could expand this portfolio, so we could have other lenders, like we’re supposed to, to offer options to student and Bob Hickey relayed to me a very unusual occurrence as part of that process. That Brandon Purgey was actually calling these banks and while he was calling a particular bank, I think PNC is the particular bank, he was put on hold and all of a sudden that person patched in Henry Howard on the call and Henry Howard proceeded why Brendon was even doing this, telling him he didn’t have the authority to do this. Now, think about that for just a minute. You have a supplier telling us we can’t go out and solicit other suppliers to be in our bid, to be part of our portfolio, represented himself that he was acting on the highest authority from the Foundation, to tell Brendon he was acting out of line and he shouldn’t be soliciting other banks.”
“… Henry indicated to me that he had an arrangement with that particular bank to offer private loans to the law school that looked like student loans with deferred interest because they, at that time, were not accredited and that Henry was working with this bank to somehow trade the paper loans. I never got quite sure – I got the impression that this bank would write the loans and that Henry would, in turn, buy those loans and trade it with other financial – or regular guaranteed loans. I was never sure exactly what he meant, but he implied there was some kind of relationship there and Henry cultivated this relationship in order to get preferential treatment for student loans for the law school and that, quote, I needed to play ball and not get in the middle of this thing.”
“The important point to raise here, though, is that even though Nick executed that (i.e. sent a memo to Henry concerning the irregularities), he (Nick) was not happy that Bob Hickey and I had boxed him into a corner to force him to do this because we had all the documentation to prove this and why that whole transaction was quite unusual is because these three (Henry, Nick, Fessio) had been very involved in the whole formation of trying to get it, first, purchased by Steubenville and then run by us….”
Stewardship and Financial Decisions
“During the construction (renovation of a house for AMC’s President Healy) it went way over budget and Paul Roney (Foundation CFO) asked me to outline to him why the home was so far over budget and so I wrote him a detailed report, which included the fact that Mrs. Healy had spent ninety thousand dollars using the College’s credit card in order to furnish the house without prior authorization or knowledge by me. … Obviously, the board didn’t independently approve this. Nick was upset, very upset with me because he thought I was implying that something improper was going on. … Because I remember Nick called me on vacation when I was on vacation and specifically when he read the report and expressed his deep anger.”
(added clarification in parentheses)
Institutional finances and investing are completely tied to AMF
“At the time I started, I didn’t have even signatory authority over the investment back accounts for the College. Paul Roney from the Foundation did. And I was only ever granted the ability to move the money from money market account to the checking account to fund daily operations. I was never given authority to direct the asset allocation or investments for the College – when I tried to get that, Paul indicated to me that the investment for the College were basically he looked at the entire portfolio’s investments for all the Foundation’s entities and did his asset allocation based upon that whole, not the individual needs of the College.”
“I told Nick (Healy, AMC/AMU President) the following problems that need to be corrected. Number one, we needed to remove the Foundation employees as signatories from the College’s investments and bank accounts because there were numerous Foundation employees who actually have signatory authority over that. Secondly, I said that the board itself should – we should actually create a board of advisors and specifically that board of advisors should advise us on investment management and that board of advisors should be individuals that are wholly independent from the Foundation and from the present composition of the board because they were – in fact, in this report and in another report written by Father Burchel, who also did his own separate independent assessment, he was on the board of Notre Dame for, I don’t know, more than twenty years, he specifically brought this point up as well, where essentially he indicated that we needed to have people that did not have financial interests with Tom Monaghan, which would compromise their ability to be independent, but specifically to create an advisory board who would then set investment management policy based upon the needs of the College and that then the officers of the College, myself in particular, would be then responsible for executing that policy and very specifically those policies would include the asset allocation of the investments for the College.”
“Well, of course, that board (AMC’s) wasn’t independent at that particular point in time either, so I also recommended that we actually change the composition of that board so that the board could be independent. … Specifically, it was mentioned in this report and specifically it was mentioned in Father Burchel’s report in fall of 2000…”
“Essentially both this report, Father Burchel’s report and my own observations, was that the composition of the board itself was made up of either Ave Maria Foundation employees, friends, or people who had business interests with Tom Monaghan and very few independent academic – people that were academics and so the report here, Father Burchels’ very direct report indicates that you had – that you needed to change the composition of the board so that these individuals could truly act independently and give independent advice and not merely rubber stamp the decisions that were made by Tom Monaghan and the members of the Ave Maria Foundation, which is exactly what occurred.”
“The [Burchel] report was very blunt and very direct regarding the improper influence that the Foundation had on the governance of the College. It was also very blunt in suggesting that Nick Healy was good as an interim choice, but we needed to get a seasoned academic to replace him and that Nick Healy was also treating, because he was a lawyer by training, was treating Tom Monaghan as his client and was basically working at his beck and call and he (Burchel) also took issue with the entanglements that we had with St. Mary’s Collegge, Ave Maria College of the Americas… The report was very blunt as it was my understanding that Nick Healy decided never to deliver this report to the Foundation because he thought it was too blunt and inflammatory, so we never – he buried it, to my understanding. We never heard anything more about it, but that was verbal, so I don’t know what he actually did.”
Small AMF group makes decisions for institutions
“In fact, most of the major (College) decisions were made at (Foundation) ET meetings that I saw. Executive team (ET) meetings where Tom Monaghan would basically have the senior members of all his founding organizations, Ave School of Law, Credo, Ave Maria College, et cetera, would go to – almost like they were board meetings where he would chair them and were either subsidiary presidents or franchises or whatever. There would be discussions at those meetings, decisions made at those meetings, decisions made at those meetings that were essentially then rubber stamped by the board of the College.”
“I can give you several (examples of issues that were rubber stamped after the ET meetings). One relates to the fact when Dominic Aquila was actually summarily demoted from provost and that was done actually outside of a board meeting without – outside of any kind of academic review. That was actually discussed at an ET meeting prior to its execution. … And then I saw there was an email that went out to the College informing them of the change and then a communication that went to the board that communicated the change prior to – before the formal board approval, actually informed the board I had to do this.”
“(Another example) was a policy recommendation that was made at the ET – by the ET, that was then conveyed to all of us and was brought up at a board meeting. That essentially said that the Foundation was going to be permitting individuals who transferred from any one of their (Foundation) entities, whether it was Credo, Ave Maria College or whatever, to carry over seniority from one group to the next and also be able, for things like vacation, 401K benefits, metical, et cetera and that – and also to tell us that we had to adopt the human resource policies of the Ave Maria Foundation. I found that quite troubling in light of this kind of a report… the AALE report and also from my own knowledge, the fact that we were supposed to be an independent organization and by – by doing something like that, it would give a lot of evidence that you were, in fact, a single employer. And essentially, I got that same legal opinion from Liz Dumouchelle (Butzel Long) … Someone, if they wanted to bring a legal claim against any one of the organizations, could sort of go right to the Foundation. It also was very troubling to me in the fact that we were supposed to be an independent, non-profit organization and that also caused – also caused me to call into question things like we’re going to have problems with our tax status and things along these lines because essentially, you know, if you’re not a non-profit organization, you are a for-profit organization and things start getting called into question related to that.”
“One example (of the Foundation’s authority) that comes to mind was where the Ave Maria Foundation requested that the St. Mary’s College board fill out a very detailed salary survey and portfolio of all the professors and academics that were at the College so that they could be evaluated in light of all the other Foundation-related entities and Ted (Radzilowski, St. Mary’s College President) responded immediately to it, saying this is unusual, this should be under the governance of St. Mary’s College board and you really shouldn’t be getting involved in those kind of activities, pushed back kind of hard in that process and suggested that if the Foundation was going to provide any kind of services, that they (St. Mary’s) ought to enter into contracts with the Foundation that could be administered by the board separately with the Foundation, with them, to have the ability to go out and get competitive bids and things like that, so I saw him reacting to the attempt to try and control that board…”
Financial irregularities and FERPA
“My personal opinion related to that, to that deterioration of the relationship (with Nick Healy), had to do with my unwillingness to attempt to portray to the AALE accreditation board that was going to be coming in on a return visit (to AMC) that the – that the degree of independence (from the Foundation) that was outlined in that report that I was there to execute was, in fact, in place…. there was also friction as it related to some of my questioning of some of the usual transactions and relationships that I’ve outlined in previous testimony…”
“There was quite a few (irregularities at Ave Maria College of the Americas). One of the things that came to my attention was an unusual transaction related to the funding for the chapel down in Nicaragua. … it came to light that there was a liability in order to repay a Father Fessio ($240,000) for construction for the College chapel. When I inquired as to why there was no liability on the financial statements for that, I was told that the liability was, quote, off balance sheet. Well, I’ll explain what that means. Is that essentially that the funding, which I still never knew where it all really came from, essentially had somehow flowed – had come from Father Fessio, from some source and actually the money was deposited in Humberto Belli’s (President, AMC of the Americas) private bank account and the expenditures were made from that bank account in order to fund the construction of the College campus – or the College chapel. … At the end of the day they (auditors) did not review those records. Humberto Belli suggested that these records were private and he ended-up having Martin Bunge (AMC of the America’s financial administrator) review the records and he ended-up giving me the assurances that they were all in order or whatever. I brought this to the attention of Nick in writing. I thought it was very unusual and it just raised eyebrows for me and the issue just died when Martin Bunge gave me this report.
“Henry Howard at the time, I believe, was the president of – he was the president of a bank that provided federally guaranteed student loans and he was the exclusive lender of those loans to the (AMC of the Americas) Nicaraguan students and I want to say he was the U.S. Education Finance Corporation, something like that. The thing that made the whole experience with Henry Howard quite unusual was his high degree of involvement not only with the campus, but with the financial aid processing with the campus. That was highly irregular and as I pointed out to Nick in numerous memos and also from the separate legal opinions from outside financial aid service companies, was basically a violation of the federal statutes governing this behavior.”
“It is my understanding… apparently Nick (when he was a member of the Franciscan University board of directors), Father Fessio, and Henry Howard had endeavored to get the Franciscan University to actually buy the (Nicaragua) campus… when (the University of) Mobile decided to close it (their Nicaraguan campus). This was, and by the way, this was conveyed to me verbally by both Nick and by Bob Hickey… The (FUS) board decided for Steubenville not to execute the sale. Apparently that was one of the factors that led to Nick’s leaving the board of directors from Steubenville and he and Henry Howard then took the proposition to Tom Monaghan and convinced Tom Monaghan to basically go ahead with the execution of the sale.”
“(After the sale to AMC) The Nicaraguan campus called in a panic wanting to get federal student loans for their students and wanted to go through the whole application process, et cetera, and I started getting calls directly from Henry Howard and I thought it was kind of unusual that an individual who was a primary lender for these loans would be so intimately involved with these kind of transactions.”
“The way that financial aid departments, my understanding, are supposed to run, I found that out when I got there, was that a financial aid officer, basically they take the applications from the students, they’re supposed to then be able to offer a portfolio of potential lenders for the students to be able to choose who they want to actually have the loan against, so they offer them you can get a loan here, you can get a loan there. … Henry Howard… represented himself initially as a board member for the College of the Americas and as such, it turned out later, all he had was a board of advisors and he was on the board of advisors. And he also represented himself as one of the principle benefactors for the College of the Americas. He made significant at his own commentary about personal donations to the campus and the reason why that – both Ave Maria College and Ave Maria College of the Americas. The reason why that raised some eyebrows is that lenders who are part of the federal guaranteed program are not supposed to be doing anything that would lead one to believe that there’s influence, meddling or preferential treatment and one of the things that could indicate that would be donations to the College and that – so essentially that raised some eyebrows and I raised that issue with Nick on numerous occasions…”
“[Henry] basically wanted me to hire a financial aid officer of his choice because we didn’t have one at that point. He also indicated very strongly that he wanted to be the preferred lender of choice not only for the College of the Americas, but for St. Mary’s College, Ave Maria College in Ypsilanti and he also indicated in conversations that he eventually wanted to get that for the Ave Maria School of Law. … I mean, picture yourself, you’ve got a lender who’s basically involving himself directly with the College, basically trying to tell them how they’re going to do their financial aid. There’s supposed to be a huge separation between the financial aid officers and the College that – from their primary suppliers. Some of the activities that Henry’s employees engaged in is they went on campus of the Ave Maria College of the Americas, went into the financial aid office, examined individual student files because those student files were --- apparently these were loans that were granted when they were students under the University of Mobile. … That was brought to my attention, which was very troubling because that’s a violation of FERPA laws. No one who’s a lender should have the right or access to those particular files.”
“… what I ended up doing… was writing Nick a very detailed memo regarding my concerns regarding Henry Howard’s activities, Henry Howard’s requests to fly our financial aid consulting officers down to Nicaragua in our private jet, taking donations, also comments that Henry Howard had made to me regarding the fact that he was married to the relative of the chief of police or somebody down in Nicaragua and he could make arrangements for individuals to either if they got in trouble, to get them out of it or subtly, if you got in trouble, you, I wouldn’t help you kind of thing. Comments were made to me like that, which I thought were very unusual or bizarre.”
“They (Bob Hickey and Brendon Purgey) were canvassing other banks so we could expand this portfolio, so we could have other lenders, like we’re supposed to, to offer options to student and Bob Hickey relayed to me a very unusual occurrence as part of that process. That Brandon Purgey was actually calling these banks and while he was calling a particular bank, I think PNC is the particular bank, he was put on hold and all of a sudden that person patched in Henry Howard on the call and Henry Howard proceeded why Brendon was even doing this, telling him he didn’t have the authority to do this. Now, think about that for just a minute. You have a supplier telling us we can’t go out and solicit other suppliers to be in our bid, to be part of our portfolio, represented himself that he was acting on the highest authority from the Foundation, to tell Brendon he was acting out of line and he shouldn’t be soliciting other banks.”
“… Henry indicated to me that he had an arrangement with that particular bank to offer private loans to the law school that looked like student loans with deferred interest because they, at that time, were not accredited and that Henry was working with this bank to somehow trade the paper loans. I never got quite sure – I got the impression that this bank would write the loans and that Henry would, in turn, buy those loans and trade it with other financial – or regular guaranteed loans. I was never sure exactly what he meant, but he implied there was some kind of relationship there and Henry cultivated this relationship in order to get preferential treatment for student loans for the law school and that, quote, I needed to play ball and not get in the middle of this thing.”
“The important point to raise here, though, is that even though Nick executed that (i.e. sent a memo to Henry concerning the irregularities), he (Nick) was not happy that Bob Hickey and I had boxed him into a corner to force him to do this because we had all the documentation to prove this and why that whole transaction was quite unusual is because these three (Henry, Nick, Fessio) had been very involved in the whole formation of trying to get it, first, purchased by Steubenville and then run by us….”
Stewardship and Financial Decisions
“During the construction (renovation of a house for AMC’s President Healy) it went way over budget and Paul Roney (Foundation CFO) asked me to outline to him why the home was so far over budget and so I wrote him a detailed report, which included the fact that Mrs. Healy had spent ninety thousand dollars using the College’s credit card in order to furnish the house without prior authorization or knowledge by me. … Obviously, the board didn’t independently approve this. Nick was upset, very upset with me because he thought I was implying that something improper was going on. … Because I remember Nick called me on vacation when I was on vacation and specifically when he read the report and expressed his deep anger.”