New evidence in the university financial shell game

This is an edition of the University Scandals 96-97 series, selected installments of which were submitted for Pulitzer Prize consideration. Click here to access the archive.

The U-boat captains have been taking stupidity pills again. How else can you explain their voluntarily confirming reports which have appeared exclusively in this column since last October?

Exhibiting smarmy arrogance in defense of leaden incompetence, they give up information they don't realize further incriminates them.

A few weeks ago, somebody sent me a copy of the official minutes of the UNR faculty senate meeting of January 16. Superannuated UNR President Joe Crowley "told the senate he wanted to report on the financial affairs of the university in response to reports recently appearing in some of the local press. He believes such reports usually don't warrant a response because they are based on 'rumors, unfounded allegations and half truths,' but those regarding the UNR Foundation are so without merit that he felt compelled to report the facts," the minutes state.

This sounds curiously like the November 10 letter published in this newspaper over the signature of local McDonald's mogul Luther Mack. "As chairman of the University of Nevada, Reno Foundation Board of Trustees, I am both concerned and offended by Andrew Barbano's Sunday column...littered with so much misinformation that I find it necessary to respond because such 'shoddy journalism' harms higher education in Nevada," Mack stated.

In dismantling Mr. Mack's criticisms on Nov. 17, I theorized that he did not write the letter or he would not have fired so many blanks. I recently identified one of the principal composers, a university PR man named Gregg Bortolin.

Crowley's parallel presentation to the faculty senate shows that either Bortolin helped him, or Crowley helped Bortolin. Mack's letter asserted that the UNR "Foundation has never had a $2 million endowment loss." The faculty senate minutes have Crowley making the same point, "the foundation has not experienced a $2 million loss."

Mary Ellen McMullen, defeated by Howard Rosenberg for university regent last year, confirmed to me that she had been notified of such a loss in one of her first meetings as a foundation trustee. I printed that the foundation's boss, UNR VP Paul Page, told me Mrs. McMullen was mistaken, that the loss was a mere $200,000 attributable to a rogue money manager back east. President Crowley contradicts both Dean Page, his appointee, and Mrs. McMullen.

"The loss to the UNR Foundation was $235,000 and the UCCSN (University and Community College System of Nevada) lost $213,000," the Crowley minutes state. Zounds. The publicly admitted loss has now risen to $448,000. These guys need to take a meeting to get their stories straight.

I reported all of this after the Mackay School of Mines sent over to the UNR Foundation for about $2 million parked there for construction of a mines library. They were told only $483,000 remained in their account.

But did the state of Nevada dare put the library out to bid when it would have been illegal to do so without the funds to pay for it? A bid for $1,496,000 was awarded last August 27. Where did the money go? Was interest skimmed off?

Things got so serious that Crowley and Jarvis went before the board of regents last December for a $1.3 million loan to bail them out. Only this column printed the story. The U-Boat commanders were in danger of losing the better part of $15 million in federal funds if the mines library construction were delayed. Two federal audits of the fiasco are now underway and the U.S. Department of Defense inspector general is not a happy camper.

As I exclusively reported December 8, they got the rubberstamp regents (when they knew crusading dissident Nancy Price would be absent) to approve the $1.3 million skim from funds paid by students for housing maintenance. Yet, all concerned contend that no money is missing.

All this comes when the university system has been criticized by two major outside audits for running a financial shell game, spending money on all sorts of stuff approved by neither legislature nor regents. The two dozen or so foundations (not even Chancellor Richard Jarvis could tell me he how many he's got) act as handy money laundries to facilitate such transfers. Nevada legislative auditors found "expenditures totaling $235 million were excluded from the budgetary approval process in fiscal years 1995 and 1996."

I recently received a solicitation from a local businessman of my acquaintance. He is raising funds for a project at the U. I sent him a letter advising him to make sure his check is made out to the UCCSN Board of Regents, not to any foundation. That's good advice for everyone. These guys think nothing of shunting dollars to the foundations where donations are exempt from public scrutiny under an ill-advised state law originally designed to legitimize defrocked UNLV basketball coach Rollie Massimino's illegal contract with the UNLV Foundation.

In the past, foundation accounts have been used to fund fat bonuses to pet administrators and new cars every six months for favored deans. Pres. Crowley's wife even got one. (Call the Nevada Ethics Commission at 687-5469 and ask for Opinion No. 92-17.)

Down in Gomorrah South, a $1.5 million estate willed to UNLV was looted. "After the (UNLV) foundation converted the donation into permanent library endowments, the value of the windfall was a third less," Las Vegas Review-Journal reporter John Gallant wrote on June 26, 1992. Among the more egregious examples were real estate transactions, "some of which involved people with ties to the foundation. One transaction involved the sale of a house to an executive of one of then-Foundation Chairwoman Elaine Wynn's casinos," the Review-Journal reported.

"The house was appraised at $170,000 and sold to Arthur Nathan, who was moving from New Jersey to become the Mirage hotel's human resources director, for $157,500. Wynn is an executive in Mirage Resorts, Inc., and her husband, Steve Wynn, is the corporation's chairman," Gallant wrote. "Another sale was handled by a broker who is a longtime friend and business associate of Foundation Executive Director Lyle Rivera...Madison Graves, a candidate for university regent this year and a long time friend of Rivera." (Graves is now chairman of the board of regents.)

Crowley's remarks to the faculty senate talk about the university's gold mine donated years ago by one John Livermore, discoverer of the fabulously rich Carlin trend in northeastern Nevada. "Originally, the royalties from the mine were being deposited into a university account, under the management of finance and administration," according to the minutes. "A donor, who had ties to the mining company and whose main consideration was to ensure that the royalties from the mine be allocated to the Mackay School of Mines, was concerned that the royalties might not be allocated as intended if they were managed by administration and finance. It was suggested that the royalties be deposited with the foundation, and Crowley agreed," the minutes state.

Wait. Crowley IS the administration. And last year he told the Las Vegas Review-Journal that it was his command decision to shunt the money to the foundation. Who is this shadowy donor now calling the shots?

It's illegal to deposit funds payable to the U anywhere else. In the same decision noted above, the state ethics commission ruled that the foundations are legally private corporations largely exempt from public scrutiny--great vehicles for moving money around. Last year, when I asked for the portions of foundation records mandated by law as public, the university illegally refused them.

The neverending story of university financial finagling continues. More soon. Keep them cards and letters comin' in.

Be well. Raise hell.


© Andrew Barbano

Andrew Barbano is a Reno-based syndicated columnist and 28-year Nevadan.
Barbwire by Barbano has appeared in the Sparks Tribune since 1988.
This column originally published 4/20/97.

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