A joint committee of the University of Louisville and its foundation is suing former leaders of the university, alleging “breach of fiduciary duty, fraudulent appropriations and improper diversion of funds for personal gain.”
Named in the suit are former president James Ramsey; former chief of staff Kathleen Smith; former finance officers Michael Curtin and Jason Tomlinson; former Foundation Chair Burt Deutsch; and the law firm Stites & Harbison, the Foundation’s longtime legal counsel.
The action follows a nearly year-long decision making process following the release of a scathing audit last June. The $2.2 million forensic report found questionable loans to foundation subsidiaries, a $21 million deferred compensation plan shrouded in secrecy and numerous unbudgeted transactions that were hidden from board members.
Steve Pence, who represents Ramsey, couldn’t be reached for comment Wednesday.
Smith’s attorney, Ann Oldfather, said she’s looking forward to “finally getting to defend” Smith.
“I think this is a very ill-founded decision, but frankly, I think it’s one that the public will benefit from,” Oldfather said. “We’ll have an opportunity to see all the other ways this particular board of trustees is not acting in the best interest of the university or of those people who have helped make it what it is.”
She also noted that she’d be surprised if the basis of the suit is the Alvarez and Marsal forensic report, since “it disclaims any accuracy in its preface.”
According to a press release issued by U of L, the suit filed in Jefferson Circuit Court claims Ramsey and others “conspired to divert millions of dollars from the Foundation’s endowment into speculative and unauthorized ventures, putting the Foundation at risk” between 2008 and 2016. The suit also alleges that Ramsey and Smith gave themselves and others excessive compensation.
These actions depleted the endowment through “complicated – and often unauthorized – transactions” designed to avoid scrutiny, according to U of L.
“We have implemented new controls at the Foundation to insure this never happens again,” said U of L Foundation Chair Earl Reed in a press release. “Now it is time to turn this mess over to the lawyers for clean-up, while the rest of us focus on turning a new page at UofL and the start of an exciting chapter of growth and excellence.”
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