WASHINGTON

American University trustees announced that Dr. Benjamin Ladner will not return as president after a months-long investigation into his spending.

The university's board of trustees made the decision earlier this week after a closed-door meeting that lasted more than eight hours.

The university will continue to seek $125,000 in reimbursement from Ladner for questionable expenses and report to the IRS $398,000 in taxable income on top of Ladner's $633,000 annual salary, said the board's acting chairman, Thomas A. Gottschalk. The board did not address a severance package.

Ladner's attorneys say the spending was appropriate under his contract and the conclusions of the auditors are distorted and unfair.

Auditors had questioned spending by Ladner that included French wine, expensive restaurants both here and abroad and chauffeurs who ran personal errands.

Earlier, students and faculty members at the 11,000-student private school in Northwest Washington rallied on the main quad and outside the boardroom.

“Our community needs an immediate resolution,'' says Abdul Aziz Said, a longtime professor and director of the university's Center for Global Peace. “Our community has lost confidence in Dr. Ladner.''

Said was one of several faculty members and student government leaders briefly allowed inside the meeting so trustees could get an update on the campus' opinion.

Ladner, 63, was suspended in August while auditors examined at least $500,000 in travel costs and other expenses that he and his wife incurred over the past three years.

He refused to comment when reached by telephone this week. In an interview last month with The Associated Press, he acknowledged some mistakes, but argued that much of the spending questioned by auditors was consistent with his contract.

Ladner, who became president of AU in 1994, said he wanted to return to the university despite student protests and a no-confidence vote by some faculty members, who urged him to resign.