LOUISVILLE, Ky. — More information is needed to determine whether the University of Louisville Foundation’s mismanagement — uncovered by a blistering audit – “crossed the line into criminal” activity, Kentucky Attorney General Andy Beshear said Monday.
Beshear told reporters that his office is reviewing the audit to determine whether its findings exposed potential violations of law, and if so, whether his office would have jurisdiction.
The nonprofit foundation serves as UofL’s investment arm. The audit, released last week, scrutinized the foundation’s compensation of UofL administrators, flawed real estate investments and withdrawal of millions of dollars from the endowment meant to support the university.
“The findings are disturbing enough to where we need to carefully review it to see if there is criminal activity,” the Democratic attorney general said.
The AG’s office would have jurisdiction if investigators determined that state dollars were taken or nonprofit rules were violated, Beshear said.
“There are definite findings of gross mismanagement here, which is terrible considering that these are funds that are supposed to support the university,” he said. “What we’ll need is more information to know if that gross mismanagement crossed the line into criminal.”
The audit, conducted by the accounting firm Alvarez & Marsal, did not specify any criminal activity or recommend a referral to prosecutors.
The audit focused on the foundation’s finances during a time that included James Ramsey’s stint as both university president and foundation president. Ramsey left both positions last year.
UofL board of trustees Chairman J. David Grissom said last week that the audit revealed a “disturbing picture,” and said trustees would confer with legal counsel in deciding on their response.
The foundation’s woes are blamed for a decline in gifts to the university.
Since Ramsey’s departure, the foundation has undergone big changes, including the ending of a deferred compensation plan. UofL presidents are barred from serving concurrently as foundation president, as Ramsey did. The foundation board includes 12 newly appointed members, and a line-item budget was established “with actual expenses matching actual revenues.”
The law firm where Beshear worked before his election represented the foundation for years. Beshear said Monday he didn’t perform any legal work for the foundation.
Asked if his past ties to the firm might necessitate his recusal if charges are pursued, he said: “I don’t think that we’ve seen anything now that would suggest that’s appropriate.” He added he’d be willing to “re-evaluate” if “we reach a point where there are concerns about that.”