Monday, July 19, 2010

Dubious Donations, Continued

If your Ponzi scheme is sputtering or your overleveraged business is tottering, your self-esteeem needs a boost. Solution? Garner gratitude with a big donation to a big-name institution. Jim Gust pointed out one example. The Yale Alumni Magazine spotlights others, such as $5 million in Ponzi loot returned by Miami University of Ohio.

One of Yale's own problem donors is John Mazzuto. He gave the university shares of Industrial Enterprises of America. Now he's accused of looting the company, which is bankrupt. Yale sold the shares (presumably to a willing, maybe even eager, buyer) before they lost value. Should Yale now have to return the sales proceeds?

Another of Yale's problem donors is Bearingpoint. Like Industrial Enterprises, Bearingpoint is now bankrupt; you can pick up shares for $.04 or so. Yet a few years ago, the giant consulting firm seemed anything but fly-by-night. Should Yale return the $8 million in Bearingpoint donations that it has devoted to an endowed professorship and an executive training program?

Another article in the YAM shows that corporate grants can cause problems even when they are legit. PepsiCo has a research lab in New Haven, so both town and gown have reason to make nice to the company. Even so, is Pepsi a cool sponsor for a fellowship in … nutritional science?

Boy, am I glad I'm not a university president.

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