U of L Chairman Calls For Further Scrutiny Of Real Estate Deal With Donor
The chairman of the University of Louisville Board of Trustees is calling for further examination of a real estate transaction involving the school’s foundation and a major donor.
Larry Benz said Wednesday that he is researching the “intricacies” of a deal in which the foundation bought into a vacant factory in Oklahoma at the request of a donor, a transaction revealed a day earlier by WFPL’s Kentucky Center for Investigative Reporting. The foundation waited more than two years for the factory to sell, but ultimately canceled the arrangement after inquiries from KyCIR. (Read "The University of Louisville Foundation Bought An Empty Factory In Oklahoma—Because A Donor Asked")
Following the unwinding of the deal, foundation attorney David Saffer said last month that the nonprofit would hire an independent expert to review its actions.
“I’m glad to see that it is being independently reviewed and I’m anxious to see that report when it is complete,” Benz said Wednesday. “I am personally asking a lot of questions to understand the complexities of this transaction.”
Saffer didn’t respond to an email Wednesday asking for an update on the review's status.
U of L interim president Neville Pinto declined an interview request through a university spokesman. Foundation board chairwoman Brucie Moore couldn’t be reached for comment.
University staffers described the foundation’s investment in an Oklahoma factory as a gift attempt that didn’t pan out, but experts questioned whether it was engineered to give tax advantages to a donor.
The foundation is the school’s nonprofit fundraising arm and manages the school’s roughly $700 million endowment. It is the focus of both a state audit and an upcoming forensic audit by the university.
The foundation in 2014 purchased 99 percent of a holding company created by donor Henry Vogt Heuser Jr. The foundation borrowed $3.47 million from Heuser to purchase shares in his company. University and foundation staffers said this wasn’t a true debt, since it would have only been paid back when the factory sold. The promissory note functioned as a vehicle to get a donation to the foundation, staffers said, and would have directed proceeds from the sale to the foundation.
Benz, who serves on both the university and the university foundation’s board, said one of his main questions is why foundation board members were asked to approve the deal initially, but not asked to approve the deal’s cancellation.
Bob Hughes, the former chairman of the foundation board, said he doesn’t have any concerns because the foundation didn’t spend money in the transaction. Hughes, who wasn’t on the foundation board when it approved the transaction, noted that the arrangement could have netted the nonprofit money.
“Any money received through the foundation helps advance the education mission through scholarships,” Hughes said. “I didn’t personally see any problem with that.”
Kate Howard can be reached at email@example.com and (502) 814.6546.
Disclosures: In 2015, the University of Louisville, which for years has donated to Louisville Public Media, earmarked $3,000 to KyCIR as part of a larger LPM donation. University board member Stephen Campbell and former member Sandra Frazier have donated. Foundation attorney David Saffer previously served on LPM’s board.