The University of Southern California couldn’t ask for a better trustee. John Martin just priced his desperately-needed hepatitis medication at $1,125-per-pill. Last year he gave himself $180 million in compensation. (Read what a columnist at Forbes, of all places, thinks of John’s take-home pay.)
Yes, when it comes to modeling ethical behavior for a university’s students, when it comes to bringing that certain something to the running of a university, Brown University’s famous Steven Cohen (now that the SEC has forced him to close the shop) can’t do better than USC’s very own John Martin.
For those of us impatiently awaiting Tom “Kristallnacht” Perkins’ successor, Vinod Khosla has arrived not a moment too soon. It’s his beach, and he’ll sue all the way to the Supreme Court if he has to.
There’s even a wonderful mine, mine, all mine cosmic convergence here: For years, Khosla worked for Tom Perkins’ venture firm.
***********************
Khosla has progressive academia’s endorsement as a trustee of Berkeley’s Blum Center (and Mr. Blum... eh. Nuff said.)
Maybe Robert Reich, who has been eloquent on the corrosive social and moral effects of income inequality, can take Khosla aside for a chat. Reich too is on the Blum board.
… as a judge refuses to stop a big insider trading case against him.
*****************
Trouble? Given Cohen’s utterly shocking market behavior, and the resulting extensive litigation against him which will last for the rest of his life, and given his apparently unassailable position of trust at the top of one of America’s best-known universities, UD begins to think she’s gotten it all wrong. UD begins to think that trustee-selection-wise, a long record of SEC investigation and outraged investor lawsuits is an advertisement for the position of university trustee.
UD‘s not sure why this is. She is a babe in the woods – most of us are – when we’re talking about the kind of money Brown is targeting in targeting Steven Cohen (personal fortune: close to ten billion dollars). Are they thinking in terms of a delicate, sophisticated trade-off involving delicate sophisticated timing? As in – We’ll be able to peel off a couple billion before he has to go to jail. Our PR people will be able to control the PR fallout of our association with him. Or is it far more straightforward? “Insider trading” is a bogus designation essentially describing nothing less than the working reality of all capital market players. Eventually the world will catch up to this truth, and all penalties and investigations of people like Cohen will vanish. Indeed these people will become martyrs, and we’ll be praised for having stayed the course with them.
That’s the question. Certainly the entire Westfield State University board of trustees should go. But there must have been others at the university who hired as president a man whose character and actions were already fully known.
… [Evan] Dobelle [got] into similar trouble for his lavish spending at previous jobs, including at the University of Hawaii and the New England Board of Higher Education. In Hawaii, the board of regents unanimously voted to terminate his seven-year contract in 2004 after just three years because of his wasteful spending and ever-shifting explanations…
“There has been a lack of accountability, lack of fund-raising progress, lack of a sense of stewardship, ignoring the most basic policies,” then-regents chairwoman Patricia Lee said, according to the minutes of the Hawaii board’s June 15, 2004, meeting. “But, most importantly, his dishonesty and lying are most troubling.”
How stupid does your institution have to be to hire a person with this record?
He … commissioned a portrait of himself, contacting a local artist in 2013, and sent the $777.75 bill to [Westfield State’s] foundation after the fact. The portrait remained in a closet to be unveiled at an event for the 175th anniversary of the university in 2013. After Dobelle resigned, school staffers didn’t want the painting and shipped it to Dobelle.
So okay. Here are a couple of names for you. Diamandopoulos. Slade. So now we have the names of three university presidents who came in with crushing egos and big talk and proceeded to strip everything on campus except the interior wiring. Can even schools like Hawaii and Westfield State learn from this?
Enlarge the photo to see one of your most prominent trustees in action! Ever vigilant, Ronald Prestage scopes out the US Senate for you as he completes a surveillance mission for future loaded-Ruger-toting NCSU visitors to the nation’s capitol. Can you get away with it? Apparently, no. Trustee Prestage has also teased out, as a kind of bonus, the information that you need a permit to carry a gun.
Because UD feels that this martyr to the cause of bringing “a magazine with six rounds of ammunition and one round in the chamber” to the very heart of the American government will have much of value to say to the press, she will follow his story closely. For now, this is all you need to know: Prestage is Pretrial.
From Alabama State University trustee Elton Dean’s resignation letter to the governor:
I am a graduate of this great institution and you will not find anyone who loves these hollow grounds more than Elton N. Dean, Sr.
… one of its own.
Marching a loaded Ruger right up to the security police at the Cannon Building. The police are on extra alert because only a few days ago another asshole did the same thing.
‘Course he dint have no pistol license on him neither. Hyuk.
And they say pigs are smart.
*****************************
Oh, and he’s a North Carolina State University trustee! Just the sort of clever boots you want setting policy at a university. He’ll get right back to work on that. As soon as he can get out of jail.
UD is an old hand at university scandals, and Alabama State University is one of the most scandalous universities in the world; so she certainly doesn’t expect to be shocked – WOW shocked – by anything its pathetic conflicted threatened with loss of accreditation board of trustees does.
But UD has to hand it to this school. It has truly astounded her. The two most-conflicted trustees (chair and vice-chair of the board!) have been asked to resign by the governor, “who serves as president of the ASU board by virtue of his elected office.” And why? The governor, like other governors, has tolerated this grossly corrupt institution forever. How do you go too far for the sixth most corrupt state in the union?
Well, you do this:
[The governor] learn[ed] that proposed amendments to ASU’s bylaws had been circulated to members of ASU’s board “excluding me as president and a member of the board.”
[T]he amendments would have done the following in an apparent attempt to grab power from [just-appointed ASU president Gwendolyn] Boyd:
Establish an attorney-client privileges between the university’s general counsel and the board, replacing that between the university and its president,
Provide for the hire of the general counsel by the board of trustees,
Allow removal of trustees only for criminal acts [and not just little bitty ol’ conflicts of interest, get it?] by a majority of the members of the board of trustees rather than a majority present at the time of the vote,
Install a board liaison with the same powers as those designated to the university president,
Prohibit trustees from disclosing confidential information, and
Allow a committee chair to direct the actions of the president.
Shut ma mouth. There’s something almost impressive about people anticipating both their own conflictual/criminal acts and the way they’re going to get away with those acts…
But what truly amazes me (if I may, at this remarkable moment in the history of my blogging about universities, speak in the first-person) is how flagrant these guys are. I mean, just put it out there… Don’t tell the governor; write it so you take power from the president; protect your ass in advance of further self-enriching conflicts of interest…
This school makes Yeshiva University look well-behaved. This school is afuckingmazing.
… is another term for political history in America’s most corrupt state, Florida. A kind University Diaries reader (UD thanks you) sends an update on the distress of faculty and students at Florida State University over having a political hack shoved down their throat for president (that would be the perfectly named John Thrasher, who as chair of FSU’s trustees presided over the school almost having a chiropractic school shoved down its throat).
So UD does a search on Thrasher and Infinite Rascal Regression begins… Thrasher’s predecessor as head of the Florida Republican Party done went to state prison, while Thrasher himself seems to have thrashed out, before that happened, a real interesting severance agreement for his buddy… Among the signatures on that agreement was that of Mike Haridopolos, featured on this blog years ago for his own impressive academic career … Yes, infinite rascality… wheels within rascally wheels…
It’s an old Southern tradition. If universities aren’t dumping grounds for used up politicians, what are they?
The report also recalled former S.C. State Board Chairman Jonathan Pinson, who viewed an Atlanta Falcons football game in a $5,000 suite. Half the cost was paid by an S.C. State vendor and half by an S.C. State foundation, according to the report. Pinson has since been convicted of federal corruption charges in connection with other activities at the university and separate business deals.
Jonathon Pinson was recently chair of the board of trustees at South Carolina State University. Now he’s going to prison.
In the grand tradition of Leslie Berlowitz, ex-director of the American Academy of Arts and Sciences who paid herself almost six hundred thousand dollars a year (she also had a chauffeur) to sit in a mansion in the middle of a park (right across the street, by the way, from Les UDs’ Cambridge house) and oversee a teeny staff doing dainty things, trustees at Minnesota’s Bremer Foundation have also taken our tax money and over-amply rewarded themselves with it.
In 2004, the three trustees together received nearly $125,000. That figure has increased by nearly 10 times in 10 years… “These institutions get tremendously preferential tax treatment,” [Aaron Dorfman] said. “And because of the tax-exempt status they enjoy, the rest of us pay higher taxes and in effect subsidize nonprofit tax-exempt charitable foundations.”
UD sucks at reading charts, but this one is pretty hard to misread…
By Yaacov M. Gross.
[President Richard Joel] offered a small statistical comparison between the performance of YU’s long term investment pool since 2002 versus that of all other university endowments over this period. The comparison purports to show that the compound annual growth rate over the period was 6.3% for YU’s pool vs. 5.3% for the other university endowments, meaning that YU’s investment strategy produced superior results. But a close reading of the comparison raises disturbing questions. For example, why was 2002 chosen as the starting point for the measurement as opposed to fiscal year 2005 (the year in which, according to the article, YU’s current leadership assumed control of the portfolio and sold off more than half of the endowment’s conservative investments)? Why was the comparison made to the endowments of all other universities rather than to peer university endowments with over a billion dollars? Finally, and most troubling, the comparison is based on YU’s “long term investment pool”, which in President Joel’s words, “includes the endowment”, but apparently includes other things as well. What are they? And why didn’t President Joel just offer a simple apples-to-apples comparison between YU’s endowment and other peer endowments? The answer, not surprisingly, is because that simpler and more honest comparison would have told a very negative story: according to the NACUBO Endowment Study used by President Joel, in 2005-2013, YU’s peer endowments grew by a compound annual growth rate of 5.6% while YU’s endowment grew by only 0.37%. That’s less than the inflation rate over this period.
President Joel’s attempt to reframe the discussion as a comparison of returns is also fundamentally mistaken because the proper benchmark for a portfolio’s performance is not its nominal return but rather its “risk-adjusted” return. Riskier portfolios often produce higher results to compensate for their higher risk profile — but does that mean that YU should invest its entire nest egg in a high-risk portfolio? Ultimately, that’s the question — not a comparison of nominal returns – that needs to be addressed when examining whether YU’s leadership was reckless with its endowment money. And President Joel’s response speaks to only one small aspect of YU’s financial performance discussed in the article; he does not address, for example, YU’s massive operating deficits which, according to Moody’s, may cause YU to run out of cash next year.
We have indeed fallen very far when the President of YU responds to an article claimed to contain “half truths and inaccuracies” with his own half truths and inaccuracies. But it did not have to be this way. President Joel could instead have offered a full accounting to the community of the decisions that were made and why … He could have openly acknowledged such mistakes as were made, the lessons learned, the corrective steps being undertaken. He could have laid out a roadmap for YU’s recovery. Like the [initial] article, he could have offered facts and figures. And he could have said, “I recognize that I will have to ask our staff, students and supporters to make painful sacrifices, in part due to decisions that I helped make. Therefore, I am tearing up my employment contract, which under the current circumstances is inappropriate, and will continue to serve as President only for as long as the board wants me and with compensation that is determined by the board to be commensurate with my efforts and accomplishments.”
*********
A comment on the Failed Messiah blog:
[D]oes he take us for fools? If there’s no problem, why has Moody’s steadily downgraded their debt and issued warnings? Why is YU frantically selling off many apartment buildings? Why no mention of the approx. $400M in deficits over the last 5 years?
Yes, it’s all guys; and this moving eulogy to what used to be a university ponders the grotesquerie of universities as settings for the ongoing drama of one’s struggle to be a man. John Shelton Reed’s opinion piece makes the point that the University of North Carolina Chapel Hill used to be a good school until a group of rich men with their manhood at stake began to stick their dicks in it.
Other famous dick-stickers are Oklahoma State’s T. Boone Pickens (the entire university lolls open to Pickens; his dicksticking into the hedge fund and death payout markets really fucked the place up, but no one cares) and the University of Oregon’s Phil Knight, who has ginned up his new pleasure palace for UO football players with huge lettered signs saying things like EAT YOUR ENEMIES.
Famed Penn State had, of course, multiple and varied dick-stickers.
If the only university arena for at-stake manhood were athletics, it would be bad enough; but as ol’ T. Boone’s hedge fund maneuver demonstrates, sports programs already rife with financial, sexual, and academic perversion are only part one. Like “Big Stones” Larry Summers, who lost Harvard over a billion dollars on interest rate swaps (“No one had the stones to stand up to Summers when it came to this high-risk strategy of essentially borrowing at Treasury rates and investing the proceeds in an illiquid long-term endowment…”), T. Boone out-balled all voices of reason at Oklahoma State and lost the school an unimaginable fortune.
Yet Harvard is so rich, long hot Larry barely made it break a sweat. Ditto for T. Boone. Bouncy bouncy. Big deal.
**********************
Now, soon-to-be-ex-universities like Yeshiva – that’s another matter. It does matter there, because – unless at the last minute Big Berries Rennert decides to give the place a couple of billion dollars – that school is permanently post-coital. (One of the characters in Henry Miller’s Tropic of Cancer says to his lover, “I am fucking you, Tania, so that you’ll stay fucked.” Insert Yeshiva in place of Tania.) Its trustees – trying to compensate for their loss of testosterone when sooooooper-macho fellow trustee Bernie Madoff went to prison – hedge funded away money Yeshiva didn’t, couldn’t, and wouldn’t ever have.
**************************
University Diaries thinks it’s time to open the chemical castration conversation.
**************************
Update: At-stake manhood strikes again:
Polish anxieties about who’s blowing who and who’s got the biggest dick are apparently going to bring down the government.
As international attention pivots to scandalous, junk-status Yeshiva University, UD wants to acknowledge those people – like Andrew Sole – whose concern for the institution as a university rather than a tit for hedgies on the board of trustees prompted them to act on behalf of YU. She wants to acknowledge the three faculty members who, in 2012, wrote an anonymous letter to the campus newspaper (anonymity being required in the corrupt setting of this rapidly dissolving university) voicing their despair at the baffling failure of the university’s endowment — baffling because the cronies on the board of trustees who were high-risk-betting all of the university’s money away were far too arrogant to tell anyone about it. Why weren’t there conflict rules? Why wasn’t someone supervising the trustees and the money managers? Does it bother anyone that, with the exception of storied Yeshiva trustees Bernard Madoff and Ezra Merkin, pretty much the same people whose staggering financial irresponsibility destroyed the school are still on the board?
There’s a pathos, two years later, to reading these faculty members trying to figure out what’s going on:
No one is speaking about what caused the terrible drain on the endowment and when it will stop. In short, there is no transparency… Yeshiva needs to figure out why the endowment is performing so much poorer than the endowment of every other comparable institution in the nation and fix that problem. We do not know what the problem is or how to fix it – but we see that no one else is discussing what really is the problem, in part because of the utter lack of transparency in YU’s finances.
Well, that’s over. Now the whole world is watching as the story of how a school destroys itself through greed, secrecy, and cronyism, plays out in the national and international press. As the Yeshiva University story escalates, this blog will continue to note the people who warned the school that it was killing itself.