U of L board establishes litigation committee to decide response to forensic audit

08/10/2017 05:36 PM

The University of Louisville board of trustees created an Ad Hoc Special Litigation Committee on Thursday, giving the five-member panel authority to decide whether to seek legal action in response to a forensic audit that uncovered up to $100 million in losses by the U of L Foundation.

The ad hoc committee will be chaired by David Grissom, who also chairs the board of trustees, and include trustees Raymond Burse, Sandra Frazier and James Rogers and interim President Greg Postel in a non-voting, ex-officio role.

A resolution that passed after an hour-and-a-half executive session with two votes against it — student representative Vishnu Tirumala and faculty representative Enid Trucio-Haynes — cites the forensic audit by the firm Alvarez & Marsal as well as Auditor Mike Harmon’s governance review, the former of which blistered former foundation officials for unbudgeted spending that U of L attorney Craig Dilger has said led to losses ranging from $40 million to $100 million.

Three of the foundation’s top officials during the period examined by auditors have left, with former U of L President Jim Ramsey resigning from his role as head of the nonprofit in September and the foundation firing Kathleen Smith, Ramsey’s former chief of staff, in June and former Chief Financial Officer Jason Tomlinson in July.

The resolution gives the panel authority to decide what action to seek in response to the audits, including initiating lawsuits, approving settlements and hiring legal counsel.

Grissom, speaking to reporters after Thursday’s meeting, said he expected the committee to make any decisions within the next month and that trustees “felt that to have a smaller, more manageable group of people to consider the options that are available to the board and to the university was a more appropriate way to proceed.” The board of trustees will be informed of any actions taken or considered, according to the resolution.

“The committee’s charged with the responsibility of doing any and all things necessary to protect the interests of the university in connection with the … 2016 audit and 2017 (Alvarez & Marsal) audit and to report back and keep the board fully advised of progress as it takes place,” Grissom said.

Grissom said a number of factors would determine how the special committee proceeds, including the likelihood of collecting any judgments, tarnishing U of L’s reputation, affecting its search for a new president and adding to its legal bill.

“When you’re looking at what actions, if any, should be taken, one of the things you’ll think about is the cost of litigation,” he said. “You’ll think about does protracted litigation further damage the reputation of the university? Does further litigation imperil the carrying out of a really successful presidential search? Those are things that you have to, this committee’s going to be thinking about.”

The committee’s first meeting has not been scheduled.


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