Wednesday, November 18, 2009

AGs in Action: Stevens Institute of Technology Ahava Kids

Attorneys General in New Jersey and Connecticut are pursuing lawsuits against two very different charities but based on similar allegations relating to the handling of money.

New Jersey Attorney General Anne Milgram announced in mid-September that she had filed a complaint against the Stevens Institute of Technology alleging that the president and board chairman of the 5,700-student institution of higher education had engaged in financial mismanagement, including excessive spending of endowment gains, mishandling of other endowment and investment funds, and paying excessive compensation to the school's president.  The Institute's Board of Trustees promptly responded that the AG had overstepped her authority by questioning the business judgment of the private school's management.  The AG's suit is currently pending the Superior Court of New Jersey, Chancery Division, County of Hudson.  And for those who are wondering, the alleged cash compensation awarded by the Institute's Compensation Committee to the President reached $1,089,780 for fiscal year 2008, which amount does not include other benefits provided, including substantial and allegedly below-market interest loans (page 70 of the complaint).

Connecticut Attorney General Richard Blumenthal announced in early October that he had filed a lawsuit against Ahava Kids, Inc., a charity that purportedly helps victims of human trafficking.  Like the New Jersey case, the lawsuit alleges financial mismanagement, including diversion of almost half of the charity's revenues to personal expenses of its founder and president and to the founder's for-profit companies.  According to a local news report, an attorney for the founder denied the charges and asserted that any inaccurate financial disclosures had been rectified.  Another report states that the Attorney General first received information about the alleged diversions from a whistleblower who had been hired to work on the organization's website.

LHM

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