I went out into the night,
I went out to find some light.
Kids are dyin’ out in the snow,
look at them go, look at them go!
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a bag of charcoal briquettes from the Gray Lady across the water.
We won’t recount all the gory details here. For those who want to know more, access our earlier posts by clicking here: Part I and Part II. Those posts also include links to the New Jersey Attorney General's complaint, which is a must read.
The school and its officials apparently made little effort to defend themselves when Dillon sought comment, at least that is the impression we have after reading the article. Dillon tells us that Raveche’s lawyer, Angelo Genova, “would not allow his client to be interviewed.” A Stevens spokesperson told Dillon, “We cannot comment on the issues raised by the attorney general because they are part of the ongoing litigation.”
Go to the Stevens Institute website. The board of trustees has a webpage. That’s good, but what is even more noticeable is that the trustees and their webpage are listed as part of the Office of the President’s webpage. While Freud has been largely discredited, we can’t help but view this positioning as a Freudian slip, particularly when Dillon quotes a former board member as saying, “They [the board] were all beholden to him [Raveche], and there were no controls on what he spent.”
On the trustees page, you will find several transcripts of meetings that one or more trustees had with stakeholders. Trustee Philip Crowley leads off the discussion during a meeting with the Student Government Association by stating:
Because of the existence of the litigation, there are some areas that my colleagueThis common reason for not speaking doesn’t hold up in a case of this nature. The New Jersey Attorney General has made serious allegations in her complaint. The allegations go far beyond an allegation that Raveche’s compensation was unreasonable. Unreasonableness can be a squishy concept, but facts are facts. Those facts are going to come out if the case goes to court so the existence of litigation should not serve as a basis for non-disclosure.
Jim Walsh and I can't really talk about. We can't get into an argument about who's right and who's wrong and the substantive arguments that the trustees and the Attorney General have raised in our court papers. To do that could prejudice our case. And so I want to stress that I'm not an official spokesman for the Board of Trustees on these issues. I'm one trustee. And I'm here to try to give you some helpful information to put this in context.
If the board wants to demonstrate that it is independent of Raveche, it should want to end public speculation by getting the facts out. In particular, it can release (with or without further comment):
A. President Raveche’s employment contract.If New Jersey is like most states, all of this is discoverable and will be discovered in litigation. The Stevens position appears to be that there are no problems and everything can be explained. We will assume the documents support that position. So why not begin to set the record straight and prevent further damage to the Institute and its students by releasing what are facts. No need to comment. If we were allowed to read those documents and they support Stevens’ position, we would be quick to post our assessment. When the facts warrant, we have been quick to come to the defense of nonprofits that are wrongfully accused of wrongdoing or mismanagement.
B. Minutes of all board and committee meetings.
C. The PriceWaterhouseCoopers management letters for 2000 through 2004.
D. The Towers Perrin and Hewitt Associates compensation studies.
E. The promissory notes, if issued, for the alleged loans to Reveche.
As it stands, the board’s apparent unwillingness to respond to the allegations supports Dillon’s reporting that “Raveche had packed it [the board] with loyalists.” Based on our observations of litigation in this area and discussions with numerous charity regulators, the regulators are more interested in correcting problems once they surface than holding boards monetarily liable for those problems. But boards have a duty to correct problems. At some point, refusing to conduct an impartial investigation and redress problems raises the possibility that the board has breached its duties of loyalty to the institution (rather than to the institution’s management) independent of any breach of duties that may have occurred from a failure to perform adequate oversight. In other words, there is a duty to investigate and ask hard questions.
We suspect the board is in bunker mode right now. Until Dillon wrote his article, we suspect that they hoped the whole ugly matter would go away if they just kept it tamped down. The New York Times article should assure that the matter is not going away anytime soon. We have little doubt that Senator Grassley and his staff are preparing one of Grassley’s “love” letter to Stevens and its board, at least if past practice is any guide. You have to wonder whether alumni who were busy living their lives are now taking notice.
And what about the student body? Well we looked at the student newspaper, the Stute, for about a month after the New Jersey Attorney General filed suit. Virtually nothing on the lawsuit except an initial report, leading us that to conclude that a better name for the newspaper might be the Stooge. Our observations must have been shared by others. In an October 10, 2009 editorial, Natalie Schloeder began:
Over the past month, The Stute has been heavily criticized for its coverage, or supposed lack of coverage, regarding the civil suit brought against Stevens Institute by Attorney General Anne Milgram. Several professors, both current and retired, have come forward voicing their dismay over an absence of this topic in some of our previous issues.We then read about the Stute's effort to remain neutral. We agree with Schloeder’s sentiment that the Stute should focus on facts rather than publish opinion as news. But neutrality doesn’t preclude digging for the facts, asking questions, or interviewing people of different viewpoints and reporting their views. Schloeder’s task is not to assume that the New Jersey Attorney General’s allegations are correct. Her task is to investigate those allegations by asking questions. Did the board forgive nearly a $1 million in loans to Raveche? In today’s Times article, we are told that Raveche claimed he used the houses apparently financed with these loans for college fundraising events. Fine, but why then, if the loans were forgiven, does Raveche apparently get to keep the homes after his official duties with the Institute come to an end without repaying the loan? As a journalist, Schloeder has a duty to ask that question, particularly when you take the amount involved and divide it by the cost of tuition, thereby revealing how many one-year scholarships could have been made.
In an article discussing the meeting hosted by the student government association where several trustees spoke, we read that the students were told the lawsuit has no impact on them. The author of the article, Sheeraz Hyder, swallows that medicine, apparently without any questions. Yet, the Times reports Stevens paid penalties to the IRS and that Moody’s downgraded the school’s bond rating in 2004 because of operating deficits. The students are sorely mistaken if they believe poor governance and management doesn't affect them.
Serious allegations have been made. The failure of the logical student institution to ask hard and penetrating questions of those in charge is deplorable and a disservice to the student body.
And so the world continues to turn. We will see what happens in 2010, but right now we see a lot of enabling behavior. We hope the New Jersey Attorney General doesn’t settle this suit, but takes it to trial. We also hope she begins to put more pressure on the trustees to ask the hard questions.
THE FOREGOING IS NOT AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. IF LEGAL ADVICE IS REQUIRED, THE NONPROFIT OR OTHER PARTY IN QUESTION SHOULD SEEK THE ADVICE OF QUALIFIED LEGAL COUNSEL. If you liked this post, please visit http://www.charitygovernance.com for a description of our training and consulting services. You will also want to acquire a copy of Jack Siegel's book, A Desktop Guide for Nonprofit Directors, Officers, and Advisors: Avoiding Trouble While Doing Good."
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