Scandal at St. John’s University: An Update

st-johns

St. John’s University is back in the news following an investigation into possible financial improprieties involving the former president of the university and another administrator with ties to Cecilia Chang, a dean who was accused of fraud.  A statement released by the University on August 24th, concluded that although “there were errors in judgment” by Rev. Donald J. Harrington, C.M. and Robert Wile, his chief of staff, that led to “conflicts of interest and failures to fully disclose those conflicts to the Board of Trustees,” there was no criminal wrongdoing.

Crisis readers may recall reading about the scandal on these pages last spring.  The investigation confirmed that Fr. Harrington and Mr. Wile had received two loans from a university vendor and a member of the Board of Trustees in connection with a real estate transaction that benefited them both, but concluded that “none of these transactions caused financial harm to the university.”  The report also determined that “no one in university management was aware of Cecilia Chang’s intricate fraud scheme.”

Leading what the university has described as an independent investigation was Frank Wohl, a partner with the Manhattan based law firm, Lankler, Siffert & Wohl LLP.  Wohl’s firm concentrates in litigation and dispute resolution—representing private and corporate clients in civil litigation, regulatory investigations and white-collar criminal matters.  Wohl most recently defended Garth Peterson, an ex-Morgan Stanley Executive who pleaded guilty of violating federal anti-corruption laws by acquiring millions of dollars worth of property investments for himself and a Chinese government official. Peterson faced a maximum of five years in prison for the fraud and bribery, but was sentenced to only nine months.

Although Wohl’s investigation of St. John’s University has concluded that no crime had been committed by Harrington and Wile, the fraud committed by Cecilia Chang was facilitated by the university’s failure to require strict compliance by Chang with financial controls that were in place.

There are members of the St. John’s University community who are unhappy with what they believe is an attempt by the university to move on from the scandal without admitting wrongdoing.  One member of the alumni wrote to the Crisis editor to say that she was “outraged, disgusted and also saddened by the events that occurred at my alma mater…. Nowhere do I see contrition and atonement mentioned.”  This alum was referring to a mass mailing to the St. John’s University alumni she received last week from Peter P. D’Angelo, chairman of the Board of Trustees, which she believed minimized the damage done to the university by the president and his chief of staff.

In his letter to the alumni, D’Angelo asks the St. John’s community to view the events surrounding the financial improprieties “in the context of 24 years of dedicated leadership and service by Father Harrington, who retired as President last month.”  D’Angelo also advised the alumni that “earlier this summer, Mr. Wile resigned as Senior Vice President of Institutional Advancement and Athletics and Chief of Staff to the President.”  D’Angelo reassured the alumni that “following the disclosure of Cecilia Chang’s crimes, a number of measures were immediately implemented to expand the university’s internal controls and enhance its policies.”

Rev. Harrington himself has never publicly acknowledged any wrongdoing. In his letter of resignation posted on the university website, Fr. Harrington reflected on all he had done to “enhance our fiscal profile,” and stated that he was “pleased that during each of the last 24 years St. John’s has enjoyed a surplus in its operating budget. In March, 2013, the University’s investment portfolio reached $411 million, the highest in our history.”  Fr. Harrington concluded his letter of resignation by saying that “I will leave the presidency cherishing many memories.”

It is clear that St. John’s University would like to move on from this scandal.  But, it is less clear whether the university community will allow that to happen.  Beyond the alumni, there are many stakeholders on the St. John’s University campus—some of them on the faculty—who remain concerned that they were not part of the process of investigation.  On April 11, 2013, The Torch, St. John’s University student newspaper, reported that 66 members of the faculty had signed a petition requesting more transparency in the investigation.  Writing that “we seek a review that is thorough and comprehensive…. There should be a public release of the recently appointed investigator’s report alongside evidence to support its findings, including minutes of Board meetings and other supporting documents, and a detailed forensic audit that can uncover any inappropriate or illegal use of funds,” the faculty petitioners asked for a “broad based oversight committee of faculty, alumni and student representatives which reviews all of the above materials and makes recommendations to the Board of Trustees for action.”

It is likely that many of these faculty members may not be willing to move on as quickly as the Board of Trustees appears to have done.  One faculty member said that although she could not speak for the faculty, she found the lack of transparency “regrettable because it leaves a cloud of uncertainty over the entire affair. Was a forensic audit conducted?  Are there any legal repercussions to the ‘errors in judgment’? These issues should be clarified by the Board…. Faculty should have been included in the process because we are an important part of the university and should have a voice in major issues facing the university.”

This faculty member is concerned that the whole story may never be known.  She may be right.

Anne Hendershott

By

Anne Hendershott is Professor of Sociology and Director of the Veritas Center at Franciscan University in Steubenville, Ohio. She is the author of Status Envy: The Politics of Catholic Higher Education; The Politics of Abortion; and The Politics of Deviance (Encounter Books). She is also the co-author of Renewal: How a New Generation of Priests and Bishops are Revitalizing the Catholic Church (2013).

  • Alex M

    I guess we all have a personal door to Heaven and to Hell, how will you enter, where and why? We all know how to look smart and act stupid at the same time…

  • Adam Baum

    The 66 faculty members are right and I’ll go farther. This stinks of being a whitewash.

    1.) When you suspect financial wrongdoing, you don’t get a lawyer. No matter what their presumptions to the contrary, they don’t know how to review financial records to offer an opinion on the them.

    2.) Wohl’s investigation could NOT determine that there was no “criminal wrongdoing”, a lawyer’s “report” is not an adjudicate matter.

    3.) If there are “conflicts of interest and failures to fully disclose those conflicts to the Board of Trustees,”then while there may not be criminal wrongdoing, these are certainly matters which call for dismissal, not only of the perpetrators, but the BoD, since they should be, as a matter of course, requiring affirmation disclosures of conflicts of interest and reviewing management performance.

    • slainte

      “….When you suspect financial wrongdoing, you don’t get a lawyer. No matter what their presumptions to the contrary, they don’t know how to review financial records to offer an opinion on the them….”
      An institution gets a lawyer when it wants to contain a problem and remain willfully ignorant of the true scope of any alleged fraud. That institution can then avoid having to disclose inconvenient and incriminating facts to donors, incoming students and their parents, and the public at large. Willfull ignorance can be bliss.
      Lawyers contain scandals; accountants and auditors disclose the facts that are the stuff of scandals.

      • Adam__Baum

        With the exception of chaining the word “contain” to “minimize”, we are in agreement.

        • slainte

          So stipulated.

  • davend

    Since Anne Hendershott works for a competing university, this comes across as a hit piece.

    • Augustus

      Oh, how clever! Since there are only two institutions for parents of college-bound children to choose from, why all Dr. Hendershott needed to do is take out St. John’s and her own institution will monopolize higher education for decades to come! Too bad no one on the faculty at St. John’s thought of it first. Oh, wait. Didn’t Dr. Hendershott teach at a different institution when she first wrote about St. John’s in Crisis last spring? Oh dear. Looks like she’s going to have to write a hit piece on her former employer too. I guess it wasn’t such a clever strategy after all…

  • Mack

    Let’s move along and get back to faulting public-school teachers – who have no control over budgets – for everything that’s wrong in the republic.

    • cestusdei

      Public teacher unions have huge influence over budgets by their incessant demands for more and more and more…while student performance drops and drops and drops…

    • Adam__Baum

      Aside from the fact that the article has nothing to do with public schools…

      I work three blocks away from my state capital building. Whenever there’s even the whiff of a budget cut, the teachers show up in the state education tea shirts in force, which is easy because their union has a nearby office that monitors such things. Sometimes, they even manage to get parents to send kids to protest.
      To be blunt, you are either ignorant, disingenuous or an NEA troll.

  • Art Deco

    Fr. Harrington is a Vincentian, no? Does the rule of his order permit personal real-estate investments?

  • Arturo

    Let’s not forget that Chang was the main suspect in the murder of her husband.

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