Scandal at St. John’s University: An Update

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.