Ohio Northern University is the fourth higher-education institution to announce that it is seeking to recoup money in an alleged $554-million investment fraud, university officials said today. Ohio Northern’s endowment had $10-million invested with two Wall Street veterans who face criminal charges for allegedly using investors’ money as a “personal piggy bank,” spending at least $160-million on mansions, horses, rare books, and collectible toys.
Also tied up in the apparent swindle is $65-million from the University of Pittsburgh, $49-million from Carnegie Mellon University, and $15-million from Bowling Green State University. Securities lawyers say little value from the original investments will be recovered. Officials from all of the universities say the potential losses will have no immediate impact on their operations.
Most college endowments rely on outside investment consultants to help direct their money. Hartland & Company, a financial firm in Cleveland, steered the now-missing investments by Ohio Northern and Bowling Green to the firm running the allegedly-fraudulent scheme. Pitt and Carnegie Mellon relied on the advice of Wilshire Associates, a major California-based consulting firm.
Paul R. Greenwood and Stephen Walsh, the two Wall Street traders who owned the suspect firm, face charges of securities fraud, wire fraud, and conspiracy. Federal regulators have also sued the men, and are pursuing their assets.—Paul Fain