Friday, November 30, 2018

$2 million naming-rights deal for alumni center upset by actions of UW officials, foundation alleges

Photo by Miles Maguire
The UWO Foundation says it may sell the alumni center if the UW System continues to resist paying a court judgment.

By Miles Maguire

A $2 million naming-rights deal for the UW Oshkosh alumni center has been put on ice after the donor canceled a $500,000 check upon learning that an agreement he approved with university officials did not match his intent, court papers show.

The University of Wisconsin Oshkosh Foundation alleges in court filings that the naming-rights deal as well as several other major gifts were targeted in repeated acts of interference by university officials, possibly including UW System President Ray Cross.

In addition, according to a sworn affidavit from former state Sen. Jessica King, UW Oshkosh Chancellor Andrew Leavitt spoke to her at a memorial for longtime professor Dr. Kenneth A. Grieb and told her that future gifts in his name should be directed away from the university foundation.

King is the executrix of Grieb’s estate and had just informed the chancellor that Grieb “had left a generous gift through the UW Oshkosh Foundation for the International Studies Department,” the affidavit states. Grieb died this summer after teaching for more than 50 years at the university.

The allegations of state officials directing donations away from the foundation represent the latest skirmish between the university and its long-established fundraising arm. Rep-resentatives of Cross and Leavitt were asked to comment for this story. They declined to do so.

The dispute over charitable gifts has surfaced as the UW System is attempting to keep the UWO foundation from collecting on a multimillion-dollar judgment that would allow it to emerge from bankruptcy.

If the impasse continues, the foundation says, it may attempt to sell the Alumni Welcome and Conference Center, which overlooks the Fox River and which is currently used by the university rent free. 

The foundation also says it would sell a biodigester that sits off Witzel Avenue behind the Campus Services Building. According to the foundation, the facility is used by the university in teaching and, according to the university website, it provides energy to the school while disposing of yard and food waste.

“If the UWO Foundation cannot confirm a Chapter 11 plan by collecting on the judgment, I will recommend that that the UWO Foundation liquidate the Witzel Biodigester and Welcome Center,” Timothy Mulloy, the chairman of the foundation, said in a sworn statement. 

“I do not think that such an action is in the best interests of either the university or the UWO Foundation," Mulloy added. "But the reality is that those two assets are part of the reason the UWO Foundation was forced into bankruptcy and selling those two assets will allow the UWO Foundation to exit bankruptcy.”

Mulloy estimated that the biodigester would sell for $2 million and indicated the alumni center is worth $12 million based on its cost of construction.

Organizations that file for bankruptcy protection are typically not bankrupt in the sense of being unable to function or to meet most of their obligations. The UW Oshkosh Foundation recently disbursed more than $800,000 in scholarship funds and says that it has healthy revenue streams despite some long-term debts that it cannot repay immediately.

The bankruptcy process is intended to allow debtors to find a way to restructure their obligations and then return to normal operations. A bankruptcy judge has ordered the state to pay the foundation millions of dollars to make good on promises made by former UWO officials.

Elsewhere in his affidavit Mulloy alleges university officials interfered with pledges from two major contributors, J.J. Keller & Associates, the Neenah-based company that specializes in safety and regulatory compliance, and Sodexo, the campus food service contractor.

Keller had agreed to a series of pledges to help pay for the alumni center, Mulloy said. But when the company’s foundation was sent a reminder about this year’s installment, a company official reported that “Chancellor Leavitt contacted the J.J. Keller Foundation and instructed it to not send the pledge.”

Mulloy paid a personal visit to the company’s chairman, Robert Keller, and convinced him to continue making payments to the UW Oshkosh Foundation. The remaining installments total $43,000, court papers show.

As part of a 2013 contract renewal that was approved by the UW System Board of Regents, Sodexo agreed to pay $1.5 million toward the alumni center, and the foundation agreed to name the main ballroom there after the company.

But the payments, which were made in annual installments of $250,000, stopped this year. When foundation staff sought an explanation for the final, missing payment, a Sodexo official said the company could not make good on its pledge because of an investigation that was started by a university official.

“I was told to do nothing with regards to this,” the company official said, according to the affidavit.

In the naming-rights matter, foundation officials allege that the university told the donor to send his money to the University of Wisconsin Foundation, which describes itself as “the official fundraising and gift-receiving organization for the University of Wisconsin-Madison.”

The donor had already made one $500,000 payment to the Oshkosh foundation and then decided to hold off on making further payments after the foundation filed for bankruptcy protection in 2017.

A donor agreement with the Madison foundation was drawn up in late 2017. This agreement, a copy of which is included in court records, specified the money would be spent in support of the alumni center in return for naming rights.

In a court filing, foundation officials objected to this provision because UW Oshkosh does not own the building and “had no authority to promise naming rights.”

The agreement with the Madison foundation was signed after the donor met with Leavitt and an aide. “I also understand that Ray Cross, the UW System’s president, may have been involved with this meeting,” Mulloy said in his affidavit.

The donor then made out a check for $500,000 to the UW Madison Foundation. When Mulloy contacted the donor, the donor said he “did not understand the arrangement was not to benefit the UWO Foundation,” Mulloy said.

“He agreed to stop payment on the check, and we once again held his installment in abeyance pending resolution of the bankruptcy,” Mulloy said.

The university recently announced a second foundation for fundraising purposes and has been urging donors to use this newer vehicle for their gifts.

Gene Drecktrah is a professor emeritus of biology who serves on the board of the UWO foundation and of the UW Oshkosh Retiree Association. In an affidavit he cited numerous instances of university officials spreading false information about the financial status of the foundation in an apparently successful attempt to discourage donations.

Drecktrah said these statements have hurt the ability of the foundation to raise money and described how a close friend and retired faculty member decided to cancel his plans for “a significant endowed scholarship through the UW Oshkosh Foundation.”

The former faculty member now plans to direct this bequest to his high school alma mater. As a result he will not be “giving his money for the benefit of the UW Oshkosh community,” Drecktrah said.

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