Wednesday, January 15, 2020

Former UW Oshkosh officials plead guilty, agree to pay fine, restitution to settle foundation case

Judge John A. Jorgensen presides over sentencing hearing for two former UW Oshkosh officials. 

By Miles Maguire
The former chancellor of the University of Wisconsin Oshkosh and one of his top aides pleaded guilty Wednesday to a single count of felony misconduct in office with each accepting a $5,000 fine and promising to pay $70,000 apiece in restitution to settle the criminal case against them.

Former Chancellor Richard H. Wells, 72, and former Vice Chancellor Thomas G. Sonnleitner, 79,  had faced a total of five felony counts that could have netted them $50,000 in fines and nearly 18 years in prison.

They were accused of illegally providing loan guarantees from the university to the UW Oshkosh foundation to support five real estate projects. The one count they pleaded guilty to was related to the Best Western Premier Waterfront Hotel and Convention Center, which has been a financial success for the foundation.

In accepting the plea agreement, Winnebago County Circuit Judge John A. Jorgensen expressed sympathy for the legal arguments advanced by the defendants.

Campus leaders at the time of the misdeeds in this case were forced to look for creative responses to budget cutbacks, he said. He also noted that the UW System’s universities and related foundations often worked very closely together and that what the two Oshkosh officials did “seemed to be a practice throughout the state.”

He referred to a defense memorandum that described 2,000 transactions from UW System schools to their foundations betweeen 2011 and 2016 that came to $25 million. Campuses that passed money to their foundations include UW Madison, UW Milwaukee, UW Platteville and UW Superior, the memo shows. These figures undercut the prosecution's consistent argument that state money can never flow outward to a private foundation.

Neither Wells nor Sonnleitner was ever accused of putting any money into their own pockets. Assistant Attorney General W. Richard Chiapete said the two men were motivated by a “zeal for public recognition and personal achievement rather than that of a personal gain or personal greed.”

He said the felony conviction meant “a significant stain on the reputation of both of these men.”

Raymond M. Dall’Osto, the former chancellor’s attorney, said he wanted to take the case to trial but was overruled by his client. One factor was the rising cost of legal services, already “in the six figures,” Dall’Osto said.

Wells was also reluctant to mount a full-throated defense, Dall’Osto told the court, because the former chancellor did not want to speak out against UW Oshkosh or its officials.

“A directive by Mr. Wells to me throughout this case in interacting with the press was never to talk against the people at the university [or UW System] because they’re doing their jobs,” Dall’Osto said. “His loyalty to the University of [Wisconsin] Oshkosh and to the Oshkosh community is great.”

UW System officials were not as gracious in their description of the former Oshkosh officials. In a victim impact statement, the president of the system’s board of regents, Andrew S. Petersen, said “the criminal acts of these former administrators” had resulted in significant adversity for the school.

“For the last several years, the institution’s financial future, strategic planning, recruitment efforts and public persona has [sic] been impeded and impugned by an institutional legacy of ‘unethical behavior and bad acts,’” Petersen said.

He identified eight specific impacts that resulted from the criminal case, including “in excess of 250 media and public record requests for information,” a threat to the school’s accreditation status, a disruption in fundraising, staff turnover and “the loss of the chancellor’s residence.”

Although the state said Wells and Sonnleitner transferred about $30 million between the university and the foundation, their lawyers argued that this exaggerated the effect of their actions and that this amount of money was never at risk. 

On one occasion the two men "improperly forgave a foundation loan in the amount of $289,362," a defense memo states. But in the same time period, the foundation forwarded $5.6 million to the university." Thus, without the forgiveness, the foundation could have easily repaid the $289,362 and still donated $5.3 million."

Despite the criminal case against them, Wells and Sonnleitner continue to enjoy considerable support among the school’s major backers, including restaurant chain founder Craig Culver and Bill Wyman, chairman of the Oshksoh Area Community Foundation, both of whom put their names on letters that were included in the court file.

As part of his sentencing memo, Wells also included reference letters from two former chancellors, Petra Roter, who served on an interim basis, and Edward Penson, for whom one of the school’s major teaching awards is named.

In addition to the hotel, the other projects that were part of the criminal case were two biodigesters, a stadium complex and a conference/welcome center.

Restitution will go to UW System, with half the money due by the end of this year and half due at the end of 2021.

“Defendant Sonnleitner, living on fixed income, will need to gut or otherwise seriously impair his retirement account to satisfy this debt,” a defense memo said. “The state has reviewed the defendant's sworn financial statement and agrees with this characterization.”

At the end of the hour-long hearing Wednesday, the state attempted to extend the length of time that Wells and Sonnleitner will be without their right to vote due to their felony conviction. “It is the only hook we have” to make sure restitution is paid, Chiapete said.

After Sonnleitner’s attorney, Steven M. Biskupic objected, noting the strong character references both defendants had received, Jorgensen rejected the state’s request and said their voting rights will be restored as soon as their fines are paid.

Much of the commentary after the hearing focused on the need to move beyond the foundation saga.

“Today’s guilty pleas are the result of a three-year process to bring about public accountability, while affording UW Oshkosh the ability to renew its focus on its students and mission,” regent Petersen said in a prepared statement. “We are gratified that DOJ and UW System’s efforts resulted in restitution and acknowledgment of misconduct in office by former UW Oshkosh officials.”

“Today marks the end of a long, difficult chapter for the University of Wisconsin Oshkosh,” said Chancellor Andrew J. Leavitt. “Everyone is moving forward.”

“I’m glad they can put this in the past,” said UW Oshkosh Foundation Chairman Timothy Mulloy, referring to Wells and Sonnleitner. “It’s time to look to the future.”

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