Filing for bankruptcy protection may be the next step for UW-Oshkosh’s private foundation state Rep. Amanda Stuck, D-Appleton, told the Journal Sentinel Thursday. The foundation is struggling to repay the $14.5 million it illegally transferred from the university to finance and back loans on several private development projects.
"Things are pretty tight and bankruptcy is one of the things they've discussed," Stuck said to the Journal Sentinel. She serves as a member on the foundation, in addition to representing her Appleton district in the state legislature.
According to a statement published by the Board of Regents Jan. 18, UWO requested that the Department of Justice take legal action against former UW-Oshkosh Chancellor Richard Wells and former Vice Chancellor of Administrative Services and Chief Business Officer Thomas Sonnleitner, who oversaw the foundation's misuse of funding and other illegal activities.
“Both the state constitution and UW System policies prohibit a public entity from supporting a private entity, and campuses have strict rules to prevent university executives from being in decision-making roles on behalf of university foundations," the statement said.
If the case proceeds, the foundation will find it difficult to repay the debt it acquired under Wells and Sonnleitner between 2011 and 2014, because few of the loans it took out were legally guaranteed. The Journal Sentinel reports that, in addition to owing banks $12.5 million from unpaid loans they backed using UWO funding, the foundation still owes UWO itself another $5.5 million out of the $11 million it took directly from the university.
“Because the actions of Wells and Sonnleitner were unconstitutional, UWO could not legally guarantee the Foundation’s bank loans. UWO and the UW System cannot be held responsible for the Foundation’s project expenses or debt service,” the report said.
The foundation spent an estimated $14.5 million on construction projects, including the Alumni Welcome Center, the Oshkosh Sports Complex and the Best Western Waterfront Hotel and Conference Center, as well as the installation of two green energy bio digesters, according to the Journal Sentinel.
Neither representatives from the university nor its foundation could be reached for comment at this time.
