The Wisconsin Department of Justice and UW System filed a civil lawsuit against three former high-level officials at UW-Oshkosh, which comes on the heels of an investigation surrounding improprieties involving six building projects supported by the university and its foundation.
The lawsuit states the officials allegedly mishandled millions of dollars, made illegal financial guarantees and financial transfers from UW- Oshkosh to the foundation, and spent $600,000 on a foundation project with no strings attached.
The investigation began last spring when UW-Oshkosh Foundation Board President Arthur Rathjen informed UW-Oshkosh Chancellor Andrew Leavitt that the foundation could need the university’s help with debt payments on two building projects.
According to a press release, Leavitt then immediately informed Board of Regents President Ray Cross. When UW System staff began reviewing documents, they discovered then-Chancellor Richard Wells and retired Vice Chancellor of Administrative Service Tom Sonnleitner had sent letters to banks agreeing to financially back projects owned by the foundation.
Stephanie Marquis, spokesperson for the UW System, told the USA Today Network that as a state government unit, the university could not guarantee a loan for the foundation with is a private 501(c)3 non-profit.
During the time of investigation the foundation was involved in renovation of the Oshkosh Best Western Waterfront Hotel, Oshkosh Sports Complex and construction of two digesters and the Alumni Welcome and Conference Center.
“The UWO [Oshkosh] Foundation was established to provide support to the university, and funding should have only flowed from the foundation to UWO,” read a press release from the UW System.
In June the Board of Regents hired Dane County Circuit Court Judge Patrick Fiedler to conduct an independent review of real estate project called into question. Fiedler’s report prompted Cross to request an investigation by the DOJ, which verified the improper transfers.
“They created a mess, which we are acting swiftly and decisively to clean up and show our citizens this will not be tolerated,” said Board of Regents Audit Committee Chair Michael M. Grebe on behalf of the board.
Leavitt fired Rathjen Jan. 17 and placed the foundation’s accountant on administrative leave.
Cross and the board have taken corrective actions following the investigation’s conclusion. All chancellors have been instructed to review “Memorandums of Understanding” with their respective foundations and Leavitt will create a new position at UW-Oshkosh that focuses on compliance with UW System rules.
"I certainly see this as a setback, and one that we will work through and move forward," said Leavitt in an article from Oshkosh NorthWestern. "This university holds tremendous promise for the future of our students and this region and I know that we'll persevere and get through this."