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| Breaking News: Criminal charges filed in University Place scandal |
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| Wednesday, 01 November 2006 | ||||||
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Former vice president of finance indicted for misuse of funds Jerry Neil Wallace, former University of Idaho vice president of finance and administration, was indicted Monday and ordered to appear before a magistrate in Latah County on two felony charges of misuse of public money stemming from UI’s failed University Place project. The criminal complaint against Wallace was filed and sealed on June 30 in order to meet state requirements of the statutes of limitations and allow state investigators to complete inquiries, said a press release issued by Latah County prosecuting attorney Bill Thompson. The records were unsealed on Oct. 25 by Judge W.C. Hamlett after the court issued a summons to Wallace and completed the investigations, court documents said. The trial is schedule for 8:45 a.m. Nov. 13 at the Latah County Courthouse. “The whole idea was to allow the investigation to reach its conclusion so that we could make a decision about if pursuing charges was appropriate,” Thompson said, noting that it would not have been fair to Wallace to publicize charges only to conclude the investigation and discover nothing illegal had been done. “But at the same time we had to file something with the court to reach the statute of limitations.” The first felony count deals with Wallace mischaracterizing an agency account in the university’s fiscal year 2001 audit report, Thompson said. The second deals with Wallace misusing the account and “treating it as an authorized loan” instead of as a debit-style account. A report in court documents filed by Detective Brett Quilter of the Boise Police Department, who was assigned to the state investigations with the Ada County Sheriff’s office and Idaho State Police, summarized the issues at University Place (referred to as “Idaho Place” in court documents). The project, begun in 1999, had the goal of constructing a $136 million, multi-building UI branch campus in Boise. In 2000, the UI Foundation — of which Wallace was treasurer — was placed in charge of the project. Wallace was placed in charge of the project and was the head of financing for both the university and the Foundation, which are separate entities, the report said. In November 2000, Wallace opened an agency account that would cover project costs and pre-development. Quilter’s report states that Wallace did not receive or seek approval or authorization from the Idaho State Board of Education, UI’s regents, for the account to be opened or funded. According to the board, agency accounts are supposed to operate like a debit account in which only funds that have been deposited can be withdrawn. The accounts are not allowed to be in deficit. The report said that Wallace had planned financing for the project to come from state issued bonds. However, the 2001 Legislature did not approve the project bonding, leaving University Place with no source of funding to cover the expenses — which had hit at least $2.2 million by June 2001. The failed project resulted only in the completion of the Idaho Water Center, which cost the Foundation $26 million, resulted in bad publicity for the university and has stemmed a series of lawsuits. The final lawsuit, against developer Civic Place, is set to be tried in Boise on Jan. 22. After the denial of the bonds, Quilter said Wallace had to decide how to characterize the money in UI’s 2001 annual audit. The report states that Wallace falsely reported the expenditures as UI “construction in progress.” He then received the Foundation’s approval to spend $12 million of Foundation funds to continue the project and an additional $1.9 million to purchase property where the project was to be built. When that money was gone, Wallace used the agency account. By the time the account was closed in early 2003, the report states the account was more than $8 million in deficit. It was at this time that then-university President Bob Hoover removed Wallace from the project. The only deposits ever made into the account was one $600,000 deposit and “three airline travel credits totaling less than $1,000” Quilter’s report states. Both Wallace and Hoover resigned in 2003 in the wake of the scandal. By falsely reporting the nature of the account and continuing to use an unauthorized agency account, Quilter said Wallace violated the Misuse of Public Monies By Officers, Idaho Code 18-5701, sections 1, 2, 6 and 7. The case has been being investigated at the federal level as well. The White Collar Crimes Unit of the Oregon United States Attorney’s Office has been working with the Ada County Sheriff’s Office, Boise Police Department and the Idaho State Police, due to a conflict of interest between the Idaho Attorney General and the case. The attorney general was one of the parties involved in some of the lawsuits stemming from University Place. Wallace has been the only person charged with criminal activity, Thompson said, due to a recent decision from the Court of Appeals that stated the misuse of public money applies only to someone who is entrusted with public money by statute. The bursar is the only person at the UI who fits the description, Thompson said. If anyone else was to be considered for criminal charges, Thompson said they would have to be considered for a different crime (such as theft), of which no evidence has been found. “There is absolutely no evidence at all that anyone intended to steal from the U of I or the Foundation,” Thompson said. If convicted, Wallace could face a maximum penalty of 10 years in prison and a $50,000 fine per count, Thompson said. However, there is no minimum penalty required, meaning the judge can impose any penalty he chooses, including probation. UI President Tim White addressed the indictment Tuesday. “While the university has settled the legal dispute surrounding the events discussed in the indictment, and has moved on confidently from the difficult days of our recent past, we are saddened that someone who held our community’s and the public’s trust is charged with breaking that trust,” White said. “We now put our confidence in the judicial system for a just outcome in the case of former Vice President Wallace. The University of Idaho is dedicated to practicing the highest business and ethical standards, stewarding the public’s dollars with respect and responsibility and operating with honesty, openness and transparency in all things. We expect this behavior from our current administrators.” For more on this story, read Friday's edition of The Argonaut.  Add as favorites (52) | Views: 1379
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