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In the years leading up to Finlandia University’s closure the the school used endowment funds from donors to pay for operational expenses. Endowments typically allow an entity to pull money from the interest made by the account, but not from the principal. An endowment’s trustee may take money from the principal if a donor has given explicit permission.
“You can spend them with the acceptance of the donor for the use of those funds. So there’s another, I don’t want to even say it’s a gray area. But let’s say an area of dispute. To whether or not the university physically went to each donor, to say ‘Yes. I know you provided funds for the scholarship. But we need the money to fund operation costs.’ ” – Patrick O’Keefe, Finlandia University State Receiver, O’Keefe & Associates
In last week’s episode of Copper Country Today, state receiver Patrick O’Keefe told host Todd Van Dyke that the university’s use of endowment funds is being looked at by the state attorney general’s office. In a statement to our outlet, Attorney General Dana Nessel’s officer confirmed that the office is investigating the university.
“Oh, I don’t believe for one minute that the attorney general’s office is going to let this pass under the bridge. There are several targets in, let’s say the misappropriation of these funds. You’ve got the board who came up with a very creative way to access those restricted funds. By pledging them for loans. So instead of spending the endowment proceeds. They spent loan proceeds. And that was kind of a cute way of having access to liquidity to run the university. That claim against the banks could be as high as six million dollars. Of the 12 and half million that the attorney general’s office thinks has been misappropriated.” Patrick O’Keefe, Finlandia University State Receiver, O’Keefe & Associates
The attorney general’s office did not give any details on the investigation beyond confirming the investigation. If you missed last Sunday’s Copper Country Today episode with Patrick O’Keefe to update the community on Finlandia University’s receivership, you can find it here.
