NEWTON — As the monetary image at Mount Ida College grew more and more grim and its financial institution lastly refused to mortgage extra money, the college two years in the past turned to a mysterious benefactor whose personal cash saved the college on life help, paperwork present.
The cash — greater than $16 million — got here by a shell company that obscured its true supply: Rosalie Ok. Stahl, a 98-year-old New York City actual property investor and longtime private consumer of faculty president Barry Brown.
The association helped the troubled college keep afloat a bit longer, however Stahl stood to profit too, by curiosity she might accumulate on her mortgage. She was additionally possible eligible for a tax deduction for an $eight million reward she additionally made to the college in 2015. Previously, when Brown labored at Suffolk University in Boston, Stahl helped bolster that college too, paperwork present.
The Mount Ida loans elevate questions of whether or not Brown was serving two masters and whether or not he used his twin roles to create a enterprise alternative for his consumer. Although Mount Ida trustees say Brown disclosed his connection to them, the battle is nonetheless problematic, in accordance to eight specialists in nonprofit ethics and faculty governance who reviewed the state of affairs for the Globe. The deal led the specialists to query whether or not Brown and trustees had college students’ greatest pursuits as their high precedence.
“This is the president of the institution with a private financial interest,” stated Scott Harshbarger, the former state legal professional normal and an knowledgeable in nonprofit governance.
At the identical time, a minimum of one knowledgeable puzzled at the knowledge of Brown’s apparently advising an aged investor to put important cash into a struggling faculty.
“If I were one of her heirs, I would really be upset,” stated Lawrence Zicklin, a former managing companion at the funding administration agency Neuberger Berman and knowledgeable in enterprise ethics.
The Mount Ida trustees, nonetheless, stated they have been grateful for the cash, which helped the college keep open whereas it strategized methods to achieve success in the long run.
“The board has never had any doubt with respect to President Brown’s integrity or his commitment to the welfare of Mount Ida College,” wrote board chairwoman Carmin Reiss in a assertion.
Mount Ida trustees stated Brown didn’t revenue personally from the mortgage association.
Despite the lending, trustees realized early this 12 months that the faculty wouldn’t come up with the money for to make payroll beginning in June. In March they gave college students lower than two months’ discover that the college would shut and failed to notify state regulators of its plan to shutter.
The entity that loaned Mount Ida $16.5 million is listed publicly as Carlson Property LLC. Brown’s title doesn’t seem on any public filings by the faculty nor does the title of his consumer, however after questions from the Globe, trustees acknowledged that Stahl’s belief funded Carlson.
Attempts to attain Stahl have been unsuccessful, however her daughter stated she was conscious of the transactions.
Carlson Property now holds a mortgage for about 15 acres of the campus in return for the lending, public paperwork present. An nameless donation of $eight million in 2015 additionally got here from Stahl, in accordance to a assertion from trustees.
The Boston Business Journal reported on the Carlson loans Saturday.
Brown is a trustee of Stahl’s private belief, paperwork present. He has been concerned in issues on behalf of her household for a minimum of three a long time and in a number of states, in accordance to public paperwork filed in New York, California, the Virgin Islands, and Massachusetts.
Harshbarger, who as legal professional normal oversaw the state’s public charities, stated the lending association with Carlson Property at Mount Ida might violate core fiduciary obligations that govern nonprofit charities, together with schools.
University trustees have a authorized obligation to act in the greatest curiosity of the establishment and to make knowledgeable selections about its funds. College presidents in addition to trustees are suggested to file annual battle of curiosity disclosure varieties that listing their different monetary and nonprofit pursuits.
Harshbarger, now senior counsel at the agency Casner & Edwards, additionally stated there ought to have been extra public disclosure round who was behind the lending to present how the tangled relationship might nonetheless have been in the greatest curiosity of the college.
The lending was not totally described in the school’s audited monetary assertion, nor talked about on a disclosure type the college is required to file yearly with the state legal professional normal. It asks about enterprise executed with events which have private ties to the establishment.
“There is a whole trail of insider dealing here that could possibly be justified as in the best interest, but there’s no core documentation or disclosure so that anybody independently can be satisfied that that’s the case,” Harshbarger stated.
Prior to accepting the presidency, Brown disclosed his function with the Stahl belief to faculty trustees in addition to his intention to proceed in that function, in accordance to a assertion from the trustees despatched to the Globe. Reiss, the chairwoman, stated Brown launched the faculty to the Stahl belief early in his tenure as a main donor with a historical past of philanthropy in increased schooling. She stated the monetary transactions have been negotiated at arm’s size, and Brown recused himself from discussions and votes.
“Any implication that there is or was a conflict of interest in these matters is not only unfair and misleading, it is false,” stated the assertion from the board.
Richard Lyon, Stahl’s longtime accountant, stated Brown didn’t take part in decision-making on behalf of Carlson in negotiations with the faculty. The LLC is managed by Lyon, and he stated selections have been dealt with by him in session with attorneys.
It can also be unknown how a lot, if in any respect, Brown was paid by the belief.
Brown declined a request to be interviewed for this story. The Globe despatched Mount Ida a listing of 16 questions for Brown, which he didn’t reply. It despatched trustees eight questions, which additionally they declined to reply, as a substitute offering a number of statements.
The board declined to launch its battle of curiosity coverage, Brown’s contract, or disclosure varieties, board assembly minutes, or some other paperwork to again up its assertions that Brown disclosed his conflicts, recused himself, and didn’t revenue from the deal.
As Mount Ida negotiated the sale of its campus to the University of Massachusetts Amherst, Reiss stated Carlson Property agreed to forgive almost half the mortgage steadiness.
“The Board is grateful to the Stahl Trust and to Carlson Properties, LLC for their financial support to Mount Ida College through both substantial gifts and below-market-rate loans that enabled the college to pursue a revitalization effort during the last few difficult years,” Reiss wrote.
She stated the loans got here “at a time when the college’s bank and other commercial lenders had declined to extend credit.”
According to the school’s audited monetary statements, the rate of interest on the first $12.5 million in lending was 6 p.c. The different $four million had a 6.5 p.c price. That totals about $1 million in curiosity per 12 months. The school’s different loans have rates of interest of three to 5 p.c.
James Finkelstein, professor emeritus of public coverage at George Mason University whose analysis focuses on faculty presidents, presidential contracts, and conflicts, stated that is the first occasion he has seen during which a college president additionally represents the curiosity of a donor to his college.
“Given the 24/7 demands of any university president and putting aside the potential conflicts of interest not to mention having to manage a catastrophic fiscal crisis, it is hard to imagine how Mr. Brown found time to manage Ms. Stahl’s affairs,” stated Finkelstein, who additionally served as a college administrator at George Mason, New York University, and Ohio State University and labored for the inspector normal’s workplace at the US Postal Service.
One specialist took a totally different perspective. Zicklin, the company ethics knowledgeable, stated he isn’t bothered by Brown’s battle of curiosity at Mount Ida as a result of it was disclosed to the faculty.
But he questioned whether or not Brown acted in the greatest monetary curiosity of Stahl as a trustee of her belief by advising her to lend cash to Mount Ida. Her belief now stands to lose about half her funding as the college closes.
“I sure wouldn’t be in a position of advising a 96-year-old woman of making a loan to an institution that wasn’t creditworthy,” stated Zicklin, who additionally endowed a middle for enterprise ethics at the Wharton School at the University of Pennsylvania and teaches enterprise ethics at New York University.
Brown got here to Mount Ida after greater than three a long time at Suffolk University, the place he rose from legislation professor to provost to interim president. After arriving at Mount Ida in 2012, Brown led the faculty by a interval of enlargement, borrowing $30 million to put money into the campus in hopes of attracting extra college students. But whereas the tutorial profile of the college improved, it couldn’t sustain with its debt.
At the identical time, information present that Brown continued his personal work for Stahl and different members of her household, usually out of the Mount Ida College tackle.
In 2015, Brown’s title seems on a mortgage from Stahl to one in every of her grandsons in Newton, doc present, itemizing Mount Ida College as the tackle of Rosalie’s belief. As not too long ago as final fall, Brown seems to have facilitated the switch of actual property for Stahl in New York City, signing gross sales paperwork in November 2017. His title can also be listed on paperwork of a number of different LLCs with Stahl and he serves as a trustee of a charitable basis arrange in her title.
Public paperwork on file in a number of states present that Brown has executed enterprise for the Stahl household for a minimum of three a long time, stretching again to the mid-1980s, when he was listed as a trustee of Stahl’s belief in California. In 1992 he was a co-plaintiff with Stahl’s daughter in a court docket case involving their property in the Virgin Islands.
The ties amongst Brown, Stahl, Suffolk, and Mount Ida stretch additional. Jason Potts, the CFO at Mount Ida, labored at Suffolk underneath Brown as director of finance and actual property. Rosalie Stahl’s grandson, Isaac, is a tennis coach at Mount Ida. Isaac at one level ran a actual property enterprise with Potts. Robert Dannin, a Mount Ida trustee, is the husband of one in every of Stahl’s daughters.
From 2001 to 2008, Brown served as senior counsel at the nationwide legislation agency Holland & Knight. Documents present that over the years the agency continued to do enterprise for Stahl. The agency represented Mount Ida in the latest sale of its Newton campus to the University of Massachusetts Amherst. Mount Ida additionally agreed that Holland & Knight might signify Carlson when it loaned cash to the faculty, in accordance to the agency.
Stahl appears to have adopted Brown by his profession as a faculty administrator. In 2004, when Brown was a professor at Suffolk, Stahl bought an $85 million workplace constructing in downtown Boston and leased it to the college. The constructing, 73 Tremont St., has now grow to be the school’s foremost constructing with the president’s workplace on the high flooring, overlooking Boston Common. A gold plaque exterior identifies it as the Rosalie Ok. Stahl Center.
But specialists additionally discovered the phrases of the 73 Tremont deal uncommon. The Tremont Street constructing is owned by an LLC, registered to each Stahl and Brown, to which Suffolk continues to make funds. It is unknown whether or not Brown earnings personally from this association.
That association requires Suffolk to pay the mortgage in addition to a month-to-month charge to the LLC, which is now registered to the tackle of Mount Ida, and says the constructing might be donated to the college, topic to the mortgage, upon Stahl’s dying.
Finkelstein, the knowledgeable in faculty presidents, stated it’s typical for schools to set up restricted legal responsibility firms, particularly for actual property transactions, with college workers as members of the company. But he stated that is the first time he has seen an worker as the supervisor of an LLC that does enterprise with the college.
Also throughout Brown’s time at Suffolk, Robyn Stahl, Rosalie’s daughter, donated an 80-acre horse farm in northern Maine to the college.
Suffolk at the time touted the donation as a priceless reward for the college, though little instruction ever befell on the property, in accordance to former Suffolk officers. In 2016 Suffolk bought the farm to a native Native American tribe for about $700,000, public paperwork present.
For years, Rosalie Ok. Stahl lived in a condominium two blocks from Central Park in Manhattan. Now she is believed to reside in South Natick with her daughter in a home bought by a belief arrange by Brown.
Stahl’s daughter answered the door on two events this month when a reporter knocked. She stated her mom was aged and never able to commenting for this story. She stated Rosalie is “absolutely” conscious of the lending by her belief.
The daughter instructed a reporter to go away additional questions in the mailbox however she didn’t reply to them.
Although the Stahl loans staved off closure quickly, they have been finally not sufficient to save the college. The Mount Ida College graduation befell earlier this month in Boston in a ceremony run virtually totally by the college students, who requested Brown and the trustees not to attend.