NEWS

JSU foundation audit shows thousands in undocumented expenses

Mollie Bryant

The Clarion-Ledger

Jackson State University’s development foundation canceled all of its credit cards amid an independent accountants’ report that found administrators made thousands of dollars in questionable, unapproved or undocumented purchases using the cards.

David Hoard, JSU’s former vice president of Institutional Advancement, spent almost $24,000 from the university’s development foundation at casinos and on personal items, including cigarettes, meals, movie tickets, travel and utilities, according to the report, obtained by The Clarion-Ledger.

JSU’s former Vice President of Institutional Advancement David Hoard spent almost $24,000 from the university’s development foundation at casinos and on personal items.

Hoard, who did not return repeated requests for comment, was fired from JSU in August 2014, according to university records. Hoard reimbursed the foundation for all of his charges flagged as questionable in December 2014, when the report was privately released to the nonprofit foundation and the state Institutions of Higher Learning.

After repeated interview requests, a university spokesperson said President Carolyn Meyers was out of town and unavailable for comment. Meyers answered questions posed in writing, however, and said: "At this time, I am confident that the JSUDF employs appropriate and aggressive internal controls, processes and procedures to insure that all donations to the JSUDF are spent properly."

Meyers would not answer whether Hoard was fired because of his credit card spending. She said she was not aware of him misusing other university or foundation funds.

Because the foundation is a private entity, it remains unclear why IHL became involved with the JSUDF’s financials by calling for the credit card audit and how common that practice is. Although Meyers said IHL maintains oversight of the foundation, public bodies tend to use nonprofit status as justification to block records requests for university foundation documents. Both IHL and JSU denied requests from The Clarion-Ledger for the report.

“I’m generally aware that universities have to maintain a certain amount of control over foundations, but foundations have to maintain a certain amount of independence,” Ethics Commission Executive Director Tom Hood said.

Hank Bounds, who was the higher education commissioner at the time the audit was conducted, did not respond to repeated calls for comment.

An IHL spokeswoman asked that questions regarding the foundation report be submitted in writing. The Clarion-Ledger posed a single question: Why was IHL involved in a nonprofit foundation?

In response, Commissioner Glenn Boyce released a statement paraphrasing board policy, which says the IHL board requires organizations that manage university funds or that are affiliated by name with the university to "properly manage, utilize and account for funds contributed to or for the benefit of the universities."

A month before the report came out, the foundation suspended all of its credit cards, which the foundation had issued to staff members, including coaches and development officers. Meyers said she did not know why the credit cards were canceled.

"It seemed like a smart move to me as, in my humble opinion, there were too many of these," she said.

The report’s release to the foundation board was not the first time the matter had come to its attention, according to the report.

“Issues regarding questionable credit card transactions were reported to various JSUDF board members between 2012 and 2014,” the report said. “No significant actions were taken to address the issue until 2014.”

Meyers said she discovered concerns regarding credit card use from a foundation board member during summer 2014. It's unclear if she took any efforts to address the issue at that time.

Alfred Martin, chairman of the foundation’s board, did not respond to repeated requests for comment. Alveno Castilla, the board’s legal secretary, would not comment.

'Stewards of the donor dollar'

JSU’s foundation collects funds that donors can designate as either restricted for certain purposes, such as scholarships, or unrestricted, meaning spending decisions are left to the nonprofit’s board of directors and JSU president.

Sandra Hodge, the interim vice president of Institutional Development at JSU who has not read the report, said the foundation has put into place policies to ensure donations are spent properly.

“We consider ourselves stewards of the donor dollar,” she said. “As we do learn of any issues and concerns, we do move quickly to make changes. … I would hope alumni and students trust we have done our due diligence to make sure their dollars are in good hands and spent as they were intended, as well.”

According to the report, Meyers reimbursed the foundation $384.15 for personal expenses paid for with a foundation credit card. That covered a payment of about $300 to W Hotels and Resorts and about $76 to Edible Arrangements. Meyers spent about $2,300 with Edible Arrangements and florists using foundation funds, the report said, and she also spent $800 at Marriott and $2,035.90 at Ruth’s Chris Steak House.

Meyers said the payments to florists and Edible Arrangements were for gifts to faculty, alumni and community members.

"No one at any time in any position with the JSUDF informed me informally or formally that these gifts of encouragement and good will were not supported by the JSUDF," she said. "These have never been questioned or denied to my knowledge."

When asked about the funds she reimbursed the foundation, Meyers did not explain the purpose or location of her trip involving W Hotels, and of the Edible Arrangements payment, she said: "Occasionally, although noted on my requests to charge my personal account, an edible that was probably sent to one of my personal associates was inadvertently charged to the JSUDF account by my assistant who places these orders. On discovery of this when the amount does not appear on my personal card statement, I catch the error and reimburse the JSUDF. All personal requests are reimbursed by me by personal check."

Meyers did not answer whether she continues to use university or foundation funds for personal expenses.

Only one other employee named in the report, Tammy Terrell-Brooks, director of Alumni and Constituency Relations, reimbursed the foundation for personal items purchased with a foundation credit card. Those payments totaled about $105 to Enterprise and Avis car rental services.

Brooks, who did not return a call requesting comment, also spent $1,026 at Ya Ya Creations, $560.76 at Koyal Wholesale and $66 at Harrah’s Casino.

The report reviewed the foundation’s credit card spending from July 2011 to September 2014, finding 11 employees other than Hoard had spent $15,538.37 in transactions that lacked request for expenditure forms or receipts, leaving accountants uncertain if the spending was for legitimate business purposes. Most meal and entertainment spending, for instance, lacked itemized receipts. Another $37,108.10 in credit card spending initially did not include request-for-expenditure forms.

Accountants also reviewed the foundation’s contracts, identifying 19 worth more than $1.29 million that did not appear in the foundation board’s minutes. However, all contracts must be reviewed and approved by the board under current policy, Hodge said.

'Questionable' spending spurs policy revamp

The report found Hoard, who works as a consultant for North Carolina-based marketing firm Vitalink, used his foundation credit card to pay for golf course fees, clothing, dry cleaning, medical expenses, and vehicle maintenance. The payments, which accountants identified as unauthorized or questionable, “appear to be beyond the scope of Mr. Hoard’s job description,” the report said.

He spent $684.75 at Diamond Jacks Casino, $1,533.09 at Ameristar Casino and $2,239.76 with hotels, airlines and rental car companies. He used his foundation card for an $898.62 rent payment and to pay Entergy and Verizon a total of $2,758.80. The report also shows he made a $138.82 payment to Turbotax and a $169.95 payment to Tower Loan.

Other transactions included multiple payments totaling $437.65 to Hallmark Cleaners, $1,010.52 to Belk and $362.75 to movie theaters. He also used the card at retailers including Lowe’s, Home Depot, Amazon, Barnes and Noble, Best Buy and the Apple Store.

At the time of the report, the foundation lacked a code of ethics and policy related to document retention. Although Hodge was uncertain if there is a code of ethics, she said the foundation now has a document retention policy that requires employees to keep original, itemized receipts and to submit requests for expenditures, travel and reimbursement. A comptroller and business manager review spending, as well as the foundation board’s chairman and treasurer.

In 2014, personal use of credit cards was allowed under the foundation’s policy, which required employees to reimburse JSUDF for personal spending within 48 hours or the first business day after a trip. The foundation’s current policy, however, does not allow personal spending of funds, Hodge said.

“We only expend funds based on the budget,” she said.

The foundation also didn’t have policies when it came to purchasing alcohol with foundation funds, creating “room for excessive use,” the report said. Hodge said that current policy doesn’t allow individuals to use foundation funds for alcohol.

Contact Mollie Bryant at mbryant2@gannett.com or 601-961-7251. Follow @MollieEBryant on Twitter.