Well, it seems financial impropriety has hit two of Pittsburgh's biggest learning institutions, the University of Pittsburgh and my alma mater, Carnegie Mellon University. According to a recent article in the Pittsburgh Post-Gazette, the two universities entrusted Westridge Capital Management with a combined $114 million. Apparently all of the money is gone, and both schools are suing Westridge's Paul Greenwood and Stephen Walsh of fraud. Boy, am I glad I didn't donate during the last alumni appeal!
Fraud--I'll say, since the two allegedly stole more than half a billion dollars from their clients. I'll also charge them with extremely bad taste, since their laundry list of purchases include Steiff teddy bears, some more than $80,000 each. Half a billion buys a lot of teddy bears, even $80,000 ones, as well as rare books, condos, cars, and gifts to current and former spouses.
Investigators are theorizing that Greenwood and Walsh devised a Ponzi scheme not unlike the now infamous case of Bernie Madoff. According to the P-G article, Mr. Greenwood told Pitt's assistant treasurer about four weeks ago that they had $2.8 billion under management--though that number is now in question. And on February 2nd, Pitt sent an additional $5 million to be invested.
I'm really torn deciding who should be blamed more: Westridge, for duping all of its clients, or Pitt and CMU, who were gullible enough to be duped (Isn't CMU's Tepper School of Business supposed to be one of the Top 10 Business Schools in the US?). But here's the bad news, latest news stories report that it is unlikely that Pitt or CMU will get even pennies back on the $114 million they invested.
I have to hand it to Greenwood and Walsh for completely going through half a billion dollars and having little or nothing to show for it--well done! Were you trying to do a remake of Brewster's Millions? Even when my beloved Independence Air went belly up and the bankruptcy court divvied up everything, I got back nearly two-thirds of what they owed me. Now I'm feeling not so bad giving a start-up airline some of my money. At least I got enough back for one of those fancy teddy bears--albeit the Build-A-Bear kind.
Frank Rich mentioned this scandal in his NY Times Op/Ed column today (03/08) I got the impression that Westridge invested the money with Madoff (after they got their cut, of course), but maybe I'm wrong on that.
ReplyDeleteI have to say, though: part of me feels a distinct sense of irony about this--in that Pitt and CMU are being paid back for decades of overcharging their students and excessive executive compensation (hello Mark Nordenburg.) The trouble, though, is: it's invariably the students that lose opportunities. How many kids are going to be turned away because there's no scholarship money in the till anymore? Probably too many.
Imho, the Bernie Madoffs and Westridges of the world need to be thrown in state prison among the general population to get a sense of how the other half lives.