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| Deborah Daniels |
A former federal prosecutor will look at Ball State’s fraud cases from 2008 and 2010 that totaled $13 million.
The Board of Trustees voted Thursday to allow its chair to hire outside resources without calling a board meeting on these decisions. This gives the chair, currently Rick Hall, the broad power to quickly hire outside help, allowing the board to avoid a cumbersome number of meetings, said Tom Taylor, vice president for enrollment, marketing and communications.
Hall is using this new power to hire Deborah Daniels to “bring in someone with fresh eyes” to look at the two fraud cases the university was a victim in, Taylor said.
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The $13 million loss 2008 $8.165 million Gale Prizevoits, representing the university as director of cash and investments, entered into three putative contracts with Seth Beoku Betts of Betts and Gambles. The contracts, dated July 3, July 24 and Dec. 9, totaled $8.165 million for buying collateralized mortgage obligations and selling them to make a profit. Betts received a sentence of four years and three months for defrauding the university. April 27, 2010 $5 million Once again, Prizevoits created a putative contract — this time with Blackhawk Wealth Solutions Inc. for $5 million. The contract states the company would get federal Treasury STRIPS, with Ball State receiving 25 percent of the net profits. However, $3 million of this money found its way to George Montolio of New York. He received three years in prison for defrauding Ball State. |
Daniels — a former U.S. attorney and U.S. assistant attorney general and former Gov. Mitch Daniels’ sister — is currently at the Indianapolis office of Krieg DeVault.
She will review the case and look for changes that can be made to better strengthen internal controls and prevent any kinds of fraud in the future.
“There are no absolute safeguards, but there are best practices,” Taylor said. “The external folks the board will bring in will really [see if] those are the best approaches.”
After uncovering the fraud cases, the university put in place new checks and balances, said Randy Howard, vice president for business affairs and treasurer, in an interview with The Daily News in June. An example is that the investment office cannot purchase a security from brokers unless they are on a university pre-approved list.
Taylor said the new review will look through the university’s past investments, to double check what he is confident was a thorough first internal review.
The U.S. Attorneys’ Office contacted Ball State in September 2011 about the university being a potential fraud victim, prompting an internal review. Ball State’s review uncovered two cases from 2008 and 2010 that involved investments made by Gale Prizevoits, former director of cash and investments.
“She signed contracts that the university didn’t even know existed,” Howard told The Daily News in June.
In addition to hiding these contracts from the university, he said Prizevoits had misrepresented what was in the contracts, going in and changing “the nature of some of the investments in the investment records.”
After the review, Ball State handed the information over to the U.S. Attorneys’ Office to investigate the potential fraud cases.
These ongoing investigations lead to the arrests and sentencing of what Taylor called “two of the major players.”
George Montolio, 48, of New York was sentenced March 7, 2013, to three years in prison for defrauding the university after receiving some of the money from Prizevoits’ $5 million investment with a company called Blackhawk. Recently on June 5, 38-year-old Seth Beoku Betts of Florida received a sentence of four years and three months in prison for separate fraudulent investment contracts he made with Prizevoits, totaling $8.165 million.
Montolio and Betts were ordered to repay the university for $3 million and $8.165 million, respectively.
“What happened was really awful,” Taylor said. “Everyone involved — the university and the board — is sick that it happened. Unfortunately, these things do happen. ... There are unscrupulous people who commit criminal activity.”
Related articles:
- Ball State looks to recover from fraud cases
- Ball State victim of $13M total in fraud
- Adviser gets 4 years in prison for defrauding Ball State $8M
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