- Quick Takes: 2 DUI Arrests for President of Mary Washington, Investors Sue Charleston Southern, Adding Liberal Arts to Business, Showdown in West Virginia, Gains Seen From Tax Break, $100M for Virginia, The 'Eurocommuter' Student
- Quick Takes: Second Thoughts in California, Economist Admits Fraud, Nobel in Medicine, Benefits Data, Artifacts Dispute, 'Fighting Sioux' Warning, Removing Sex Offenders, Middlebury Seeks Campaign Record, 'Cloud Computing' Drive, 'Booze News' Questioned
- Quick Takes: Faust Didn't Say It, Questions on Colorado Choice, Slippage at Sallie Mae, Charleston Southern Settles Suit, Reforming Higher Ed in Middle East, $5M Surprise for Temple U.
- Harvard rejects call to divest from fossil fuels
- So You Say You're Broke?
Honey, I Lost the Endowment
Al Parish has been known for his flashy wardrobe and big spending ways in Charleston, S.C. His collection of fancy pens was believed to be worth hundreds of thousands of dollars. And the Web site of one of his investment companies featured a cartoon superhero version of Parish, dubbed "Economan."
An economics professor at Charleston Southern University, Parish was the go-to guy for business leaders, local reporters, and people with a little money to invest. He provided advice, analysis and -- through several investment companies -- a great way to get rich. Except for one problem: According to a suit filed by the Securities and Exchange Commission last week, the reports that investors received were false and the money invested -- about $134 million -- is almost all gone. As SEC investigators attempted to question Parish, he claimed to be suffering from amnesia and checked himself into a hospital, so he has not commented on the mess, leaving investors and investigators very much in the dark.
One of those investors is Charleston Southern, where the board thought so highly of the university's star professor that it gave his various funds $10 million from the endowment to invest. The university is now suing to recover the funds, but the board chair acknowledged in an interview Saturday that it "doesn't look good" for there to be any money left to recover.
Johnny E. Ward, the board chair, said that he didn't know the exact size of the university's endowment. But several databases report (based on information prior to last week) that the university's endowment is worth just over $13 million. The university's last tax form on record with GuideStar, which collects such documents, reports investment funds of about $18 million.
Because the university's endowment isn't large, Ward said, funds from it "aren't used for everyday operating capital" and "we don't see this as something that will not cause us to operate in the black." At the same time, Ward said that there would need to be "adjustments" in the university, if the money is not recovered. "We are just praying that the money might be found somewhere and that we could recoup some of it," he said.
Ward said that he did not know if Parish proposed investing the university's money or if the university went to him. Ward said that the board's Investment Committee, of which he is not a member, brought the idea to the full board. "We thought it looked like a good idea because of the high returns he was getting," Ward said.
While Parish remains listed in the university's online directory, Ward said he is "no longer an employee of the university." Ward declined to describe the nature of Parish's loss of employment status.
Charleston Southern is a university of about 3,000 students, and Ward described it as a supportive community, with shared Baptist values. "We all just can't believe it," Ward said. "It's just terrible. We're completely at a loss for words. We just had all the confidence in the man -- everyone used him all the time for his economic forecasts. It's just unbelievable."
According to the SEC complaints, Parish sold interests in five investment funds from 1986 until recently. Four of the funds were described as "informal pools of money" and they had different types of investments -- commodities and securities futures, bonds, stocks, etc. One of the funds focused on "hard assets" such as jewelry and art.
Investors and would-be investors were shown detailed financial results for the various funds, and those results suggested that they were earning substantial rates of return. According to the SEC complaints, however, "investors received information grossly misrepresenting the amount of assets in the respective funds and misrepresenting the rates of return."
The SEC complaint added that "without disclosure to the investors, virtually all of the assets of the funds have been dissipated."