An investigative report questioned President Benjamin Ladner's spending of more than a half-million dollars on vacations, parties and food, the Washington Post reported. Ladner was also operating under a second contract negotiated a few years after he arrived at AU in 1994, unknown to many board members.
The probe could cost $1 million in legal fees, sources said.
"It galls me to learn that Ben incurred a travel expense for himself alone to Nigeria of $22,345," said trustee Paul M. Wolff in a letter sent to board members Tuesday, according to the Post. "Had he bought a business elite ticket, the savings would have covered a student's tuition for one semester." Tuition this year is about $28,000.
AU has turned over documents to the U.S. attorney's office, which is working with the FBI, in compliance with a subpoena amid a probe into allegations Ladner misused university money, according to the Post.
The Internal Revenue Service has contacted the university regarding the investigation but is not actively involved, according to the Post's anonymous sources.
The IRS could levy tax penalties against Ladner and members of the board if it finds evidence of "excess benefits" for executives in 501(c)3 nonprofit organizations like AU, according to a report from the Association of Governing Boards of Universities and Colleges.
Benefits are excessive when "pay and benefits appear too high for the market, in the judgment of the IRS, or [they] raise questions about the nonprofit organization's purposes," according to the report.
The university reported Ladner's compensation in fiscal year 2004 as $633,000 on tax forms, but the Post's sources say his compensation was more than $800,000.
The Board of Trustees began investigating Ladner this summer after some received an anonymous letter alleging he spent university money on European vacations, presents for his children, his son's engagement party, a personal French chef and other expenses. The chef, Rodney Scruggs, was laid off last week.
Ladner has been on administrative leave since Aug. 24 amid what has, until recently, been an internal investigation.
Ultimately the board's audit committee reviews school spending, but departmental managers are responsible for overseeing their own budgets, Kudravetz said. Ladner is the departmental manager in charge of the budget of the president's office.
Protiviti Independent Risk Consulting, the company the university hired to complete the internal audit, conducts periodic audits of different AU departments. Kudravetz did not know when Protiviti last audited the president's department.
Ladner's spending by the numbers
$1 million estimated cost of Ladner investigation $220,000 chef's services $100,000 social secretary services $54,000 driver's expenses $44,000 spent on alcohol $22,345 expenses for a trip to Nigeria $6,000 paid in club dues $5,000 lunch hosted by Nancy Ladner
