May 20, 2018; Boston Globe
The abrupt closing of Mount Ida College—announced on April 5th—and its subsequent sale to the University of Massachusetts at Amherst have raised many questions about what was going on in the lead-up to the action, which left Mount Ida students and parents adrift in terms of their educational direction. Now, the Boston Globe is reporting on an odd nest of relationships at the center of the nonprofit that could represent conflicts of interest. As Laura Krantz writes, a mysterious $16.5 million that kept Mount Ida viable for a while “came through a shell corporation that obscured its true source: Rosalie K. Stahl, a 98-year-old New York City real estate investor and longtime personal client of college president Barry Brown.”
The arrangement helped the troubled school stay afloat a bit longer, but Stahl stood to benefit too, through interest she could collect on her loans. She was also probably eligible for a tax deduction for an $8 million gift she also made to the school in 2015. Previously, when Brown worked at Suffolk University in Boston, Stahl helped bolster that school, too, documents show.
“The entity that loaned Mount Ida $16.5 million is listed publicly as Carlson Property LLC,” Krantz reports. The loan resulted in Carlson Property holding a mortgage for around 15 acres of the school’s campus.
“Brown’s name does not appear on any public filings by the college,” says Krantz, “nor does the name of his client, but after questions from the Globe, trustees acknowledged that Stahl’s trust funded Carlson.” But Brown is a trustee of Stahl’s personal trust.
All of this raises many questions. Scott Harshbarger, a nationally known expert in the governance of nonprofits and a former Massachusetts attorney general, said, “This is the president of an institution with a private financial interest”—which, in and of itself, poses a problem.
Harshbarger adds that there should have been public disclosure around the loan and the tangled relationship that underwrote it. “There is a whole trail of insider dealing here that could possibly be justified as in the best interest, but there’s no core documentation or disclosure so that anybody independently can be satisfied that that’s the case,” Harshbarger said.
Then, there are the questions of whether or not Brown treated the donor fairly.
“If I were one of her heirs, I would really be upset,” said Lawrence Zicklin, a former managing partner at the investment management firm Neuberger Berman and expert in business ethics.
Despite the fact that Mount Ida’s trustees have said they knew of the relationship and that it had been disclosed before hiring, James Finkelstein, professor emeritus of public policy at George Mason University and an expert on the role of university presidents, calls the relationship both unusual and troubling.
“There is certainly a conflict of interest, no doubt about that,” Finkelstein says. “The question is how it was dealt with, what was the level of details disclosed to Mount Ida trustees, and what actions they specifically took to either wave the conflict or mitigate the conflict? Mount Ida has been unwilling to share any documentation other than to say, ‘take our word.’”
“I’ve never heard of university president who is a trustee for an individual’s affairs also using their role as trustee to benefit the institution where they serve as president,” he continues. “It’s a pretty significant issue and to my knowledge unique in higher education.”
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Scrutiny shows the tangled ties are even more complex. As reported by the Globe:
The ties among Brown, Stahl, Suffolk, and Mount Ida stretch further. Jason Potts, the CFO at Mount Ida, worked at Suffolk under Brown as director of finance and real estate. Stahl’s grandson, Isaac, is a tennis coach at Mount Ida. Isaac at one point ran a real estate business with Potts. Robert Dannin, a Mount Ida trustee, is the husband of one of Stahl’s daughters.
From 2001 to 2008, Brown served as senior counsel at the national law firm Holland & Knight. Documents show that over the years, the firm continued to do business for Stahl. The firm represented Mount Ida in the recent sale of its Newton campus to the University of Massachusetts Amherst. Mount Ida also agreed that Holland & Knight could represent Carlson when it loaned money to the college, according to the firm.
Stahl seems to have followed Brown through his career as a college administrator. In 2004, when Brown was a professor at Suffolk, Stahl purchased an $85 million office building in downtown Boston and leased it to the university. The building, 73 Tremont St., has now become the school’s main building, with the president’s office on the top floor, overlooking Boston Common. A gold plaque outside identifies it as the Rosalie K. Stahl Center.
But experts also found the terms of the 73 Tremont deal unusual. The Tremont Street building is owned by an LLC, registered to both Stahl and Brown, to which Suffolk continues to make payments. It is unknown whether Brown profits personally from this.
Carlson Property has agreed to forgive almost half of the balance of the $16.5 million loan, but Finkelstein maintains that the lack of transparency around the details, which include the school’s conflict of interest policy, doesn’t reassure:
Do they have a policy? Was there a violation of the policy? We can’t answer any questions without seeing it. There’s no reasons for any nonprofit to withhold that information from the public.
It could be that when this president was hired he fully disclosed his relationship and there was language in his contract that waived the conflict. Unfortunately, in the absence of transparency people tend to assume the worse.
Stephen Joel Trachtenberg, a professor of public service and president emeritus of George Washington University, agrees that the details are critical in order to make any judgment about whether all is above board.
“I’d be curious to ask the benefactor what her motive was,” he said. “Was she fully informed of what was happening? It may have simply been an effort to do good and keep the school alive. On the basis of the information we read, we can’t easily come to any conclusions, I’m afraid.”
Meanwhile, Brown and the Mount Ida’s trustees were asked to absent themselves from the school’s commencement by the students who ran it.—Ruth McCambridge