Fallout from the closure of Mount Ida College continued this week with new revelations of personal and business ties between the college president and a benefactor who loaned the college money to try to keep it operating.
The disclosures, outlined in an article by The Boston Globe on Sunday, suggested to some experts a conflict of interest between Barry Brown, president of the Newton, Mass., institution, and Rosalie K. Stahl, a 98-year-old New York City real estate investor and longtime personal client of Brown.
Brown, is a trustee of Stahl’s personal trust, according to the article.
Among other findings, the article highlighted the existence of a shell company through which loans to Mount Ida totaling more than $16 million were made by Stahl. The article noted that Stahl stood to benefit financially from interest collected on the loans, as well as tax deductions for an $8 million donation she made to the college in 2015.
Despite attempts to use the loans and gifts to keep the struggling college open, it closed Thursday. Mount Ida’s trustees announced last month that the college would close amid mounting debt and other financial pressures and that its campus would become e part of the University of Massachusetts, Amherst. The announcement angered and disappointed students and faculty who were not given prior notice of the closure.
“The entity that loaned Mount Ida $16.5 million is listed publicly as Carlson Property LLC,” The Globe reported. “Brown’s name does not appear on any public filings by the college nor does the name of his client, but after questions from the Globe, trustees acknowledged that Stahl’s trust funded Carlson.”
Additionally Carlson Property holds a mortgage for about 15 acres of the campus in return for the loan, the Globe reported public documents show.
According to the Globe, the loans from Stahl raised questions about Brown’s professional allegiances and whether he used his position as president and personal trustee to provide a business opportunity for Stahl, and whether he put her financial interests ahead of the interests of students.
The article noted that Mount Ida trustees said Brown, who is a lawyer, disclosed his connection to Stahl and they were comfortable with the relationship.
But not everyone agreed, James Finkelstein, professor emeritus of public policy at George Mason University and an expert on the role of university presidents, said the relationship was troubling nonetheless.
“There is certainly a conflict of interest, no doubt about that,” he said. “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.’ ”
Finklestein said he has unaware of a similar situation elsewhere.
“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 said. “It’s a pretty significant issue and to my knowledge unique in higher education.”
Finklestein was not alone in his assessment. Eight experts in nonprofit ethics and college governance who reviewed the financial arrangement for the Globe also found it problematic, the news outlet reported.
Administrators of the college, which had about 1,500 students enrolled, had been looking for new options. In February it announced discussions with Lasell College about a possible merger. But those discussions ended in March. While a statement issued by the college at the time suggested it would continue operating on its own, only weeks later administrators announced it would close.
With the college now closed, university administrators have refused to make public documents that would shed light on the loan arrangement.
“The board declined to release its conflict-of-interest policy, Brown’s contract, or disclosure forms, board meeting minutes, or any other documents to back up its assertions that Brown disclosed his conflicts, recused himself, and did not profit from the deal,” according to Boston Globe article.
“As Mount Ida negotiated the sale of its campus to the University of Massachusetts Amherst, Reiss said Carlson Property agreed to forgive nearly half the loan balance.”
Finklestein said the college’s refusal to make public the documents, especially its conflict of interest policy, only made things seem murky.
“Do they have a policy? Was there a violation of the policy?” he asked. “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, also found the details of the relationship between Brown and Stahl troubling but said it was difficult to fully judge or understand the loan arrangement without seeing the documentation.
“There are just too many questions outstanding for anybody at this point to make judgments except to say that it seems highly unusual,” he said. “That said, if you have a school that’s about to go under and you’re desperate, you grab hold of anything you can. It may well be the president was doing the best he could under the circumstances. He seems to have acted with the consent of the board of trustees.”
Still, Trachtenberg would like to know the fair market value of the land used as collateral and “whether some bargain was struck or whether it was a straight forward business deal,” and whether anyone was personally profiting from it. He also wonders if the interests of the University of Massachusetts are being protected.
“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.”
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