Ball State University lost $5 million in an investment fraud scheme in addition to the $8.1 million scheme announced last week.
University Treasurer Randy Howard told The Star Press of Muncie that the U.S. attorney's office in Manhattan notified the university in 2011 that it was a potential investment fraud victim, prompting the school to conduct a deep review of all of its investment assets.
The U.S. attorney's office discovered the second $5 million investment. Howard would not disclose details of the investment, saying the university was following the recommendation of federal prosecutors "who feel it's in our best interest" to remain silent during ongoing investigations.
Howard called the bad investments "a combination of mistakes, negligence and criminal actions," adding Ball State is working with prosecutors.
In the previously announced scheme, Seth Beoku Betts, 38, was sentenced to four years and three months in prison for defrauding Ball State University out of more than $8 million, some of which prosecutors say he spent on cars and beachfront real estate.
The founder of Betts & Gambles LLC persuaded the university to give him money to invest in collateralized mortgage obligations, directing some of the money to disreputable investment dealers and spending some on himself, the government said.
Howard acknowledged public outcry over the lack of explanation as to how one BSU employee could make $13 million in bad investments. Howard called the bad investments "a combination of mistakes, negligence and criminal actions," adding Ball State is working with prosecutors and others to determine "which individuals fall into those various categories."