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Ball State fraud involved failed internal controls

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Internal controls at Ball State University that should have alerted school officials about a pair of fraudulent investments costing the school $13.1 million failed, its treasurer says.

Treasurer Randy Howard told The Star Press he doesn't know whether that failure involved deception by anyone at the university, lack of due diligence or both. He told The Associated Press on Wednesday that the U.S. attorney's office is investigating and that he plans to meet soon with the Delaware County prosecutor.

Seth Beoku Betts was sentenced to four years in prison for wire fraud earlier this month in U.S. District Court in New York City. Authorities say he persuaded a Ball State investments director to invest millions in the mortgage market, but instead spent the money on luxury cars, a house in Florida and other personal indulgences.

Last year, George Montolio was sentenced to three years in prison after pleading guilty to one count of wire fraud. Betts has been ordered to pay $8.16 million in restitution and Montolio has been ordered to pay $3.8 million. The remaining $1.2 million remains unaccounted for.

Howard said among the red flags that were missed:

— An interest rate of 5.04727 percent on a purported $3 million U.S. Treasury investment. An interest rate with more than three digits after the decimal point is atypical, unless the investment was bought on the secondary market.

— A maturity date of Aug. 27, 2036, on a supposed Fannie Mae investment. University policy limits investments to terms of five years.

— A digit missing on a supposed Fannie Mae investment. Ball State attorney Jim Williams compared it to a missing digit in a Social Security number.

— Different code numbers being given to the same U.S. Treasury investment, which would be like a person using two Social Security numbers to identify himself.

"It should all match up," Howard said.

The supporting documents are supposed to verify the investment that was purchased, the payment schedule, the transfer of funds by wire, a confirmation that the security was purchased and other information. Those documents don't even exist for some of the fraudulent transactions.

"That's suspicious," Howard said. "There's nothing. Why? I'm surprised people signed off on that without the documentation."

Because of retirements and other turnover, most of the nine people who worked in the controller's office at the time of the investment fraud scheme no longer work there, school officials said.

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  • BSU Investigation
    State Board of Accounts needs to do a thorough investigation of BSU practices, purchasing, investing and all money matters. This is not the first odd and questionable use of state funds.
  • Inexcusable
    Why most and not all? Doesn't Ball State offer an Accounting Degree from MOB? How embarrassing! Why aren't Internal Controls continuously monitored and internal audits completed?

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  1. So much for Eric Holder's conversation about race. If white people have got something to say, they get sued over it. Bottom line: white people have un-freer speech than others as a consequence of the misnamed "Civil rights laws."

  2. I agree, having seen three shows, that I was less than wowed. Disappointing!!

  3. Start drilling, start fracking, and start using our own energy. Other states have enriched their citizens and nearly elminated unemployment by using these resources that are on private land. If you are against the 'low prices' of discount stores, the best way to allow shoppers more choice is to empower them with better earnings. NOT through manipulated gov mandated min wage hikes, but better jobs and higher competitive pay. This would be direct result of using our own energy resources, yet Obama knows that Americans who arent dependent of gov welfare are much less likely to vote Dem, so he looks for ways to ensure America's decline and keep its citizens dependent of gov.

  4. Say It Loud, I'm Black and Ashamed: It's too bad that with certain "black" entertainment events, it seems violence and thuggery follows and the collateral damage that it leaves behinds continues to be a strain on the city in terms of people getting hurt, killed or becoming victims of crimes and/or stretching city resources. I remember shopping in the Meadows area years ago until violence and crime ended make most of the business pack you and leave as did with Lafayette Square and Washington Square. Over the past 10 to 12 years, I remember going to the Indiana Black Expo Soul Picnic in Washington Park. Violence, gang fights and homicides ended that. My great grandmother still bears the scares on her leg from when she was trampled by a group of thugs running from gun fire from a rival gang. With hundreds of police offices downtown still multiple shootings, people getting shot downtown during Black Expo. A number of people getting shots or murdered at black clubs around the city like Club Six on the west side, The Industry downtown, Jamal Tinsley's shot out in front of the Conrad, multiple fights and shootings at the skating rinks, shootings at Circle Center Mall and shooting and robberies and car jackings at Lafayette Mall. Shootings and gang violence and the State Fair. I can go on and on and on. Now Broad Ripple. (Shaking head side to side) Say It Loud, I'm Black and I'm Ashamed.

  5. Ballard Administration. Too funny. This is the least fiscally responsive administration I have ever seen. One thing this article failed to mention, is that the Hoosier State line delivers rail cars to the Amtrak Beech Grove maintenance facility for refurbishment. That's an economic development issue. And the jobs there are high-paying. That alone is worth the City's investment.

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