A former federal prosecutor and a CPA firm are evaluating Ball State University's internal financial controls and investment portfolio as they create a plan to prevent a repeat of two investment scams that cost the university more than $13 million.
Indianapolis attorney Deborah Daniels and Crowe Horwath are reviewing the university's practices to develop a plan that identifies best practices for selecting brokerage firms and state-of-the-art software, creates a whistle-blower hotline operated by a third party and takes steps to ensure that a single safe-keeping firm holds all securities, The Star Press reported.
Other information gathered by Daniels and the CPA firm will be forwarded to the Delaware County prosecutor for review, said Rick Hall, chairman of the university's board of trustees.
On Oct. 24, 2011, Ball State fired Gale Prizevoits, its director of cash and investments, for "incompetence, dishonesty, substantial and manifest neglect of duty, willful disobedience of university rules and regulations and gross misconduct."
University officials have said Prizevoits altered records to conceal her investment of university funds in highly speculative mortgage bonds. She also was responsible for altering records that could have alerted the State Board of Accounts to irregularities in the investments from 2008 to 2010, records show.
Two men, George Montolio, 46, of New York and Seth Beoku Betts of Florida, were convicted in federal court in Manhattan and sentenced to federal prison for their roles in the scams.
Ball State officials say federal prosecutors found no evidence that Prizevoits had received any kickbacks from the two investment-fraud schemes.
The university first learned in September 2011 it had been the victim of an $8.1 million securities fraud, although officials say it began in 2008. They kept it quiet for more than two years at the request of federal law enforcement authorities. A week after the scheme became public in June, the university announced it had been the victim of another scheme.
Hall has told the State Budget Committee that the school doesn't expect to recover most of the money lost in the schemes.