U. of Louisville Sues Former President Over Misuse of Foundation Funds

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The University of Louisville and its foundation have taken the extraordinary step of filing a lawsuit against James R. Ramsey, the university’s former president, who stepped down from his position nearly two years ago.

The suit charges that the former president and others misspent foundation money, diverting it to “speculative ventures, loans, and gifts that had little realistic chance of repayment … through intentionally complicated — and often unauthorized — transactions,” according to the complaint.

The suit also names Ramsey’s former chief of staff, Kathleen Smith; three other former foundation employees; and the foundation’s former law firm. “While engaged in this disloyal conduct,” the complaint says, “Ramsey and Smith paid themselves (and others) excessive compensation out of the Foundation.”

“The Defendants disguised these transactions to avoid scrutiny and circumvent the Foundation’s approved spending limit and annual budget,” the complaint says.

The suit is just the latest twist in the long-running dispute over Ramsey’s tenure as president and more drama for a university that has suffered numerous scandals over the past nine years.

Ramsey led the university for some 14 years and had been widely credited for raising the institution’s profile, attracting a better crop of students with first-rate facilities and big investments in athletics.

But by 2016, Ramsey’s leadership was under fire from the Board of Trustees and many on campus over numerous controversies, including an NCAA investigation, an FBI probe, and a whistle-blower lawsuit, among other things.

Ramsey resigned from his post in August 2016, under pressure from the trustees and Gov. Matt Bevin, who personally persuaded him to step down. By then investigative news reports in Kentucky were questioning the foundation’s spending and the money it was paying to Ramsey, who also led the foundation, as well as some of the real-estate investments the organization had made.

An independent audit found “questionable loans to foundation subsidiaries, a $21 million deferred compensation plan shrouded in secrecy and numerous unbudgeted transactions that were hidden from board members,” according to a news report about the audit from the Kentucky Center for Investigative Reporting.

The chairman of the foundation, Earl Reed, said the lawsuit was a step toward putting the scandals to rest.

“We have implemented new controls at the Foundation to insure this never happens again,” Reed said in a news release.

“Now it is time to turn this mess over to the lawyers for clean-up, while the rest of us focus on turning a new page at the U of L.”

Eric Kelderman writes about money and accountability in higher education, including such areas as state policy, accreditation, and legal affairs. You can find him on Twitter @etkeld, or email him at eric.kelderman@chronicle.com.