[Vision2020] Criminal Charges Filed in Scandal

[Tom Hansen]

>From today's (November 3, 2006) UI Argonaut -

------------------------------------------------------

Criminal charges filed in scandal    
Written by Savannah Cummings -Argonaut  
   
Friday, 03 November 2006  

Former University of Idaho vice president of Finance and Administration
Jerry Neil Wallace was indicted Monday and ordered to appear before a
magistrate in Latah County on two felony charges of misuse of public money
stemming from UI's failed University Place project.

The criminal complaint against Wallace was filed and sealed June 30 in order
to meet state requirements of the statutes of limitations and allow state
investigators to complete inquiries, said a press release issued by Latah
County prosecuting attorney Bill Thompson. The records were unsealed Oct. 25
by Judge W.C. Hamlett after the court issued a summons to Wallace and
completed the investigations, court documents said.

"The whole idea was to allow the investigation to reach its conclusion so
that we could make a decision about if pursuing charges was appropriate,"
Thompson said, noting that it would not have been fair to Wallace to
publicize charges only to conclude the investigation and discover nothing
illegal had been done. "But at the same time we had to file something with
the court to reach the statute of limitations."

The first felony count deals with Wallace mischaracterizing an agency
account in the university's 2001 fiscal year audit report, Thompson said.
The second deals with Wallace misusing the account and "treating it as an
authorized loan" instead of as a debit-style account.

A report in court documents filed by Detective Brett Quilter of the Boise
Police Department, who was assigned to the state investigation with the Ada
County Sheriff's office and Idaho State Police, summarized the issues at
University Place (referred to as "Idaho Place" in court documents).
The project, which began in 1999 with the goal of constructing a $136
million, multi-building UI branch campus in Boise. In 2000, the UI
Foundation (of which Wallace was treasurer) was placed in charge of the
project. 

In November 2000, Wallace opened an agency account that would cover project
costs and pre-development. Quilter's report states that Wallace did not
receive or seek approval or authorization from the Board of Education/Board
of Regents for the account to be opened or funded. According to the board,
agency accounts are supposed to operate like a debit account in which only
funds that have been deposited can be withdrawn. The accounts are not
allowed to be in deficit.

The report said that Wallace had planned financing for the project to come
from state-issued bonds. However, the 2001 Legislature did not approve the
project bonding, leaving University Place with no source of funding to cover
the expenses - which had hit at least $2.2 million by June 2001.  
The failed project resulted only in the completion of the Idaho Water
Center, which cost the Foundation $26 million, resulted in bad publicity for
the university and has stemmed a series of lawsuits. The final lawsuit,
against developer Civic Place, is set to be tried in Boise on Jan. 22.

After the denial of the bonds, Quilter said Wallace had to decide how to
characterize the money in UI's 2001 annual audit. The report states that
Wallace falsely reported the expenditures as UI "construction in progress."
He then received the Foundation's approval to spend $12 million of
Foundation funds to continue the project and an additional $1.9 million to
purchase property where the project was to be built. When that money was
gone, Wallace used the agency account.

By the time the account was closed in early 2003, the report states the
account was more than $8 million in deficit. It was at this time that
current university president Robert 
Hoover removed Wallace from the project. The only deposits ever made into
the account was one $600,000 deposit and "three airline travel credits
totaling less than $1,000" Quilter's report states. Both Wallace and Hoover
resigned in 2003 in the wake of the scandal.
By falsely reporting the nature of the account and continuing to use an
unauthorized agency account, Quilter saidWallace violated the Misuse of
Public Monies By Officers, Idaho Code 18-5701, sections 1, 2, 6 and 7.

The case has been investigated at the federal level as well. The White
Collar Crimes Unit of the Oregon United States Attorney's Office has been
working with the Ada County Sherrif's Office, Boise Police Department and
the Idaho State Police, due to a conflict of interest between the Idaho
Attorney General and the case. The attorney general was one of the parties
involved in some of the lawsuits stemming from University Place.

Wallace has been the only person charged with criminal activity, Thompson
said, due to a recent decision from the court of appeals that stated the
misuse of public money applies only to someone who is entrusted with public
money by statute - the Bursar is the only person at UI who fits the
description, Thompson said. If anyone else was to be considered for criminal
charges, Thompson said they would have to be considered for a different
crime (such as theft), of which no evidence has been found. 
"There is absolutely no evidence at all that anyone intended to steal from
the U of I or the Foundation," Thompson said.

If convicted, Wallace could face a maximum penalty of 10 years in prison and
a $50,000 fine per count, Thompson said. However, there is no minimum
penalty required, meaning the judge can impose any penalty he chooses,
including probation.

UI President Tim White issued a press release Tuesday addressing the
indictment.

"While the university has settled the legal dispute surrounding the events
discussed in the indictment, and has moved on confidently from the difficult
days of our recent past, we are saddened that someone who held our
community's and the public's trust is charged with breaking that trust,"
White said. "We now put our confidence in the judicial system for a just
outcome in the case of former Vice President Wallace. The University of
Idaho is dedicated to practicing the highest business and ethical standards,
stewarding the public's dollars with respect and responsibility and
operating with honesty, openness and transparency in all things. We expect
this behavior from our current administrators."
An initial court appearance is schedule for 8:45 a.m. Nov. 13 at the Latah
County Courthouse.

------------------------------------------------------

Seeya at the polls, Moscow.

Take care, Vandals.

Tom Hansen
Vandalville, Idaho
UI '96

Came a tribe from the north brave and bold . . .

"Here We Have Idaho"
http://www.tomandrodna.com/HWHI.mp3

"I-D-A-H-O Idaho Idaho Go Go Go"
http://www.tomandrodna.com/Vandals.mp3