This article has been updated to more accurately reflect the current state of the money lost due to fraud.
Ball State will count the remaining $10,022,705 still missing from fraud as lost in the 2014 fiscal year accounting, according to a press release from the university.
The university employed Deborah Daniels of Krieg DeVault in July to look into concerns with internal controls that arose after $13.165 million was lost in two separate investment fraud cases from 2008 and 2010.
Daniels selected the accounting firm Crowe Horwath to help with the investigation.
The Crowe Horwath report states the university is unsure of how much of the funds will be recovered. Although the university is still reviewing options to get money back, the outcome is uncertain.
The university has worked with the State Board of Accounts to record the losses with funds from contingency reserves and interest earnings to ensure the losses are accurately recorded in financial statements.
The Board of Trustees has not decided on legal action or next steps in recovering investments the university lost from fraud, according to a recently released investigation.
In a June interview with the Daily News, Randy Howard, the former vice president of business and treasurer said the contingency reserves would keep short term effects of the loss in money at bay and that the university would “have a lot of time to recoup them.”
By reflecting the losses the university is essentially “closing the book,” said Tom Taylor, vice president for enrollment, marketing and communications.
“With this challenging period behind us, Ball State is moving forward with a stronger financial system and a collaborative leadership team,” said Taylor.
Crowe Horwath also added recommendations for Ball State in the internal control evaluation, including:
- Reviewing the investment account every month as opposed to every three months
- Allowing internal reporting to go directly to the President and Board of Trustees instead of the Vice President of Business Affairs and Treasurer first
- Task the Board of Trustees with strategizing and reviewing investment procedures
- Establishment of a whistleblower hotline that provides privacy to those reporting inappropriate behavior
“Internal controls are only effective when fully followed. Individuals charged with that responsibility failed us," said Rick Hall, chair of the Ball State Board of Trustees, in a press release. "That said, as with all areas of the university, the board expects our internal controls to reflect current best practices, and the review recommended several improvements."
Gale Prizevoits, the former director of cash and investments for Ball State during the time of the fraudulent investments was fired on Oct. 24, 2011.
As far as legal action, Taylor said Daniel’s findings from her examination of the fraud case are being sent to state and federal officials for review.
If sufficient evidence exists to prompt prosecution, government agencies will be the ones to make the decisions.
The two men convicted of defrauding the university at different times, Seth Beoku Betts and George Montolio, have both been sentenced to prison and ordered to sell items to make up for the money taken from Ball State.
Montolio was sentenced in March of 2013 and Betts was sentenced in June of this year.
Timeline of the fraud case
SOURCES: University documents provided to the Daily News and through public records requests, the FBI and federal complaints from the Southern District of New York
Read More
Yorktown softball defeats Wes-Del in 2024 Delaware County Tournament Final
By David Moore / 14 hours agoThe championship game was set, Tigers vs. Warriors for the 2024 Delaware County crown. By the end of the afternoon, it was Yorktown running away, taking a 10-0 victory over the Warriors.
Over 3,000 Cardinals join the Ball State family of alumni following commencement
By Ella Howell / 18 hours agoThe Quad filled with approximately 3,000 graduating Cardinals and their loved ones the morning of May 4 in preparation for the 198th Ball State University Commencement.
