Donor faces scrutiny

Last April, the University named the new baseball field and the head coach’s position after the family of the donor who gave more than $1 million: John Mazzuto ’70, former CEO of International Enterprises of America.

But, unbeknownst to University officials at the time, Mazzuto and other high-ranking members of the firm — which manufactures charcoal fluids, antifreeze and motor oil — were sued in 2007 for insider trading and fraudulent book-keeping.

As the case progresses, Yale is investigating whether or not it should have known about the allegations against Mazzuto — a former shortstop for the Yale baseball team and a member of the Delta Kappa Epsilon fraternity — before accepting his donation, University President Richard Levin said. Once that investigation is complete, he said, “Yale will do whatever is the right thing.”

“We’re trying to understand the circumstances under which we received the money, and whether we had any reason to be concerned,” Levin said.

Mazzuto and other executives of IEAM are being charged for misrepresenting the company’s financial situation to the public. Plaintiffs allege that the company, which had an apparent market value of $93 million in spring 2007, knowingly overstated its stock prices, and when disclosures of dishonest bookkeeping broke in November 2007, the stock’s value plummeted.

According to the lawsuit, Mazzuto illegally pocketed over $1 million as a result of insider trading on IEAM stock. The plaintiffs allege that some of the money was routed through a bank account in the name of Mazzuto’s girlfriend at the time, in order to buy a Porsche.

Mazzuto has also come under fire for omitting his 2002 personal bankruptcy from Securities and Exchange Commission filings.

IEAM has moved to dismiss the suit, calling the allegations “nonsensical” and claiming any bookkeeping errors were unintentional, according to a Dec. 2 article in Forbes Magazine. But the company’s finances during Mazzuto’s tenure as CEO are still under investigation by the SEC and the New York District Attorney’s office.

Levin said the University does not investigate donors before accepting gifts but that in his 16-year presidency he has never encountered allegations of this nature against a donor.

Yale has given back gifts in the past. Lee Bass ’79 donated $20 million to the University in 1991 for programs in Western Civilization but became unhappy with the implementation of the program. The University, for its part, believed Bass wanted too much power over hiring within the program, and the disagreement caused the Yale Corporation to vote to return the money in 1995.

Yale Director of Athletics Tom Beckett said he did not know about the allegations brought against Mazzuto and that the athletics department does not handle such matters, deferring comment to the General Counsel’s office. University General Counsel Dorothy Robinson did not respond to an e-mail Thursday.

Timothy Ford, the athletics department senior associate director of development and community, declined to comment, and Vice President for Development Inge Reichenbach could not be reached Thursday. Mazzutto and his lawyer did not respond to multiple phone and e-mail requests for comment.

Comments

  • Fraud Buster

    It would be interesting to know how much Mazzuto actually donated to Yale. “Over a million dollars” is pretty vague.

    I’d speculate that to have the baseball complex named for you and to endow the coach’s position in your name requires “many millions” of dollars.

  • sratch and spit

    This is all (disgrunted) civil matter. Maybe the you can name the facility after the winner of the suit (or let them enter the Mr.Yale X/Y contest) as consolation.

  • Fraud Buster

    Amazing that a guy who entered personal bankruptcy in 2002 and only had it resolved in 2008 had all this extra scratch around to endow the baseball program. With Manhattan DA and SEC involved it will be interesting to see how large the IEAM/Mazzuto fraud actually is.

  • old blue

    This is why you should never name anything after a living person. Generally, if a donor is dead, its too later for him to embarrass you.

  • Tanner

    Mr Old Blue
    I agree what is really embarresing is when the team sells the name of “your arena” before your Dead. Happend to former NJ Governor Brendan Byrne

  • Old Blue

    Mazzuto may have been involved in insider trading and so forth, but he seems to be no more of a scoundrel than than that old robber baron and grafter, Eli Yale, who purchased the naming rights to our faire schoole for 800 pounds worth of fabric and a box of used books.

  • Alumny Calumny

    As a former development research analyst for a major East Coast university, I know that schools with bigtime fundraising operations like Yale perform extensive research on donors. I can remember part of my job being to monitor all financial news on companies that our donors worked for, and even keeping tabs on Yahoo stock message boards to get the skinny on executive shenanigans, which are often posted there by insiders. I don’t see how Yale could possibly have not known about this.

  • Old Blue

    Whether they knew or not they should send the money back and revoke the discredited names

  • Fraud Buster

    From a PR perspective you’d figure Yale would move quickly to return the money and strip Mazzuto’s name from everything Yale-related.

    Regardless of how much money Mazzuto donated in total, it’s obviously immaterial relative to Yale’s endowment.

    The risk here for Yale is that ongoing investigations reveal a much larger fraud and more headlines. Meanwhile Mazzuto’s name remains plastered all over the baseball program and Yale still hasn’t returned the money.

  • @6

    Robber barons are awesome. Not enough of ‘em, these days.

  • Fraud Buster

    Yeah – awesome…guy runs three separate companies – City Brewery, EVTC, Inc., and IEAM – into the ground over a decade, not to mention goes personally bankrupt as well. He defrauds “mom and pop” investors to contribute money to a university with a $16bn endowment.

    Maybe Yale can’t do due diligence on every donor, which I believe is generous of me, but you’d think they’d do some background work before they plastered this recidivist’s name all over the baseball program.

  • anonymous

    How did this guy think he could get away with it?

  • Fraud Buster

    Same way he and his cohorts thought they’d get away with EVTC, another “pump and dump” scheme where he was CEO and on Board.
    http://ieamblues.blogspot.com/

  • Fraud Buster

    Any update on whether Yale has returned the money yet?

  • Stan

    Has Yale figured out how much money/stock it has received from Mazzuto? Have they returned it? Is the practice facility and head baseball coaching position still in his name?

    Hopefully, Mazzuto and company get indicted by Manhattan DA. Then Yale can make their decision on returning money if they haven’t done so yet.

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