Yale baseball donor John Mazzuto ’70 is in jail, facing charges of financial conspiracy and fraud. Now, representatives of the company Mazzuto formerly headed say Yale is considering returning his $1.7 million gift.
Industrial Enterprises of America, the company Mazzuto headed from 2004 to 2008 and whose accounts he allegedly falsified, is climbing out of bankruptcy. When the company asked Yale to return Mazzuto’s donation last October, University President Richard Levin said Yale would investigate the gift and “do whatever is the right thing.” Ever since, Yale and IEAM have not been able to agree on what that would be; the University declined to return Mazzuto’s gift for several months, with administrators saying he was innocent until proven guilty.
But with Mazzuto in jail, a lawyer for IEAM said, things have changed.
“In light of the indictment, Yale now knows for sure that they received stolen money,” said Steven Thomas of the Santa Monica, Calif.-based law firm Thomas, Alexander & Forrester, which represents IEAM. “The victims deserve their money back.”
Levin and General Counsel Dorothy Robinson declined to comment.
After months of negotiations between IEAM’s new management and the University’s legal counsel failed in early April, Thomas said he was prepared to sue Yale over fMazzuto’s donation. IEAM and federal prosecutors claim Mazzuto gave Yale shares of illegally-issued stock.
But the day Thomas planned to file a lawsuit, he said, the University told him it was considering returning the gift, which paid to endow the head baseball coaching position and build a baseball practice facility.
A year of federal investigation into alleged insider trading and accounting fraud culminated May 24 when federal officers arrested Mazzuto at his home in Palm Beach Gardens, Fla. Since then, Mazzuto has been held at Rikers Island in New York as he awaits pre-trial hearings. With his assets frozen, he has not posted $900,000 cash bail.
Along with James Marguiles, Mazzuto’s alleged co-conspirator at IEAM and other companies, Mazzuto was arraigned in criminal court in New York City on Aug. 11. Both men have been charged with conspiracy, grand larceny, fraud and falsifying business records in a 57-count indictment that includes stealing more than $60 million from their corporation and its investors. Vice President for Development Inge Reichenbach said last Wednesday that Yale has cooperated with the federal investigation.
As the investgation continues, authorities may ask one former Yale employee to return stock he accepted from Mazzuto. Bob Renck, the current CEO of IEAM, said Mazzuto gave at least one Yale employee illegal stock in August 2007, around the time he made his gift to the University’s baseball program. The stock was issued through the company’s employee stock option program to someone who was not an IEAM employee, Renck said. Mazzuto and his associates frequently abused this program to give money to their friends and take it for themselves, he said.
Sources close to the investigation say the recipient is William Asermely ’93, a former assistant baseball coach at Yale who worked extensively with Mazzuto to secure and design a use for his donation, as the recipient. Asermely did not respond to three calls seeking comment.
Building a new indoor baseball facility was Asermely’s “brainchild,” according to a fall 2007 Yale baseball newsletter. Though the indoor facility was never built, Asermely continued to play an important role in the plans for an outdoor field.
Asermely, who was in Pierson College and was captain of the baseball team when it won an Ivy League championship in 1993, played for the Baltimore Orioles after graduating. He was promoted to associate head coach of the baseball team in January 2008, after eight years as an assistant coach. But he left Yale in the same year, and is now the director of the Providence, R.I.-based Northeast Baseball School, which holds baseball clinics and lessons for children and teenagers.
J. Frederick Berg ’66, another Yale baseball donor and a friend of Asermely, said Asermely left Yale to find another way of supporting his wife and newborn twin sons.
“Bill’s a loyal Yale alumnus,” he said.
Renck said some of the money missing from IEAM’s books is still unaccounted for, and he will not know if more than one person affiliated with Yale received illegal cash or stock until he finishes his investigation.
Robinson declined to comment on whether Yale has conducted an investigation of its employees since Mazzuto’s alleged fraud was uncovered to determine if any might have privately received stock from him. She also declined to comment on the circumstances of Asermely’s departure from the University.