Yale has agreed to pay a $1 million settlement to the company previously led by Yale baseball program donor John Mazzuto ’70, who allegedly obtained the money he gave to his alma mater illegally.
Yale reached a settlement with Industrial Enterprises of America — the company of which Mazzuto was CEO from 2004 to 2008 and from which he allegedly stole over $60 million — in the fall, agreeing to pay $1 million for the value of IEAM shares Mazzuto gave to the University in 2007. IEAM, which is under new leadership and needed the gift to help climb out of bankruptcy, agreed even though the settlement is for less than the original donation, worth $1.7 million.
According to a joint statement released by both parties, IEAM does not fault Yale for accepting Mazzuto’s gift, as the University had no knowledge of Mazzuto’s alleged wrongdoings at the time.
“It was undisputed that Yale had no knowledge of any fraudulent activities at IEAM and accepted the gift of IEAM shares in good faith,” University spokesman Tom Conroy said in the statement. “We are happy to have reached this Agreement.”
Still, University General Counsel Dorothy Robinson said in an e-mail that IEAM had threatened to file a suit if Yale did not cooperate, and that Yale decided to make the settlement because of “legal uncertainty and ethical considerations.” In the past, Yale administrators had emphasized that Mazzuto was innocent until proven guilty.
Between Nov. 10 and Nov. 12, 2009, IEAM filed five lawsuits against defendants who IEAM claimed received illegal shares of company stock through an option plan that should have been restricted to employees, outside directors and consultants. Mazzuto frequently abused the stock option program to give money to his friends, IEAM CEO Bob Renck told the News in August of last year.
Renck could not be reached for comment Wednesday. Mazzuto is in jail, and could not be reached for comment.
Yale had been in discussions regarding the gift with IEAM’s new management, including Renck, starting in October 2009. When the negotiations fell through last April, Steven Thomas, a lawyer who represents IEAM, told the News in an August interview that he was prepared to sue Yale to return the gift — which was part of the $60 million Mazzuto owed the company.
In this month’s statement, Thomas praised Yale for its handling of the donation and the settlement process.
“Yale has acted honorably and appropriately in reaching this settlement,” Thomas said.
Thomas declined to provide additional comment, deferring to the joint statement.
The settlement with Yale was approved in court earlier this month, Conroy said in an e-mail, but he added that he does not know the exact date of the settlement or the court approval.
Mazzuto has been held at Rikers Island, the New York City prison, since May.
He is awaiting his March 7 trial, at which he will face a 57-count indictment, including two counts of grand larceny in the first degree.