Officials with the University of Wisconsin-Oshkosh's private fundraising foundation say they will file for bankruptcy in the wake of a scandal involving a former chancellor and his chief business officer tied to several real estate ventures.
The Journal Sentinel reports that the foundation filed a reorganization petition under Chapter 11 of the federal bankruptcy laws.
Foundation chairman Tim Mulloy says the voluntary action will protect the university's endowment, allow restructuring and help the foundation resume its mission of supporting UW-Oshkosh.
The real estate projects were the subject of a lawsuit the UW System filed in January against former Chancellor Richard Wells and his chief business officer.
The complaint alleges that they improperly funneled $11 million in university money into the projects through the private foundation.
From 2010-2014, the UW-Oshkosh Foundation participated in the renovation of the downtown Oshkosh Best Western Waterfront Hotel and Oshkosh Sports Complex. The UWO Foundation also constructed two biodigesters and the Alumni Welcome and Conference Center during this time frame.
The UWO Foundation is an independent 501(c)(3) non-profit entity.
According to the DOJ complaint, Wells and Chief Business Officer Thomas Sonnleitner made illegal financial transfers from UWO to the UWO Foundation related to these five real-estate projects.
Wells was Sonnleitner’s supervisor, and neither properly recorded those transfers in the UWO’s accounting records. The UWO Foundation was established to provide support to the university, and funding should have only flowed from the foundation to UWO.
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