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Brown Expands Probe into CSU Stanislaus Foundation

Tuesday, April 13, 2010
Contact: (415) 703-5837

SAN FRANCISCO – Attorney General Edmund G. Brown Jr. announced today that he has launched a broad investigation into the California State University Stanislaus Foundation to include an examination of its finances and the alleged dumping of documents into a university dumpster.

This action follows an inquiry Brown began last week into whether the CSU Stanislaus Foundation violated the California Public Records Act. On April 7, State Senator Leland Yee asked Brown to investigate the refusal of California State University Stanislaus to turn over records, under the Public Records Act, pertaining to the $500-a-plate June 25 speaking engagement of former vice presidential candidate Sarah Palin at the university’s 50th anniversary gala. Palin’s compensation for speaking at the CSU Stanislaus gala hasn’t been disclosed, but she earned $100,000 for speaking in February at a Tea Party convention in Nashville.

The expanded inquiry will seek to determine whether the foundation, which has assets of more than $20 million, is spending its money to benefit the campus, as it promises donors, the university and the public. The CSU Stanislaus Foundation spends more than $3 million each year on university endeavors. The Attorney General is asking university officials to preserve foundation documents.

“We are taking this action to make sure that the money raised goes toward the intended educational purposes and not a dollar is wasted or misspent,” Brown said, “Prudent financial stewardship is crucial at a time in which universities face vastly decreased funding and increased student fees.”

The Attorney General oversees charitable organizations to make sure that they comply with the law. Brown’s office has recently sought records of several foundations following allegations of improprieties including a no-bid contract to a foundation board member, a loan -- with a large loss -- to a former foundation board member, a $1.5 million-dollar loss because of bad debts, a questionable real estate deal and a $200,000 low-interest loan to a university president.

The university foundations provide crucial financial help to state universities, supplementing student fees and state support for scholarships, academic programs, buildings and operating expenses.

Brown said his office would also review documents obtained from Yee today, including part of Palin’s speech contract, which students say they plucked out of a dumpster near the CSU Stanislaus administration building. Investigators will first attempt to determine whether the documents are authentic and how they ended up in the dumpster.

“This is not about Sarah Palin,” Brown said. “She has every right to speak at a university event, and schools should strive to bring to campus a broad range of speakers. The issues are public disclosure and financial accountability in organizations embedded in state-run universities. We’re not saying any allegation is true, but we owe it to the taxpayers to thoroughly check out every serious allegation.”

The assets controlled by 95 auxiliary bodies and foundations associated with the entire CSU system amount to $1.34 billion, according to the CSU chancellor’s office. UC system foundations control another $4 billion in assets.

The Attorney General’s investigation is being conducted by its Charitable Trusts Section, which works with charities to make sure they comply with the law and their articles of incorporation. The Attorney General is also authorized to bring legal actions against charities if they misuse funds under their control.

For more information on the Attorney General’s Charitable Trusts Division, see http://ag.ca.gov/charities.php.

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