NEW YORK — Federal prosecutors have expanded their investigation of the financial dealings of the former president of the City College of New York into whether she received tens of thousands of dollars in unauthorized payments over several years from the school’s oldest alumni fund.
Lisa S. Coico, the college’s former president, was already being scrutinized over the improper use of federal research money, and the accounting of her personal expenses from the 21st Century Foundation, the college’s main fundraising vehicle. She resigned unexpectedly in October after The New York Times reported that a memo concerning those expenses had most likely been fabricated to deceive prosecutors, and that she did not return a $20,000 security deposit for a rental home.
The new avenue of inquiry looks at a second source of money, the City College Fund, which is supposed to provide scholarships to indigent students, underwrite campus programs and organize alumni reunions, and it represents a notable expansion of an inquiry that began last summer. It has spread to other groups affiliated with the college’s parent entity, the City University of New York, known as CUNY.
This month, the office of Robert L. Capers, the U.S. attorney for the Eastern District of New York, subpoenaed records related to payments to Coico from the City College Fund. Among other issues, prosecutors are trying to ascertain why the fund, which has been run for years by one of Coico’s most trusted confidantes, apparently paid Coico or entities connected to her yet failed to get approval from university officials or report the arrangement on its tax returns.
The existence of the subpoena was confirmed last week by Vincent G. Boudreau, who took over as the City College interim president after Coico resigned.
The federal inquiry, together with a related state investigation into broader university practices, comes at an inopportune time for CUNY, the country’s largest public urban university and a longtime engine of upward mobility. City College, its flagship, has been known as “the poor man’s Harvard.” For years, states have been slashing spending on public higher education while tuition has been climbing, and at CUNY, the lack of funding has contributed to deteriorating facilities and overcrowded classrooms.
But the frustrations at CUNY have been compounded by the perception that top administrators have been enriching themselves at the expense of a predominantly poor and minority student body, more than half of whom report family incomes of less than $30,000.
The future of CUNY, which receives the bulk of its funding from the state, has also drawn increasing attention from Gov. Andrew M. Cuomo, as well as state and city lawmakers.
After Coico’s resignation, William C. Thompson Jr., the chairman of CUNY’s Board of Trustees and a former New York City comptroller, asked for a thorough investigation of “all of the college foundations, alumni associations or other affiliated entities.” Weeks later, Catherine Leahy Scott, the New York state inspector general, criticized the university’s financial practices as “ripe for abuse” in an unusual interim report, prompting Cuomo to call for sweeping reforms and precipitating a shake-up at CUNY’s central office.
At City College, Coico’s annual compensation was $460,000; $160,000 of that came from the 21st Century Foundation. She also received a $90,000 housing allowance. But people who have been briefed on the investigation and spoke only on the condition of anonymity said that prosecutors appear to be focusing on whether she received thousands of dollars on top of that from the City College Fund, possibly over several years, without the knowledge of either the current CUNY chancellor, James B. Milliken, or his predecessor, Matthew Goldstein.
According to Boudreau, the latest subpoena is seeking documents like annual financial statements, annual filings with the Internal Revenue Service and all payments that may have been made to Coico or any related entities in which she or her family had a financial stake.
Boudreau said he welcomed “efforts to fully examine the way these foundations have worked” because “I think there’s a tremendous need for transparency.”
“Anybody probably would have anticipated that every one of these entities at City College would be investigated,” he said. “To get to the bottom of this is ultimately going to be a good thing for the university and City College.”
Last week, CUNY instituted new procedures for payments to faculty and staff in addition to their regular salaries from sources like the CUNY Research Foundation to require advance approval of the CUNY chancellor.
A spokeswoman for Capers, the U.S. attorney, declined to comment. A lawyer for Coico, Catherine M. Foti, also declined to comment.
But in an interview, Elena Sturman, the City College Fund’s executive director, said that “former President Coico and her family members never received any supplemental salary from the City College Fund.” When asked whether the fund had ever written checks to Coico or any entity connected to her, Sturman stressed: “There was no supplemental salary.”
Established just after World War II, the City College Fund has for years helped students afford a college education that was once free, but now costs $6,300 a year in tuition.
As City College’s ambitions grew in the 1990s, the administration established another fundraising vehicle, the 21st Century Foundation, to solicit bigger contributions from prominent alumni. The most notable, perhaps, came in 2005, when Andrew S. Grove, the late former chief executive of the Intel Corp., donated $26 million.
According to its most recent tax returns, the 21st Century Foundation now has $192 million in net assets, while the City College Fund has $70 million. The 21st Century Foundation is far more integrated into the college’s operations, relying on college employees and adhering to its rules. By contrast, the City College Fund functions as a small and independent nonprofit, with a separate board and database.
At least twice in the last decade, management consultants have criticized the City College Fund’s finances and operations as too opaque, and urged that the two organizations, which occupy offices across the hall from one another, be merged. Together, the two funds could leverage their resources and avoid redundant operations and staffing, while still using the more established City College Fund name, according to people who have seen the reports or been briefed on their contents and who spoke on the condition of anonymity.
One school official called the funds “silos” that do not talk to each other, making it easier for funds to possibly be misused.
Sturman, who was described by several officials as one of Coico’s three or four closest allies on campus, said that she was aware of the reports. “Moving forward, we have a close relationship with the executive director of the 21st Century Foundation and with the interim president,” she said. “We work as a team.”
Boudreau, a political scientist whose research focuses on social movements, particularly in Southeast Asia, has vowed to make the school more accountable.
Last month, in an unusual step, Boudreau responded to a Freedom of Information request for details of payments by the 21st Century Foundation to college administrators made by Jamal T. Manassah, an engineering professor, by posting the information on the faculty senate’s website. The data showed that the 21st Century Foundation had doled out $2.35 million in salary supplements to dozens of officials — including Coico and Boudreau — in the 2015 fiscal year, up from the $1.92 million the previous year.
The newly released documents “reflect past practice,” Boudreau wrote on the senate website.
“It would be a mistake to see this list as tagging people for receiving something improper — although if such cases exist, we won’t shy away from addressing them,” he wrote.