The University publicly announced today it could be a victim of financial fraud involving $15 million of its operating funds being held in a short-term enhancement account. University Chief Financial Officer Sherideen Stoll announced at a 10 a.m. meeting with reporters $15 million was invested with Westridge Capital Management, Inc., a California-based company that is under federal investigation. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) filed enforcement actions against Westridge, freezing its assets pending investigation. A receiver has been appointed to assess the actions of the company’s money managers Stephen Walsh and Paul Greenwood and to develop a document allocating distribution of funds. However, the University may have gotten hints something was wrong. On Friday, Feb. 13, the University received a call informing them the National Futures Assocation, which oversees U.S. investments and market integrity, was taking action against Westridge. Three days later the University filed a liquidation request to cash out their investment, automatically freezing the funds. ‘ The University has no access to the $15 million, which was invested with Westridge as part of a short-term measure earning interest on money the University has acquired over time from tuition and fee dollars and all the institution’s resources, including state funds, Stoll said. ‘We are cautiously optimistic that the funds will be returned,’ Dave Kielmeyer, director of communications, said in a release sent out at noon. ‘The University is moving aggressively to recover its assets.’ Stoll said the funds will not affect day-to-day operations of the University and she doesn’t know when they will regain access or learn if and how much money will be lost. ‘There’s so much unknown,’ Stoll said. She said she doesn’t expect to hear any updates for at least 90 to 120 days and the investigation could take years. She foresees the entire investment industry is going to see some big changes in the form of tighter regulations to appropriately safeguard funds. ‘It’s never appropriate for people to be engaging in criminal activity, regardless of this economy,’ she said. ‘The financial system depends on trust so it’s very, very serious.’

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