The $1.7 million gift a Yale alum made to his alma mater was generous, but now his New York company wants the cash back. It seems the money came from dealings that the IRS seems to find a bit questionable, according to the Yale Daily News.
Now, Industrial Enterprises of America is negotiating with the Ivy League school to return of the donation, which included improperly issued stock worth $1.7 million, the Daily News reports.
John Mazzuto, class of 1970, used to run IEAM and made the whopper of a gift to Yale to pay for a head coaching position and a new all-weather baseball facility.
But, there was apparently a little issue. He made the pledge five years after he declared personal bankruptcy, the Daily news reports.
In February 2008, the Securities and Exchange Commission got involved and started investigating IEAM for alleged accounting fraud during Mazzuto’s tenure as CEO.
It’s alleged that Mazzuto used more than $1 million in funds from insider trading to buy a Porsche for his girlfriend at the time, that IEAM executives deliberately inflated the company’s revenue and convinced investors to buy stock at high prices.
Another wrinkle is that, for the company to emerge from bankruptcy, IEAM must reclaim all the stock Mazzuto allegedly improperly gave to friends, family and institutions, including Yale and Tabor Academy.
Investors who lost money when Mazzuto declared bankruptcy are now questioning whether Yale should have investigated Mazzuto more thoroughly before accepting his gift.