2 charged in UW-Oshkosh case
Accusations stem from scandal in financing building projects
OSHKOSH - Two former University of Wisconsin-Oshkosh administrators face felony criminal charges in connection to an ongoing financial scandal surrounding several high-profile building projects.
Former Chancellor Richard Wells and former Vice Chancellor Tom Sonnleitner were charged Thursday in Winnebago County Circuit Court. It is the first time anyone has been criminally charged in connection to the situation that led to the bankruptcy of the university’s private foundation.
Both are charged with five counts of misconduct in office by acting beyond their authority as parties to a crime, according to online court records. The maxi- mum penalty for each charge is 31⁄2 years in prison.
The charges come more than a year after the UW System filed a lawsuit against Wells and Sonnleitner in Dane County Circuit Court, claiming the two administrators funneled $11 million in taxpayer money into five foundation building projects — the Best Western Premier Waterfront Hotel in Oshkosh; the Alumni Welcome and Conference Center; two biodigesters, which turn animal waste into electricity; and the Oshkosh Sports Complex, which includes Titan Stadium.
The civil case also claimed the pair wrote a series of
“comfort letters” to various banks, assuring them if the foundation was unable to make bond payments that the university would help out.
Both will make their initial appearance June 11 in Winnebago County court, according to court records.
“Former UW Oshkosh chancellor Richard Wells and I are saddened that the Attorney General’s office has chosen to issue criminal charges against him, based upon memoranda of understanding, loans and undertakings through the UW Oshkosh Foundation, which were intended to benefit the university,” Wells’ Milwaukee-based attorney, Ray Dall’Osto, said in a statement he released Thursday.
Dall’Osto said he wasn’t at liberty to comment in any greater detail about the criminal case.
Sonnleitner is being represented in the civil case by former federal prosecutor Steven Biskupic, who previously represented Gov. Scott Walker’s campaign during two John Doe investigations.
Current UW-Oshkosh Chancellor Andrew Leavitt declined to comment, directing USA TODAY NETWORK-Wisconsin to a campuswide email statement.
A campus spokeswoman directed any further questions to the UW System and the Wisconsin Department of Justice.
“I know the circumstances surrounding this matter can be concerning for students, faculty, staff, alumni and university partners,” Leavitt wrote. “However, together we will continue to exemplify resilience through stewardship.”
The UW System Board of Regents took an unprecedented step last year by asking the state Department of Justice to pursue civil and criminal charges against the two former UW-Oshkosh leaders.
“The Board took this unprecedented action because Dr. Wells and Mr. Sonnleitner failed to follow rules and statutes that govern university operations, and we are working diligently to rebuild confidence in our institutions and to improve the transparency of foundation transactions,” Regents Audit Committee Chairman Michael Grebe said in a statement released minutes after the charges were filed.
“We support these charges by DOJ, and will continue to seek justice in this case while serving students with integrity and transparency,” Grebe said.
A spokesman for the DOJ did not respond to a request from USA TODAY NETWORK-Wisconsin for comment.
“This is very good news,” said Mike Mikalsen, an aide to Sen. Steve Nass, R-Whitewater. Nass serves as vice chairman of the Senate Universities and Technical Colleges Committee. He warned UW System President Ray Cross a year ago that any attempt to use state money to bail out the foundation would set back efforts to rebuild trust between the UW and state lawmakers.
“This is a clear sign the Wisconsin Department of Justice and local DA are going to get to the bottom of this,” Mikalsen said. “The next step is to find out within the UW System who knew what, and when.”
Months after the state filed its lawsuit, the UWOshkosh Foundation filed for Chapter 11 bankruptcy protection. The private entity now is seeking to force the UW System to live up to what foundation officials call the university’s commitment to repay the bonds.
“Only comment is that we are now aware of the charges and will continue to monitor the situation,” Foundation Board Chairman Tim Mulloy said Thursday in an email to USA TODAY NETWORK-Wisconsin.
Court documents outline conduct
The state Department of Justice began investigating the financial relationship between UW-Oshkosh and the UW-Oshkosh Foundation in August 2016, according to a criminal complaint filed against both men Thursday in Winnebago County Circuit Court.
The complaint details claims that Wells and Sonnleitner made financial guarantees involving five of the foundation’s building projects that exceeded their authority as chancellor and vice chancellor.
Wells and Sonnleitner signed loan guarantees involving the Oshkosh Premier Waterfront Hotel and Convention Center, a biodigester at Rosendale Dairy in Pickett, a biodigester on the UW-Oshkosh campus, the Alumni Welcome and Conference Center and the Oshkosh Sports Complex.
The criminal complaint says:
❚ Wells and Sonnleitner signed guarantees for the hotel project in which UW-Oshkosh agreed to cover “any additional investment loans and expenses,” as well as a $7.5 million loan from First Business Bank, if the foundation was unable to make payments.
❚ Wells and Sonnleitner signed guarantees for the Rosendale Dairy biodigester in which UW-Oshkosh agreed to pay any deficit if revenue from the facility didn’t cover the costs and debt service. Sonnleitner also made a guarantee to Wells Fargo Bank in which UW-Oshkosh agreed to hold $10 million in state funds as unrestricted assets to guarantee to cover a loan used to pay for construction.
❚ Wells and Sonnleitner signed guarantees for the UW-Oshkosh campus biodigester in which UW-Oshkosh agreed to cover a $3.7 million loan from Wells Fargo Securities if the foundation couldn’t make the payments. They also signed guarantees in which the university agreed to pay any deficit if revenue from the facility didn’t cover the costs and debt service.
❚ Wells and Sonnleitner signed guarantees in which UW-Oshkosh agreed to cover any deficit incurred by the foundation to support the Alumni Welcome and Conference Center. UW-Oshkosh also agreed to pay the foundation on an annual basis for any cost overruns for the project. Sonnleitner also made guarantees to Bank First National in which UW-Oshkosh agreed to cover a $10 million loan if the foundation couldn’t make payments.
❚ Wells and Sonnleitner made guarantees on behalf of UW-Oshkosh related to the foundation’s obligations for renovation of the sports complex. UWOshkosh agreed to pay “in the event any donors would default on their pledge payments” for pledges written off as uncollectible until the bond is retired this year.