New Jersey Attorney General Ann Milgram slapped Stevens Institute of Technology in Hoboken and the university’s leadership with a lawsuit last week claiming fiscal mismanagement, but the private institute claims Milgram is overstepping her bounds.
President Harold Raveche and Board of Trustees Chairman Lawrence Babbio are included in the suit, accused of providing low-interest loans and excessive pay to Raveche, among other things.
In a preemptive strike, Stevens filed their own lawsuit against the state the day before, claiming Milgram was trying to force her business “philosophies” on the school and “causing and/or threatening substantial and irreparable harm to Stevens” by filing a complaint.
Stevens is also seeking to keep deliberations confidential in the future, since they believe disclosing financial information in a public forum could have damaging results.
Tipping her hand
Stevens officials knew some sort of complaint was forthcoming when they filed their suit on Wednesday, Sept. 16, because Milgram appeared before their Board of Trustees to discuss the matter on Wednesday, Sept. 2.
According to the Stevens suit, Milgram then told the board she would be filing a “complaint” following a two-year investigation. Stevens says that Milgram said it would have a “devastating” impact on the school, unless her “non-negotiable” demands were met, including “removal of its current leadership and expansive oversight by her office through the imposition of a monitor.”
The state said that in 2007, Raveche made $770,000, while MIT’s president made $635,294.
________
Since no criminal complaint was filed, the school is taking the stance that nothing illegal occurred and the school should have the right handle its own finances.
The attorney general wants compensation to be returned to the school, and better management for donated money. According to Milgram’s suit, she also wants Raveche and Babbio removed from their positions.
Big payout
The state is arguing that Raveche was receiving an unsubstantiated salary and benefits package and was given “ultra vires” loans, or loans granted beyond the school’s scope of power.
According to the state lawsuit: “From 1999 to the present – while Stevens’ credit rating and endowment plummeted – Trustee-Defendants Babbio and others increased Defendant Raveche’s compensation through inadequate procedures that avoided the Board’s oversight. His compensation remains excessive, and includes the forgiveness of unlawful and ultra vires loans.”
As a comparison, the state claims Raveche’s salary and benefits in 2007 were more than those of the president of Massachusetts Institute of Technology (M.I.T.), a nationally-acclaimed university with a $2.3 billion budget, compared to Stevens’ $158 million budget. Raveche made $770,000, while MIT’s president made $635,294.
Milgram’s suit also states that Stevens’ endowment lost over $40 million in value between 2000 and 2009.
Because of “illiquidity and excess debt,” the school’s bond rating – an impartial determination of the organization’s fiscal health – was downgraded from an A rating in 2002 to a BBB+ in 2004, “three notches above junk-bond status,” according to the state.
Raveche’s compensation rose steadily throughout those years, reaching over $1 million in 2008, with an additional $92,000 in housing, tuition, and transportation subsidies.
Overboard?
The state’s suit alleges that Raveche and Babbio hid fiscal mismanagement from other board members.
According to the state suit, two trustees told the state that they couldn’t tell if the college was running at a “loss or gain,” because of allegedly irregular and “obfuscated” reports from Raveche and Babbio.
School officials are reviewing the allegations and have retained former New Jersey State Supreme Court Justice James R. Zazzali as an “impartial fact-finder to assist a subcommittee of the board to review the reforms that have been put into place in recent years and to suggest any improvements that may be advisable,” according to a press release.
Politics as usual
For years, Raveche and his wife, Elizabeth, were also contributors to various political campaigns throughout the state, both Republican and Democrat.
According a recent article by the Daily Record of Morristown, Raveche’s family contributions of over $20,000 to Rep. Rodney P. Frelinghuysen (R-11th Dist.), may have netted the school $7.2 million in congressional earmarks for three Department of Defense-related projects. Frelinghuysen, according to the report, was responsible for some of the earmarks.
One local insider said Raveche is an “entrepreneurial” leader, who has a knack for shifting the curriculum of the school to meet requirements for state and federal grant money.
“He backed into more grants than an 18-wheeler backs into loading docks,” the source said.
Campus coverage
Meanwhile, the school’s newspaper, the Stute, has been covering the story, but turned down an article written by a Stevens student about the controversy.
The paper’s editor, Natalie Schloeder, said the student was told beforehand that the newspaper staff was handling the coverage.
Schloeder said the student contacted the paper and had “taken the liberty” to begin writing the story, without being engaged in any staff meetings and only having contributed minimally to the paper over the past year.
“I decided our two most experienced writers would handle it,” she said Tuesday. That the paper turned away her story, “is in fact a lie,” Schloeder said.
She said the paper’s front page carried extensive coverage.
Timothy J. Carroll may be reached at tcarroll@hudsonreporter.com.