University of Louisville May Sue Its Own Foundation

The University of Louisville is considering suing its own foundation in the wake of a damaging audit and months of talk about recouping misspent money, according to leaders at the U of L Foundation. Earl Reed III, chairman of a U of L Foundation subcommittee, said in an affidavit provided to the Kentucky Center for Investigative Reporting that the foundation’s threat of being sued by U of L “is substantial” but could be avoided if the two entities reach agreeable terms.

The foundation created the affidavit in response to an open meetings complaint from KyCIR about two executive session meetings held on Oct. 26. The complaint argued that state law requires a specific and substantial threat of a lawsuit to warrant a secret meeting. Interim U of L Foundation executive director Keith Sherman told KyCIR that the closed sessions were legal and proper because board members were discussing a substantial and specific legal threat from U of L.

The affidavit marks the first confirmation of a specific lawsuit possibility after months of vague discussion about recovering millions lost from the foundation’s endowment.

U Of L Could Lose Bond Rating In Wake Of Hoops Scandal

The University of Louisville and its foundation could see their credit ratings pummeled as the basketball scandal’s fallout continues. This week, the bond rating agency Moody’s Investors Service announced the university is under review for a possible downgrade, citing “recent criminal allegations against senior athletic personnel” and concerns over the university’s finances. Moody’s already downgraded U of L a notch last year to A1, citing instability in leadership and financial concerns. Investors and lenders use the ratings to determine U of L’s credit worthiness. The agency warned in its announcement that U of L’s rating could drop several more notches after this review, which will consider the lack of permanent leadership and whether Louisville is maintaining the confidence of donors and stakeholders.

U of L To Pay Back Taxes On Adidas Swag, Club Memberships

The University of Louisville owes $96,000 to the Internal Revenue Service after an audit found it wasn’t paying taxes on Adidas freebies given to staffers in the athletics department. Roughly $200,000 worth of Cards clothing — polos, workout gear and the like — handed out to coaches is a fringe benefit and taxable, according to the IRS audit of the university’s wages in 2014 and 2015. Since the clothing is not required for work and can easily be worn off the clock, U of L should’ve been considering the fair market value of the clothes to be gross income subject to tax, the audit said. The IRS found that U of L also neglected to treat as taxable income golf club dues for four employees, worth about $25,000 a year. John Karman, a U of L spokesman, noted that the audit was routine and that U of L has agreed to pay the additional taxes as well as any taxes triggered by the free clothes in the future.