Friday, April 03, 2009

Joe Monaghan Speaks On Conservative Scandal - Columnist Robert Novak ‘s Minority Scholarship Program

Category: Issue 14

The Political Scandal The Conservatives Didn’t want you to Know About - Former Thomas More College Board Member Joe Monaghan Speaks About Conservative Scandal - Columnist Robert Novak ‘s Minority Scholarship Program Mismanaged by Jeffrey O. Nelson.

Merrimack, NH. – When Robert Novak wanted to launch a scholarship fund for inner-city youth at a small liberal arts college in New England, he had no idea that he was going to be taken for a ride by a trusted fellow conservative. In fact, he was warned by Joe Monaghan that his money might not go where it was supposed to, and the reason for this was that the man running the University was operating the school’s cash flow as if it were a Ponzi Scheme. Monaghan, a former Board member, stated that college President Jeffery O. Nelson, son in law of Russell Kirk, intellectual founder of the conservative movement, had not been forthright in the school’s fiduciary management. Nelson’s negligent acts, such as taking an unapproved loan and missing payroll while at the same time hiring relatives, were even reported to Mike Delucia, Assistant AG in charge of charitable trusts in New Hampshire, though he has largely ignored the case.

In response to these allegations, Mr. Novak quickly fired off a letter to Nelson, writing:

“In our conversation, [Joe Monaghan] described your management as “dishonest” and said my contribution would fall into the category of pouring in “good money after bad.” He also informed me that you had added $1.5 million to the payroll without funding it, partly to pay for two of your in-laws hired by the college.

I have been a journalist long enough not to accept at face value one version of what appears to be a bitter dispute. Nevertheless, in my past contact with him, Mr. Monaghan has come over as a principled conservative, who indeed was partially responsible for putting me in touch with Thomas More College.

Therefore, I must at least temporarily put in abeyance my commitment for what for me would be a substantial commitment of $100,000… This is tremendously distressing to me. Only a few hours before receiving a call from Mr. Monaghan, I attended a [Youth Leadership Foundation] board meeting in which I for the first the time told directors of my plans for the Thomas More scholarship. My fellow board members were very enthusiastic at the prospect of providing a scholarship to an outstanding private college (to go along with a proposed University of Maryland scholarship) for an inner city youth.”

The board of the college responded to Mr. Novak with a letter stating that “efforts at undermining your generous gift are a violation of fiduciary responsibilities and accompany a twisted assertion and interpretation of events. It pains me to write that in undertaking this effort [Monaghan] has engaged in falsehoods.

The board then went on to urge Mr. Novak to contact several board members along with the former Cardinal of NY, Egan, a board member who had resigned months earlier in the middle of the school’s unprincipled efforts to borrow $1 million. Two others resigned over the scandal, but the board’s letter to Mr. Novak did not urge him to contact them.

The loan issued by the Digital Credit Union is particularly jarring. When the loan was taken, Nelson was months overdue on the school’s budget. He refused to give justification for the loan, even increasing it from $800,000 to $1,000,000. After much scrutiny by the board, Nelson finally gave a redacted budget. Board member Richard Heitmiller, since resigned, had to declare there had been enough “stonewalling” and demanded immediate action in order to get the budget. This was well over 2 months after DCU had issued the loan using future tuition revenues and other assets as collateral.

Meanwhile the school’s response to Mr. Monaghan was less gracious, and, at Nelson’s direction, somewhat threatening. The school’s lawyer, Ovid LaMontagne, former Chair of the Romney for President National Faith and Values Steering Committee, sent a letter stating that “Mr. Novak has made a verbal commitment to establish a Youth Leadership Conference scholarship at Thomas More College” and that Monaghan should “refrain from using information… obtained in your capacity as Director to adversely affect the interests of the College.”

Mr. Monaghan was not persuaded. “The letter read as a threat to Mr. Novak for making a ‘verbal commitment’ and the legal reasoning was tenuous.  The law does not require you to not remain silent when someone is abandoning their fiduciary responsibilities to an institution, especially when you’re committing fraud to do it. Also, I had helped introduce Novak to the school.”

Mr. Monaghan sighted several financial irregularities by Mr. Nelson’s administration when he resigned, including the issuance of the DCU loan and that he no longer trusted communications from Mr. Nelson to be true. When pushed on the reasoning for the loan that caused 5 members to resign, Nelson finally responded in regards to the loan when he submitted his extremely overdue budget. According to a statement sent to the board in the Fall of 2007, Nelson directed the board to sign a “Consent to Action Without Meeting.”

“The purpose of this email is to formally notify the Board of Trustees of my decision to establish a $1,000,000 line of credit with Digital Federal Credit Union.  While . . . in the process of securing signatures from the board (which were in various stages of completion) for the $800,000 line, the bank notified me of a specific underwriting concern.  Underground storage tanks, and the correlating potential environmental risks associated with them, would cause the bank to reduce our available line of credit and hold in reserve as much as $100,000, pending resolution of an environmental study and action by the College for tank removal. Realizing the bank could not meet our target of $800,000 (due to their requirement to reserve a portion of the line) the bank offered to increase the aggregate line.
Further discussions with our legal counsel, and the bank, enabled me to increase the aggregate line of credit to $1,000,000, thereby ensuring the targeted amount of $800,000 was available to the college.    The bank’s expressed confidence in our balance sheet allowed for such an increase and it was executed at the bank closing.”

So before he even had consent from the board to take a loan no one was given reason for, he took the loan in the college’s name and raised the amount he’d asked for the authority to take. However, according to an anonymous source close to the college, by the summer of 2008 the school started missing payroll until Novak finally relented and donated the $100,000 for the Scholarship. Monaghan was not surprised Novak gave the gift. “Robert Novak was lobbied pretty hard, but it was plain as day to me that assurances from Jeff Nelson and his enablers meant nothing.”

By that Fall the school’s auditor, O’brien, Riley and Ryan of Westwood MA. refused to certify its audit. Despite taking more loans, including $400,000 at 16% interest, the college again missed payroll by December, 2008.  In an email to fello Alumni John Kelly (1991), Nelson stated “the college is now facing serious financial difficulties. Paychecks have been delayed indefinitely. The school is having difficulty paying vendors.”

In an email from Terry Knowles, the registrar of non profit trusts for the Attorney General’s Office of NH, in Dec 2008, it was noted that the AG’s office had opened an investigation into the finances of the College.

Reminiscent of the SEC’s ongoing ignorance of the Bernie Madoff scandal, the Authorities in New Hampshire have turned a blind eye to the goings on at Thomas More College. Despite finding complaints from as far back as January of 2008, Mike Delucia, assistant AG in charge of charitable trusts, did not contact Monaghan to follow up on the situation until January of 2009, and did little investigating at that. Delucia scheduled the call for a time when he was receiving physical therapy for one of his wrists, only talking about the economic environment for fund raising. For this article, Monaghan stated, “I explained to him, very, very clearly, that if he had done his job in the first place, the school wouldn’t be in the situation it is in now.”

When asked why he thought Novak went through with the scholarship, Monaghan stated “...because Jeff Nelson markets himself as a Conservative powerhouse who can cause problems for fellow conservatives within the movement. Mr. Novak has an excellent conservative mind and makes his living from conservatives. Nelson trumpets his sway as a scion within the conservative movement as the editor of the “Conservative Encyclopedia” and in his capacity as the late Russell Kirk’s son in law. According to Monaghan, “ideologues like Jeff Nelson, and his enablers, believe that truth is second to their aims.”


Material supporting this news report is available here

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