UH regents investigated
diversion of $25,000 gift
The 2002 grant to the UH Foundation
was for Jewish studies
University of Hawaii regents have investigated the UH Foundation's diversion of a $25,000 gift from a wealthy New York donor who specified that the money be used for Jewish studies.
During the last several months, attorneys and auditors for UH have looked into the foundation's use of the gift from the Martin Gruss Philanthropic Fund, according to several people familiar with the inquiries.
Martin Gruss, who heads the merchant banking firm of Gruss & Co., made the $25,000 donation to the nonprofit foundation in May 2002 for the restricted purpose of funding a lectureship in Jewish studies. But the foundation later lifted the restrictions, and much of the money was used to pay for foundation expenses, people familiar with the inquiries said.
The discovery came during the regents' investigation into UH President Evan Dobelle before his June 15 firing.
Dobelle, who has no authority over the way the nonprofit UH Foundation manages its gifts, initially informed the foundation that the use of the Gruss donation was restricted when the gift was made in 2002. Dobelle and former foundation President Elizabeth Sloane also acknowledged the donation and its restriction in letters to Gruss.
The donation, which was kept separate from other foundation money, was used for various foundation expenses, including a promotional video for Dobelle when he was named salesperson of the year in May 2003 by the Sales & Marketing Executives of Honolulu, sources said.
Gruss was not consulted when the restrictions on his donations were lifted, according to sources familiar with the investigation.
Gruss has since asked that the money be returned to the foundation so it could be used for its original educational purpose.
Rick Fried, Dobelle's attorney, declined comment, and Gruss could not be reached for comment.
Sloane, who left UH to become Harvard Divinity School's associate dean of development and external relations, could not be reached.
UH spokeswoman Carolyn Tanaka declined comment, saying she has no knowledge of the matter. UH Foundation officials also had no comment.
One person close to Dobelle said the matter was resolved during recent mediation talks with the university. The source said the money was placed on unrestricted status due to a clerical error by the foundation and that Dobelle was unaware of the mistake.
Regents initially fired Dobelle "for cause" in June but rescinded the termination after they and Dobelle reached a mediated, out-of-court settlement in which Dobelle agreed to resign and accept a $1.05 million severance payment. The regents have never publicly disclosed the "cause" for Dobelle's initial firing.
Gruss, 61, is a New York merchant banker who has given generously to several art and medical research institutions on the mainland. His firm, Gruss & Co., is a privately held investment company founded in 1940.
He also is a former part-owner of the Cleveland Indians Major League Baseball team and serves on the board of New Jersey-based Mack Cali Realty Corp., which invests in office properties on the East Coast.
Established in 1955, the UH Foundation is a tax-exempt entity that supports the university through fund raising and other activities.
