School sues professor for fraud, he claims he is an amnesiac

Jim DuPlessis

McClatchy Newspapers

COLUMBIA, S.C. – Charleston Southern University has sued its economics professor Al Parish, claiming he lost $10 million the school invested – more than a tenth of its assets and about three-quarters of its endowment.

Parish is claiming amnesia.

The U.S. Securities and Exchange Commission also filed suit on Thursday against Parish, an economist noted for his colorful outfits and a pen collection worth more than $1 million.

The suit alleges Parish defrauded the school and other investors of most of the $134 million they had invested through him.

The commission said that after it attempted to contact Parish, “he checked into a local hospital claiming to have amnesia.”

The commission said Parish’s funds had been operating since 1986 and four of the funds were “informal pools of money.”

The pools allowed investors to put money in commodities and securities futures products, bonds, stocks and hard assets such as expensive watches, jewelry and fine art. The fifth fund was Summerville Hard Assets LLC, which purported to invest in various hard assets such as jewelry and collectibles.

Charleston Southern also filed suit Thursday, claiming it lost $10 million it invested through companies Parish controlled.

The small Baptist-affiliated university signed agreements with Parish starting in 2002 – to let Parish invest money in hedge funds with expected yields of 9 percent or more each year – a return far above the earnings of conservative investments.

Ten-year U.S. Treasury bonds, a standard of conservative investments, now bear yield of about 4.6 percent.

Documents the university filed with the IRS show that the loss represents 15 percent of the school’s $71 million in total assets. The $10 million loss is part of the school’s investment funds, which stood at $18.3 million in May 2005, according to the university’s latest IRS filing.

The rest of the assets are in land, buildings and grants that must be used for designated purposes.

Rutledge Young, a lawyer representing the school, said the losses will require “budget adjustments,” but won’t have a “material impact” on the school’s operations.

“While $10 million is a significant amount of money, it will not have an impact on either the scholarships or the operations of the school,” Young said.

The school’s latest financial report shows it increased its investments by $9 million in an entity it describes only as a “limited liability company,” not disclosing with whom it was invested.

However, through the lawsuit, the school details how it had invested $10 million with Parish.

Giving control of a sizable portion of an organization’s assets to an employee is something that should be fully disclosed by an organization in its IRS filings, said Timothy W. Koch, a USC professor of finance.