NYT Weighs In on Kannam Affair

, by Ezra Silk, Blargus Co-Editor

In a 1,200 word piece in today’s edition of the Times, education reporter Lisa Federaro delves into the increasingly nasty battle between Wesleyan and Tom Kannam (et al.).The story, which ran on page A14, doesn’t break much new ground, though there are new and aggressive quotes from some of the defense attorneys. Federaro has an interesting analysis, highlighting sections of the lengthy complaint that the Argus and other publications chose to ignore. Overall, she found Wesleyan’s case to be “an unusual airing of alleged ivory tower impropriety” that sought “to portray [Kannam] as a money-obsessed bureaucrat who exploited Wesleyan’s prestige and resources to boost his personal wealth.” Though we were not as analytical in our own story, I personally found Federaro’s characterization of the complaint to ring true. No summary can really do justice to the full panoply of sordid details that Wesleyan outlines in it’s lawsuit–though most news outlets seem to agree that the story of the “Taj” is worth telling.

Mostly, the article confirms that the defense will be taking the basic position first elaborated by co-defendant Ralph Gill in an extended comment on our original story. Gill made a number of claims, but his main argument seemed to be that Michael Roth was using the lawsuit to deflect blame for the falling endowment onto Kannam. Gill claimed to have inside information that Roth was not fundraising to the satisfaction of the Board of Trustees, though he provides no evidence or sources for that assertion.

In Federaro’s story, the Belstar Group’s attorney, Martin Stein, makes a similar argument.

But Mr. Stein, the lawyer for Belstar, said that he believes that Wesleyan was “looking for a scapegoat” for its recent endowment losses.“There’s no claim that because Kannam was spending so much time on Belstar and others, that he did not do his job properly and or that Wesleyan lost money because of that,” he said. “Wesleyan’s silence on these things speaks very, very loudly. It’s a real hatchet job.”

Basically, the defense appears to be acknowledging that Kannam was spending time working on his outside entrepreneurial ventures, a fact that seems to be conclusively proved by the emails in the complaint. But they are challenging Wesleyan’s accusation that spending time on these ventures detracted from Kannam’s work for the University, or that it constituted a violation of the conflict of interest clause in his contract. Stein’s argument that Wesleyan never directly connects Kannam’s outside ventures to a decline in the endowment is interesting. Consider this line from the complaint:

Moreover, the University discovered that during his employment Kannam had defrauded the University of thousands of dollars and caused the University to incur significant expenses for his personal outside “entrepreneurial ventures.”

What are these other “significant expenses” beyond the thousands of dollars Kannam defrauded the University of? Are they endowment funds? It is not clearly explained. While the fraud line is a reference to Kannam’s alleged doctoring of expense reports, the “significant expenses” phrase is most likely a prelude to the “University Resources” section of the complaint, in which Wesleyan’s attorneys argue that Kannam had his staff at the Investment Office work on projects related to his outside ventures:

Kannam’s various entrepreneurial ventures, such as the Belstar organizations and VCP [Vietnam Capital Partners] took advantage of Wesleyan’s resources, including having the University’s interns and employees do research for Belstar Group and its affiliated companies without any compensation for same.

[As an aside, it is notable that Wesleyan is not suing any of the other employees in the Investment Office who they also appear to be accusing of violating their conflict of interest policy, which states, among other things, that “any involvement by an Individual in personal business ventures shall be conducted outside the University work environment during times which the Individual is not required or expected to perform duties or responsibilities related to his or her University employment.”]

Interestingly, this section includes information on the salaries and benefit packages of three Investment Office employees. Collectively, the trio made roughly $230,000 annually starting in the 2003-2004 school year–their first full year at Wesleyan. Two of the three are never explicitly accused of doing work for VCP and Belstar, but the implication is there. Therefore, Wesleyan seems to be implying that a portion of these three salaries, which add up to over $1.3 million over the last six years, was essentially spent on other companies’ labor. Add in Kannam’s $460,000 salary over the last 8 years (his salary was likely lower when he allegedly started his outside ventures in 2001), and that’s easily another $3 million plus that Wesleyan could argue was partially spent on other companies’ labor.

In other words, Stein is correct that Wesleyan’s complaint never accuses Kannam of sinking the endowment because he was distracted at the helm. That assertion is never explicitly argued.

But I don’t see how this invalidates Wesleyan’s argument. Their main point seems to be that Kannam doctored expense reports–which no one seems to be denying at this point–and caused the University to waste tons of money by paying people to essentially work for other companies.

Whether Michael Roth is using this case to deflect blame from himself for the University’s poor endowment numbers is another story. We have no idea whether that is true, and I think it will be hard for Kannam’s defense to prove that.

NYT: Wesleyan Sues It’s Ex-Financial Advisor, Thomas Kannam

About Ezra Silk

I have been interested in journalism ever since I was an editor at my high school student newspaper, where I was involved in a freedom of speech controversy that was covered in the local newspaper as well as local television and radio outlets. The ACLU became involved, and the ensuing negotiations lead to a liberalization of my school's freedom of expression policy. I worked as a summer intern at the Hartford Courant after my freshman year at Wesleyan, reporting for the Avon Bureau under Bill Leukhardt and publishing over 30 stories. At the Argus I have been a news reporter, news assistant editor, news editor, features editor, editor-in-chief, executive editor, blogger, and multimedia director. I have overseen the redesign of wesleyanargus.com, founding the Blargus and initiating ArgusVideo at the beginning of my time as editor-in-chief during the spring of my junior year. During my senior year, I have co-edited the Blargus with Gianna Palmer and founded Argus News Radio, a 15-minute weekly show produced by WESU 88.1 on which I conduct a weekly segment interviewing seniors about their thesis topics. I have written over 70 stories at the Argus and continue to do reporting and blogging as much as I can.

47 Comments

  1. J. Bean

    The Argus had the story first and there isn’t much new in this Times story, except perhaps the point made by the American Council on Education official–praising Wesleyan for being willing to suffer some bad publicity to attempt to reclaim assets and address the problem it had.

  2. Congrats NOT

    You fell for the defendant’s diversionary tactics. Congratulations.

    What else would you expect them to say? They have no defence other than to trash the school. What’s next? Kannam claiming that he did not receive proper oversight and the university created conditions that were just too tempting?

    Let’s get on the ball and do some better investigative journalism.

    You have a wealth of material to delve into on your blogs. Your readers have been burning up Google and have found some really interesting stuff.

  3. You Must Be Kidding

    “Perhaps they have been exonerated for just following orders.”?????????????????????????

    Are you serious? Are you accusing them of turning a blind eye? The average comp was $70K each. These are workers, not managers. They were used, and I bet they feel awful about it.

    Try this on for size.

    As far as they likely knew, everything they did was in support of the endowment. Think of Wes $ invested with Belstar (a possibility if you parse carefully the lawyer’s statement). If Wes $ were in Belstar funds and the Wes Endowment staff were doing research for Belstar, as far as they would know, their research was supporting the Wes investment.

    Its clear that one of these folks spoke up or someone in accounting raised a red flag. they are heros. They are not suspects.

    Finally, any $ that Kannam ripped off is endowment money, even if it is expenses for lavish getaways with the family.

  4. Some advice

    Ezra, if you want to ever work for the NYT, you better step up your game a couple of notches.

    The endowment argument proffered by Mr. Gill is a red herring. You fell for it. Why? Did you even confirm that it was defendant Gill who wrote the comment? Wanna bet that it wasn’t?

    And exactly what are Mr. Gill and the others charged with? Kannam’s alleged transgressions are clear. What did the others do? What claim does Wesleyan have against them? Why isn’t that interesting to you and the Argus staff? It certainly is interesting to your readers.

    You have a list of defendants that takes up a whole page. What is it that they are being sued for?

  5. Old Sage

    Oldest trick in the book. Attack the plaintiff and made folks think he is the defendant. Why anyone would put any stock in that rambling C- term paper that Mr. Gill conjured up out of thin air is beyond me. Defendant Gill was right on one thing……there is one born every day.

    Theft is theft. Kinda hard to defend against it. Get caught with your hand in the cookie jar, get busted, and you gonna pay. No ifs, ands, or buts.

    If Kannam was simply a lousy manager alone, he would have been quietly dismissed with a severance package.

    Seems he was able to put the endowment on automatic pilot (an untrained monkey could have gotten the same returns using a dartboard), and decided it was more important to live the lifestyles of the rich and famous AT WESLEYAN’S EXPENSE! Now instead of famous, he is infamous.

    So while we are all toiling and wondering about job security, this clown decides he “has arrived” and embarks on a worldwide tour living it up on the alumni’s dime.

    I hope the Attorney General brings criminal charges. The felony theft threshold certainly has been met.

  6. Onlooker

    This thing is startng to heat up big time. Wall Street Journal is next. Then it’ll go worldwide in the Financial Times. Has the Times of India run this story yet.

    I can’t believe Kannam dropped Ratan Tata’s name. What was he thinking? He is now completely fried in India. What a huge mistake.

  7. Who's On First?

    Talk about throwing Kannam under the bus. Precisely how does Mr. Stein know that Kannam was not doing his Wes job properly? Stein is the lawyer for Belstar, not Kannam.

    “There’s no claim that because Kannam was spending so much time on Belstar and others, that he did not do his job properly and or that Wesleyan lost money because of that,” Belstar Lawyer, Stein, as quoted in NYT

  8. Intelligent Reader

    Congrats NOT, you are spot on. Enough of the charades, verbosity, feigning, slight of hand, etc., etc.,… let’s get into the fact. Ralph Gill has been trained as a lawyer, albeit a terrible one, so he’s got the language confusing and obtuse enough to baffle even the most intelligent readers. Let’s cut the crap and look at the evidence. Kannam, Gill, you guys are going down once the facts are in.

  9. advice

    The defendants might be trying to win over popular opinion, but there will be 12 citizens sitting in judgment of their alleged fraud and thievery.

    Advice to defendants, Focus on winning you case in court. Otherwise you’ll be writing huge checks.

  10. Question

    Hey, when Kannam has to cough up $3 million, does anyone think that the other defendants will chip in to help him out?

  11. seriously

    2;53 r u serious? no one is going to fork over a dime to kannam. that’s called good money after bad.

  12. John Deere

    I say we dig into the endowment just a bit more at the end of the case to purchase a bulldozer for President Roth to personally demolish the Taj,

  13. Disappointed with crappy reporting

    I think these Indians have bribed the New York Times. Honestly a fifth grade reporter can see that Kannam is as guilty as Al Capone. But seriously, I’d like to see Fox News or any of Rupert Murdoch’s newspapers rip a new one for Kannam and his crimminal friends.

  14. Bluto

    Rename the Taj the Wesleyan Center for Ethics and Justice. Have an engraved picture of Kannam in each urinal.

  15. Phi Beta Kappa

    Bluto, I think I’ll give your suggestion to the Art Director here at Wesleyan. Often while urinating, I think aimlessly about my career and where I will be going in the future. Seems the launching pad called Wesleyan, has just taken a torpedo right in the gut from the likes of Kannam and his friends Ralph Gill etc. So, I’d like to be able to piss in the face of these two dudes everytime I think about where my career might now be headed when recruiters look at my resume and say: “Hmm… Wesleyan, isn’t that where they hired a dishonest crook who ripped off the endowment fund? Why did you go to that University? Were you insane? Did YOU slip in through the screening process like Kannam??!!! … casting doubts on my fine credentials…. sickening, really.

  16. Wall Street Journal

    I can’t wait till the Wall Street Journal gets its hands on this story. They will rip Kannam a new one to replace the one he already has that is overblown by excess humping with his partner in crime Ralph Gill.

  17. TK

    I’m a dishonest jerk. I double billed expenses and bought my new BMW 5 series with the monies that I STOLE. Then I LIED and told people I was off meeting investors when actually I went off to the Super Bowl and other junkets with a few strippers from Canada. We got drunk, got laid, then I paid everything and billed it as a roundtrip airline ticket. No one caught me. Of course I did a lot of personal deals using insider information that I obtained from my friends like RG who didn’t give a crap as long as he got a cut of the deal. Yup, all the circumstantial evidence is TRUE. Yet, I have a great lawyer, so I’ve got nothing to worry about! :-)

  20. Kannam's pants

    Whoa boy, have I seen a lot of shit

    There are 12 of us and we are on one hour rotations. The washer and dryer are working overtime.

  22. Extra Points Available

    To any student who emulates in the fine example that I have set as described in this weekend’s New York Times, who publically smears the former CIO name. Toilet and ethnic humor especially welcome. Please see any available TA in the next “Past and Film” class.

    Mikey likes it.

  24. ObL

    Dear Thomas,

    We like your style! You are the type of candidate we would like to work with in our operations.

    I mean your ability to blatantly lie while holding a straight face is world class. We could use a man like you.

    And your sudden disappearance from the public eye – well, nothing short of incredible!

    I’m surprised Conan, Leno, King, and Oprah are not after you for an interview about how you have been able to slip around the justice system of the U.S!

    Kudos and I hope you seriously consider our offer.

    Osama

    P.S. We have great bonuses and benefits and double bill expenses to both the U.K and U.S. Not to mention our frequent flyer program which gives you double the air miles for flying trans continental!

  27. A Priceless Look Back

    This is the funniest posting yet. Its priceless!

    It was posted on October 27, 2009 by “Anonymous” at the Farewell to Tom Kannam Argus article.

    I think we have a pretty good idea of who wrote it. The list of suspects is pretty short.

    Next time lets hire someone with some risk management experience and not a self-obsessed, self-promoting, self-enriching hedge fund director wannabe.

    “Tom Kannam was a brilliant and modern investment professional who strongly believed in the mission of Wesleyan and had significantly, and smartly, moved the school’s endowment into the ranks of some of the most sophisticated endowments in the country. No one complained when returns were excellent prior to the world financial meltdown … and the endowment is snapping back now. Tom is one of the best minds in endowment management and will be proven as such.”

  28. Korean Dignitary

    여보세요,

    나는 한국 고관이다

    톰 Kannam는 저 항상 이었다

    좋은 하루 되세요

    근실하게,

    한국 고관

  32. kannam's cesspool

    1. stop using so much toilet paper
    2. when you run out of toilet paper, do not use paper towels, and never sacrifice a wash cloth
    3. if its yellow, let it mellow
    4. a diet rich in curry causes me to gurgle up to the lawn surface
    5. please, no more bricks

  33. '12

    the humor on this post is just incredible. some of us have to study, but reading the kannam comments is hilarious – and some of them seem very insightful. the info dug up and analyzed is pretty dam good . i am now convinced without a doubt that the wes case is ironclad.

  34. 2010

    i agree. i go to bed with a smile on my face and sometimes start laughing out loud. i mean, the toilet humor was too funny. i mean, sacrifice a wash cloth – that one was over the top funny

  37. alum2

    I’m curious about all you folks hanging this guy without having even heard word one from the defense. Sure, it looks awful, but it always does if you’ve only heard the prosecution. You all might feel stupid about some of your self-righteous, inflammatory language when you know all the facts. Or, you might not. Point is, you don’t know all the facts. And yes, I would get that filing.

    I’m also curious why no one at our nice, liberal, school has qualms about going through people’s personal emails (i.e. between husband and wife).

    Apparently privacy is right, at least until the moment it’s inconvenient.

  38. Alum

    there is no such thing as private e-mail at work, websites visited, telephone calls made, written correspondence, etc.

    you do it on company time, employers own it. end of story. you create a patentable idea on company time, company owns it (even if its in your name). If you want privacy, buy your own iPhone and use that at work.

    It is imporant to remember that company’s are not democracies. your privacy ends when you walk through the front door (with few exceptions, e.g. HIPPA)

    Courts at all levels have held these employer right’s time and time again

  39. Lots of Court Activity Today

    Alum 2 – We are not going to hear anything from Kannam. His lawyer filed a ton of motions to seal everything and lock it down. His right to do, but why hide everything? I assume it is because if a settlement is reached, no one will ever see the documents. The only way we’ll see them if they go to trial.

    107.00 02/09/2010 D MOTION TO DISMISS Yes
    108.00 02/09/2010 D MEMORANDUM IN SUPPORT OF MOTION
    to Dismiss No
    109.00 02/09/2010 D AFFIDAVIT
    of Thomas Kannam No
    110.00 02/11/2010 D MOTION TO SEAL DOCUMENT Yes
    111.00 02/11/2010 D MEMORANDUM IN SUPPORT OF MOTION
    TO SEAL DOCUMENT No
    112.00 02/11/2010 D MOTION FOR PROTECTIVE ORDER No
    113.00 02/11/2010 D MEMORANDUM IN SUPPORT OF MOTION
    FOR PROTECTIVE ORDER No
    114.00 02/11/2010 D AFFIDAVIT
    OF STEPHEN FITZGERALD No
    115.00 02/11/2010 D AFFIDAVIT
    OF HEATHER McCUTCHEN No
    116.00 02/11/2010 D AFFIDAVIT
    OF THOMAS KANNAM No

  42. Freshman Question

    Who within the Administration was monitoring the expense reports and american express card statements?

  43. Legal Question

    Freshman,

    If someone lies or misrepresents an expense, its pretty hard to find out unless someone comes forward to turn them in. Fortunately a good and honest person came forward and turned in Kannam’s ass. That person should be congratulated and given a cash award by Wes (if they already haven’t).

    If a trip request is made, an approver relies on the requester to accurately represent the purpose of the trip. If the requester is a master liar, it is almost impossible to find out, again, unless someone comes forth and turns in the thief.

    You can monitor expense reports all you want, but if the liar is adept at lying and cheating, its damn hard to find out – until they make a mistake. I would suspect that in Kannam’s got sloppy. Once someone turned his ass in, the audit commenced.

    The only way to catch a liar in the act would be to hire someone to track their every move. If you have to do that, then you hired the wrong employee

    I want to know if Kannam got honaria at all of his speaking events and if he turned them into Wesleyan. That is worth pursuing.

  44. Sue the Bastards

    Rather than focus on “who was monitoring” and try to “hang” someone, it would be far better to determine exactly how Kannam deceived the University. How did he do it? Once you know how he did it, you can attempt to fix the system (if it needs fixing).

    You’ll never bulletproof the system against cheaters and liars. They’ll always figure out a way to scam. Witness, Bernie Madoff – the master of all con-men.

  46. Disappointed

    I feel the press has dropped the ball on this case. A lot of hype when it first appeared. Now it seems like yesterday’s news.

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