The University’s case against former Vice President and Chief Investment Officer Tom Kannam saw its first major decision in April when an arbitrator ordered Kannam to pay the University $68,751.33 in damages and $32,590.00 in attorney fees. The University was ordered to pay Kannam $8,287.50 in attorney fees, and both parties are expected to split the arbitration fees.
Kannam was dismissed from his position in October 2009 and the University filed suit against him in November 2009, charging him with using University funds for personal expenses and for violating his contract by sitting on several corporate boards without the administration’s knowledge.
Because Kannam’s employment contract stipulated that any legal disputes surrounding his termination would be handled out of court in arbitration, arbitrator Beverly J. Hodgson heard the case during a six-day hearing in January of this year. Since Kannam’s contract went into effect on July 1, 2005, any misbehavior before that was not included in the arbitration case.
On March 21, Hodgson issued the arbitrator’s decision and interim award. She found that the University had proven its claims for damages with regard to certain expenses that it paid to Kannam. She also found in favor of Kannam on his claims for vesting of mutual fund options granted to him by the University and with regard to damages incurred in compelling the University to arbitrate claims.
Hodgson found Kannam guilty of civil theft for charging the University for travel and expenses that were either personal or for other business entities unrelated to his University duties.
“[Kannam] knowingly sought funds from [the University] for activities which he clearly knew were not related to university business or for which he had already been reimbursed by others,” the decision and interim award states. “On two occasions, he physically altered bills in aid of securing payments.”
The document details travel expenses Kannam charged to the University, including various family vacations, a job interview in England, trips for personal business and a family wedding in India. The charges range from $677.80 on a family party in Chicago to $3,196.28 on Equinox resort lodging for his family. The fraudulent expenses total $22,651.11.
The arbitrator also found that the University owed Kannam attorney fees because Kannam had to use his lawyers to enforce the clause in his contract calling for arbitration.
Kannam and the University submitted fee claims, and on April 27 the arbitrator decided on monetary amounts each side would pay. Both parties are also expected to split the $3,875.00 administration fees of the American Arbitration Association and the $29,090.00 arbitrator’s expense.
Although the University moved to vacate the portion of the arbitration award requiring them to pay Kannam’s legal fees, the court ultimately upheld the decision and confirmed the award on June 8.
On July 26, the University asked to lift the stay of proceedings put on the rest of the charges against Kannam while this part of the case was being arbitrated. If the stay is lifted, the case with the remaining non-arbitrable claims against Kannam will continue in court.