Attorney General Richard Blumenthal is suing Wesleyan University’s former investment director and three private companies for allegedly misusing university endowment assets for personal trips and other inappropriate expenses.
Blumenthal’s lawsuit alleges that Thomas Kannam, when he served as Wesleyan’s chief investment officer, failed to disclose his ties to multiple investment groups, including Belstar Group, LLC, Vietnam Capital Partners, LLC and Advanced Device Technology, Inc.
Kannam allegedly used Wesleyan employees and resources to provide research and other professional services to these private firms, which are also named as defendants. Kannam also allegedly billed Wesleyan for business trips that strictly benefited these companies and involved little to no university-related business.
Blumenthal alleges Kannam also billed Wesleyan for a number of personal trips -- including a “golf outing of the century” in California, a Super Bowl trip, and a trip to the United Kingdom with his entire family to interview for a job at Cambridge University.
Blumenthal said this alleged misuse of the university’s endowment assets, which are strictly for the benefit of Wesleyan’s charitable and educational purposes, violated the state Solicitation of Charitable Funds Act.
“Wesleyan staff and assets were allegedly treated as personal fiefdom -- abused and misused for private gain,” Blumenthal said. “Our lawsuit seeks to recover every dollar diverted from Wesleyan University’s charitable assets by its former investment chief. This misuse of Wesleyan’s endowment resources deprived all Wesleyan students and staff of potential resources.
“Wesleyan’s endowment strictly promotes education and charity -- not private profit and personal trips. So-called golf outings of the century and new job-seeking trips abroad illegally drained school resources. My office will fight to recover charitable resources and restore public trust.”
Blumenthal’s lawsuit will support Wesleyan’s independent ongoing litigation against Kannam, and also enable the state to pursue additional remedies, including penalties under the Solicitation of Charitable Funds Act.
Kannam served as Wesleyan’s Director of Investments from December 1998 through 2005, when he was promoted to serve as Chief Investment Officer. He was one of the university’s most highly compensated employees.
As a condition of employment, Kannam was prohibited from serving in any other positions or on boards, compensatory or otherwise, without permission from the university president.
In 2006, Kannam became involved with, and eventually became an owner of and the Director of Investment for, Belstar. He did not seek consent or disclose his affiliation with Belstar to the university.
Kannam allegedly used university resources, including university investment staff, to perform work for Belstar’s benefit. The university received no benefit from those activities. Kannam also sought university reimbursement for trips that he took on behalf of Belstar -- including weekly trips to New York City and a trip to Texas.
Beginning in 2008, Kannam also began serving -- unbeknownst to Wesleyan officials -- on the board of Vietnam Capital Partners (VCP). VCP operates the Vietnam Equity Growth Fund, which is a $250 million hedge fund investing in the public and private equity markets of Vietnam.
Kannam allegedly used his position at Wesleyan to assist VCP in securing investors within the charitable higher-education endowment community. He also used Wesleyan staff to provide research and other professional services.
On multiple occasions, Kannam also provided lobbying and other services on behalf of his father’s corporation, Advanced Device Technology (ADT). Kannam billed the university for at least two trips to Washington, D.C. that were made on behalf of ADT, involving little to no university-related business.
Blumenthal’s office estimates that Kannam -- who was terminated in October 2009 -- misused, at a minimum, tens of thousands of dollars in university assets.