A report in the Intelligencer Journal New Era headlined “AG’s office looks at PAM” is sub-headed “New Academy chairman says state has launched civil inquiry into how money from endowments was used.”
We are delighted that the Attorney General’s office is responding to our calls to review activities of the trustees and officials of the Pennsylvania Academy of Music.
Buried deep in the article, it continues “It’s also unclear whether the 42 N. Prince St. academy followed state laws and regulations when transferring assets to its mortgage lender and three loan guarantors, [Dr. Holmes Morton] said. The transfers were part of a complex plan that eliminated the academy’s $18 million debt last December without putting the academy into bankruptcy.”
When Paul Ware stepped down as Chair of PAM and he and several trustees resigned in September 2009, his successor Dr. Robert Falk and the newly constituted board appointed a Business Committee, consisting of committee chair Art Mann and John Tryon, Esq., and Mary Burton. Falk also appointed NewsLanc publisher Robert Field as its Advisor.
Field insisted that arrangements for the transfer of assets to UNCB, the mortgage holder, and the Ferree Foundation, the Steinman Foundation, and the Lancaster Newspapers, Inc. be first cleared with the Attorney General’s office, which is responsible for protecting foundations. PAM counsel at the law firm of Dilworth Paxton did so and no objection was raised.
The Intell further reports “Homes said endowments tapped to cover operating expenses included endowments formed to support the Newstead Trio and to give scholarships to top students.” The transfer was done with the knowledge of the trio and knowledge of the board of trustees.
What is upsetting to some donors is the discovery that contributions made towards the $32 million construction of the Academy had been diverted by the trustees to subsidize operating expenses over the years. From all appearances, PAM never had a viable business plan!
Ware, the trustees, and co-founders Fran Veri and Michael Jamanis also assumed that they could raise sufficient funds to pay for the new building. They were wrong.
Upon taking up his business committee responsibilities, Mann observed that remaining at the Academy with its huge debt and maintenance costs and operating as an academy were two different issues. He proposed moving back to Liberty Place. Field urged relocating to the huge ground floor meeting space at the Brunswick.
Chair Ware and the board of trustees during his leadership must bear much of the responsibility for the financial failure of PAM. They were well meaning and, in many cases, personally very generous. But the sorry history suggests they were not competent in performing their oversight responsibilities.
Assuming that Millersville University follows through with its $14.5 million investment in acquiring and renovating the building for its use, the ultimate losers will not be Ware or the foundations. The acquisition price seems sufficient to bail out UNCB, Ware and the foundations. The real losers will be the donors and the taxpayers who contributed about $7 million initially and will now pay the acquisition price
Sounds to me that LNP is once agin ‘reporting’ what THEY want the public to know, and not the whole side of the story. Good thing we have Newslanc to present a fuller picture for us…keep up the good work!!!!