Billionaire hedge fund manager and Stern alumnus John Paulson is facing scrutiny for his relationship with Goldman Sachs.
Images
But NYU, which received a $20 million donation from Paulson last December, is standing by its benefactor.
On April 16, Goldman was accused of securities fraud by the Securities and Exchange Commission, which claims the bank misled clients during the financial crisis. Goldman sold mortgage securities designed by Paulson's company, Paulson & Co., to homebuyers.
Paulson, who anticipated the housing market's collapse, made $1 billion betting against the deals, and was listed by Absolute Return + Alpha magazine as the fourth highest annual earner in the hedge fund industry last year.
NYU fundraisers targeted Paulson because of his financial success and they managed to secure the December 2009 donation that helped fund scholarships and Stern's Concourse Project.
According to Debra LaMorte, senior vice president for development and alumni affairs, the prospect research team combs through media reports, real estate transactions and political donations to determine which alumni and friends of the university may be capable of making gifts.
"I suspect what happened is that, as a researcher was going through the database for Stern, they realized that John Paulson was an [alumnus] of the school and he was capable of making a gift and they began to engage him," she said.
LaMorte said the team always makes sure that potential donation money is legally obtained during its research process.
"The university wouldn't take funds that weren't legitimate," she said. "If I had a sense that somebody was trying to give money to me based on money laundering or drug dealing, that would be completely inappropriate."
According to Jennifer Keane, director of prospect research and management, she and six other researchers rely on public documents for this investigation.
"Whatever laws public companies have to abide by and file information, that's available," she said. "There is a lot, of course, that isn't public, that we can't find."
Shana Carroll, director of communication for the undergraduate college at Stern, said Stern will continue to support Paulson.
"We are very grateful for the generosity of our alumni and friends, which allows us to provide more scholarships as well as fund capital projects and special programs," she said. "It is through their generosity that we can continue to provide our students with the best possible academic and co-curricular experiences."
LaMorte agreed that the university should continue to support Paulson, who is a member of Stern's board of overseers.
"I think from a university standpoint, it's incumbent upon us to be supportive of our donors through good times and bad times," she said. "I think all too often we tend to jump to conclusions."
If a donor were to be found guilty of foul play, LaMorte said the donation would be returned on a case-by-case basis.
"I think each set of circumstances is different," she said. "Fortunately, we haven't had to deal with that."
The university has also accepted gifts from George Soros, a Hungarian businessman and investor who benefited from the 1997 Asian financial crisis. He donated more than $300,000 in 2006 and 2007.
"I can look back on others who have donated to the university who fell upon difficult times and were vindicated," LaMorte said. "This is the time that they know that the university loves them in good times and bad. You know, it's a little like a marriage. It's not always going to be perfect, and I think that support needs to go both ways."
