Tom Petters, former chief executive of the investment company Petters Group Worldwide, pled not guilty Nov. 17 during testimony in St. Paul, Minn. to U.S. District Judge Richard Kyle.
Prior to his criminal allegations, Petters pledged $14 million in gifts to Miami University's Farmer School of Business in 2004 and served on Miami's Business Advisory Council and Board of Visitors.
President David Hodge said Miami has not used the money Petters provided.
"My good news in all of this really ugly mess is that we hadn't yet committed ourselves to spending the money in any serious ways, so we were able to back off that pretty quickly," Hodge said. "There was virtually no conflict."
According to The Star Tribune of Minneapolis-St. Paul, Petters is charged with conspiracy, fraud and money laundering in what the government contends is a fraud scheme of $3.65 billion that allegedly ran from 1995 until September 2008, making it one of the largest Ponzi schemes in history. If Petters is convicted, he could face life in prison.
Hodge said Miami will not use the money if Petters is convicted.
"We are not going to honor anybody who has been convicted of a felony, we are not going to use money that was obtained illegally or fraudulently," Hodge said. "We try to take the high road in all of this."
Hodge said Miami must wait until the case has officially concluded before returning any money, if Petters is convicted.
Robin Parker, general counsel in the office of the president, said if Petters is convicted of a crime, Miami will be following the due diligence process to determine how to return the gift money.
"We have to figure out who to return it to, how much should be returned and when," Parker said, "He has not been convicted of any crime at this point. It may be determined in a matter of hours or days, but all we can do is wait."
According to the Wall Street Journal, Petters's Office Manager Deanna Coleman tipped off the FBI to Petters' actions. Coleman reportedly went undercover to gather recordings of Petters making statements about his guilt.
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The Star Tribune reported that defense attorney Jon Hopeman questioned Petters and ultimately laid the blame on Coleman for operating the fraud.
Coleman pled guilty to conspiracy in the case and hopes her cooperation will garner some leniency when she is sentenced, according to The Star Tribune.
In 2005, Petters was inducted into Miami's Academy of Entrepreneurs for supporting entrepreneurship education.
He pledged $5 million for a center in the Farmer School of Business to honor his son, a former Miami student killed during spring break in Italy in 2004, and pledged $4 million to establish a chair in Asian Business in the Farmer School in his daughter's honor.
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