DICKINSON, N.D. -- The Dickinson State University Foundation board unanimously voted Thursday night to work with the attorney general's office and the North Dakota University System in shifting control of the nonprofit's finances to a third party.
"The board acknowledges that there are some longstanding accounting issues that were initially brought to the board's attention early last year. Those issues were and are being addressed," the Foundation board members wrote in a press release after the vote. "In taking the action of accepting the receiver, the hope is that those issues will continue to be addressed, corrected, and made transparent to the public from an unbiased third party perspective."
The decision came a day after Attorney General Wayne Stenehjem accused the Foundation of financial and ethical violations and announced his intention to file a motion to force the Foundation into receivership.
"The board of directors shares the attorney general's concerns about protecting scholarship dollars, which is the very core of the Foundation's mission," the Foundation board wrote.
For more than a year, there have been concerns over finances, but those concerns have become more serious in the past couple weeks as the organization has dealt with a $1.5 million arbitration loss in district court along with the departure of former CEO Kevin Thompson and board president David Schultz. Schultz silently resigned last Friday.
"The board acknowledges that in hindsight there have been some oversights and mistakes by management and ultimately the board," the Foundation's board said.
While the North Dakota University System's involvement in the Foundation's finances began in earnest in May, NDUS interim Chancellor Larry Skogen said many of the problems with the Foundation were not brought to light until Stenehjem's announcement on Wednesday.
During a conference call, Stenehjem said there was reason to believe that the board has used restricted funds -- scholarship donations -- to finance development projects.
"If you are looking for a tipping point here, you've got the resignation of the CEO and the resignation of the board president," Skogen said. "We knew that we were dealing with very serious problems, and then all of a sudden we have these two departures."
Stenehjem, who, according to Skogen, was only informed of the Foundation's problems last week, has moved quickly to shift control of the Foundation's finances to a receiver.
"We brought this to the attention of the attorney general and laid the facts out in front of him," Skogen said.
The investigation into the Foundation is focused around three reports, Skogen said. The first is a financial audit that came back qualified, meaning the auditor could not make a determination because of missing information. The second is a focused review that was performed by Eide Bailly, an accounting firm from Fargo. The third is an audit that is currently being conducted.
"In the current audit, the auditors aren't even confident that they can put it together because the records are in such disarray," Skogen said.
Prior to this week, Skogen said he and the staff of the university system had been working with Schultz to decipher the Foundation's finances.
On Oct. 9, Skogen sent Schultz a letter laying out eight points that needed to be fixed at the Foundation, including straightening the organization's budget, removing board members who have conflicts of interest and making sure endowment money was available for their intended purposes.
"By and large, he acknowledged what was in that letter," Skogen said. "I mean, everybody knew that there were problems here. This did not come as a surprise to those of us who have been working on this."
Skogen said that he was only informed of Schultz's resignation as the board president on Sunday.
Schultz was unavailable for comment Thursday.,
Glen Young, the interim CEO of the Foundation, confirmed that Schultz resigned last Friday, and said that he was given no indication why Schultz left.
"We're looking forward to working with the attorney general and getting the Foundation on solid standing, where the attorney general thinks it needs to be," Young said.