The two top financial department administrators at College of DuPage were placed on administrative leave Tuesday after the release of an internal audit that found the college lost $2.2 million in a risky investment fund, school officials said.
Thomas J. Glaser, the college's senior vice president of administration and treasurer, and Lynn Sapyta, assistant vice president of financial affairs and controller, are on paid leave pending the results of ongoing investigations into the college's spending practices, policies and procedures, COD officials said.
It marks the second time action has been taken to place top administrators on leave at the embattled Glen Ellyn-based community college after a new majority on the board of trustees came to power in April and told President Robert Breuder to step aside.
The new majority, led by Chairwoman Kathy Hamilton, has been critical of the college's financial management practices under the leadership of Breuder and his top lieutenants. Glaser and Sapyta were grilled by trustees on financial issues at a board meeting last month.
Whereas the board voted to place Breuder on leave, Acting Interim President Joseph Collins was the one to place Glaser and Sapyta on leave.
At the same time, he appointed James Bente, vice president of planning and institutional effectiveness, to head the college's financial department. But Bente's appointment is expected to last only until Thursday night, when the board is expected to vote to hire Alix Partners, an outside financial advisory firm, to manage the college's finances on an interim basis.
"These actions (risky investments) are utterly unacceptable," Collins said in a statement. "We are taking steps now to ensure this breach of trust with the taxpayer never happens again. We are addressing each of the auditor's recommendations."
Glaser declined to comment, and Sapyta couldn't be reached.
Officials say the audit has circulated internally at the college since March, but Hamilton said she didn't see a copy of it until after the first board meeting under her chairmanship April 30, when the board voted to place Breuder on leave and appoint Collins. She said that's when Collins provided her a copy of the audit.
"I was saddened by it," Hamilton said. "I was shocked and saddened."
Hamilton said the recommendation to place Glaser and Sapyta on leave came from Schiff Hardin, a law firm hired by Breuder to conduct an internal investigation when a federal probe of COD began in April, and the board's newly hired law firm Rathje & Woodward.
The report by the college's internal auditor, James Martner, found the college's financial staff increased COD's investments in the Illinois Metropolitan Investment Fund from about $10 million in April 2014 to more than $80 million in September 2014 after the board passed a resolution authorizing management to invest in the fund.
But while the college's investment in the fund in April was 4 percent of its portfolio, the investment had increased to 29 percent by September, and board policy limits investments in local government investment pools to 5 percent, Martner wrote.
Glaser placed the funds with IMET due to the much higher yield the college would receive compared to other investments, according to the audit.
IMET defaulted on certain loans last October, resulting in COD losing more than $2.2 million on its IMET total -- the greatest such loss of all municipal investors statewide, college officials said.
Martner wrote that the IMET loss would have been only $381,436 had COD officials kept the amount invested to 5 percent, per board policy.
It's unknown whether COD will ever get that money back, the audit said.
Martner wrote that in many instances, Glaser didn't listen to recommendations Martner made, such as limiting investments to 5 percent, considering additional screening procedures for potential investments, and making more detailed reports to the board.
The audit also cautioned against investing as much in bond mutual funds, which Martner said are susceptible to interest rate risk. As of September 2014, COD had 43 percent of its investments in bond mutual funds, while a survey of other local community colleges found no other school had invested in those type of funds.