Albany -- A draft report says Institute for Entrepreneurism squandered thousands, failed to uphold the public trust

By JAMES M. ODATO, Capitol bureau
First published: Tuesday, July 16, 2002

State auditors have documented tens of thousands of dollars in misspending by the former executive director of a publicly funded agency that was supposed to help people become entrepreneurs.

The Institute for Entrepreneurism, based in Albany, hired more people than it needed, spent lavishly on parties, failed on most of its program objectives, allowed its top executive to pad his salary and perks while double-billing public agencies and creating false reports, a draft audit by the State Comptroller's Office says.

"The institute officials failed to uphold the public trust," the audit team reported.

The auditors also blamed the State University of New York for failing to monitor the institute and its former director, Felix Strevell, whom SUNY forced to resign last July.

The audit urges SUNY to try to recoup $250,000 in state money improperly used by the institute, either through the Institute board's insurance policy or from Strevell himself.

The comptroller said the issue of a criminal referral was up to the state Inspector General.

The auditors depicted widespread malfeasance and said Strevell is primarily accountable. But they also blamed state officials, including SUNY's central administration, the institute's board -- which was led by Strevell -- and Empire State College's operations manager. The institute had been under Empire State College, but became a nonprofit organization that collected $8 million in mostly federal and state funds, as well as some private donations.

The comptroller's findings underscored reports last year in the Times Union, including questionable expenditures by Strevell and a bonus payment of $95,000 to supplement his salary of $134,254.

The auditors said Strevell received the bonus in violation of institute bylaws because it required a majority vote of the board. Auditors suspect that vote never occurred, but that Strevell instructed an administrative assistant to report in the minutes of a meeting that the board approved the compensation.

The auditors said the institute's program has little to show for the $5.3 million spent during the period of the audit -- Aug. 1, 1998, to June 30, 2001. Particularly wasteful, they said, was a $147,000 "E-tour" that sent young people around the country in a van to interview young entrepreneurs. An online MBA program failed to attract any students, yet auditors found $4,975 in tuition was billed and another $1,911 was spent.

Other findings include:

The institute used public money in "an improper, questionable, wasteful and/or extravagant manner."

About $250,000 in state funds were improperly spent. A SUNY Research Foundation investigation found that about $1 million in federal funds was improperly spent.

About $333,000 was billed twice -- to a federal grant and a state grant. The institute "fraudulently" certified that the costs had not been billed to any other source. (The institute refunded all but $157,000 to the federal government.)

Funds were disbursed at Strevell's direction. He also reviewed his credit card statements without oversight, and $140,515 in checks was payable directly to him.

$45,000 in Strevell's credit card charges were unsupported or inappropriate, including prescriptions for his wife; mats for his horses; men's suits; meals at eateries near his Rensselaer County residence; plane travel to Salt Lake City for Strevell and his daughter; and travel to Florida with his wife.

$3,000 was spent on two trips to China for Strevell's father.

Strevell sold an RV to the institute for $64,000. The institute sold the vehicle less than a year later for $38,000 with 12,000 miles on it.

$61,437 in expenses was inadequately documented, including marketing dollars to an auto speedway, $20,000 for lobbying in Washington and $14,000 for an annual celebration.

One party in November 1999 cost $91,430.

Submitted by: Werner Hetzner 

Source: Albany Times Union  7/16/02