NMMI, alumni board face nasty divorce

June 1, 2013 • Local News

In this undated file photo, NMMI cadets stand at attention during a ceremony. (Mark Wilson Photo)

The ousted New Mexico Military Institute’s Alumni Association continued its offense against the Institution on Friday accusing officials of misleading the public about its financial mismanagement — accusations the administration defended point-by-point.

The former on-campus Alumni Association has accused NMMI of attempting to seize money and property, destroy its reputation and break the law.

NMMI officials stand firm behind the decision to sever ties with the group at the end of April following a series of long-running financial concerns, a failure to meet a deadline to fix those problems and the Association’s inability to negotiate a settlement to stay.

The result is quickly evolving into a nasty divorce.

At stake is $5.2 million, specifically restricted for cadet scholarships and some earmarked for “alumni office” operations.

The Association contends the money is still under its control. However, the agreement it signed to operate gave NMMI management and oversight of the funds provided by donors for scholarships and endowments to benefit NMMI cadets, according to NMMI spokesman Carl Hansen.

“NMMI does not desire to benefit monetarily from the termination,” Hansen said. “Failures in the governance and oversight of the corporation’s financial activities and the Regents’ action to terminate the relationship go directly to the [auth] heart of benefiting our cadets and realizing donor wishes.”

NMMI has asked that the funds, currently held in a brokerage account at Wells Fargo, be transferred to the NMMI Foundation Inc., for management and oversight.

New Association president John Phinizy, an attorney, said the Association intends to maintain absolute control of the money.

“We want to tell our alumni that it’s not being mismanaged,” he said. “It’s being used exactly like it’s been used as long as we’ve had it. We still have control over that.”

The Alumni Association has changed its board of directors and is still asking alumni for donations and support. NMMI has established its own alumni office on campus.

“It just means they kicked us off campus, because whatever their reasoning is they don’t want us there,” Phinizy said. “We’re going to set up an office and operate off campus.”

NMMI Board of Regents ended its nearly 50-year relationship with the Association in April after giving its board 30 days to fix financial issues — a time limit that was not met. After a negotiation period between the two boards, the Association could not legally sign an agreement that would have disbanded the nonprofit and allow it to remain on campus, Phinizy said. NMMI then locked the office shortly after.

The Institute initially cited concerns with the group following a 2012 audit that characterized financial oversight problems.

Among some findings, the audit, though characterized as “clean” did find “the Association has been unable to keep timely financial records,” according to Moss-Adams, LLP’s June 30, 2012 report. “The Association experienced lengthy delays in its monthly reporting and closing process … and had to recreate the records after the first six months of the fiscal year.”

The independent audit also found 2013 financial reporting documents remained unavailable and internal controls were “deficient.”

Under an agreement with NMMI, signed in 2012, the Association was required to “maintain a financial accounting system considered … governmental accounting standards, or such other standards as may be required by law, in staff coordination with the Institute and its internal and external auditors.”

The Association is currently out of compliance and not up-to-date with its financial records, but that is because those records are not available, Phinizy said.

“They locked us out of our office,” he said. “We don’t have those records.”

Phinizy maintains NMMI administration’s statements about the Association’s finances are “misleading.”

“When it comes to the Association’s finances, it’s extremely important to set the record straight for our members,” Phinizy said. “False and misleading information is being put out into the public by NMMI Superintendent (General Jerry) Grizzle and his representatives, and it must stop.”

A letter was sent to alumni on May 20 by the Association signed by Phinizy and other Association board members that stated: “In this unprecedented campaign being waged by certain people within the administration, laws have been broken and false statements have been made.”

When asked, Phinizy declined to cite which laws were violated.

“I’m not going to go into that,” Phinizy said. “We will stand by the press release. Anything that comes out further, we will stand by that. I’m not an attorney representing the Alumni Association.”

NMMI plans to continue serving its alumni, Hansen said.

“The Institute will always, as it has in the past, honor, support and provide services for its Alumni,” Hansen said. “Maintaining and fostering connections with our Alumni is the specific reason for the school going back to its roots and forming the Office of Alumni Relations.”

Phinizy said the Association would continue to operate as a nonprofit corporation, supporting scholarships to cadets. Any donors can choose to support either or both alumni funds, he said.

“They kicked us off, so I’m thinking they’re not happy with us,” Phinizy said. “So, I would say that whatever we do, I think it’s going to change our relationship with them.”

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