The Oregonian


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UO Will Investigate Legality Of Grayson Donation





The University of Oregon said Tuesday that it "is prepared to do the right thing" with regard to a controversial $795,000 donation from Portland investment adviser Jeffrey Grayson.


But university officials stopped short of saying they intend to return the money.


The university said in a statement issued late Tuesday that it will begin talks with Thomas Lennon, the receiver appointed last September to liquidate Grayson's firm, Capital Consultants.


Grayson voluntarily gave up control of Capital Consultants in September, when he was sued by the U.S. Department of Labor and the Securities and Exchange Commission, which accused him of orchestrating a "Ponzi-like scheme" to conceal investment losses.


Lennon claims that Grayson's donation to the university is "voidable" because it was made with Capital Consultants' funds at a time the investment firm was insolvent and facing debts it couldn't hope to pay.


Grayson stands accused of losing hundreds of millions of his clients' dollars in failed and fraudulent investments. The allegations against Grayson have led to calls from some alumni for the university to return what they consider "dirty money."


But university officials said they won't do anything until they are convinced that Lennon's claims are accurate. "The university cannot simply give away money without clear legal reason to do so," said UO President Dave Frohnmayer.


The UO Foundation, the university's nonprofit fund-raising arm to which the donation was made, "will step up to its responsibilities once that is really determined," added Allan Peters, the university's new vice president for university advancement.


Grayson and his wife Susan Grayson pledged $1.5 million to their alma mater in 1997. Grayson himself had served on the UO Foundation and had led a successful capital campaign that raised $200 million.


The allegations against its former patron have put the university in an awkward spot. Though the Graysons only donated $795,000 of the pledge, Frohnmayer received special permission from the Oregon Board of Higher Education to name the university's former law school in the Graysons' honor.


University officials said they have not decided whether to change the name of Grayson Hall. "The issue of the name of the building will be dealt with in due course," Peters said. "What is important right now is to resolve this question regarding the status of the funds."


The Graysons' donation has already been spent. It helped fund the $4.25 million renovation of the former law school, which now houses classrooms, Peters said.


The UO Foundation raised $55 million last year.

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