Wes sues former VP Tom Kannam for $3 million

Cue populist rage!!

Unless you’re a particularly keen watchdog of the administration, you probably paid little attention to the departure of former Vice President of Investments and Chief Investment Officer Thomas Kannam back in October, via a vaguely worded all-campus email stating that he had “left Wesleyan University to pursue other opportunities.”

As it turns out, Kannam is now being pursued by the University in a $3 million lawsuit, for civil theft, fraud, statutory forgery, breach of fiduciary duty, breach of contract, and unjust enrichment, among other charges.

Thomas Kannam, via FacebookThere’s been no public announcement of this, but according to a late scoop by the Argus,the University filed its suit in the Middletown Superior Court on November 24. Kannam’s employment was terminated on October 13th, presumably soon after his misconduct was brought to light. The basic details of the suit are available here on the State of Connecticut’s Civil Inquiry website – Kannam is listed at the top of a list of about twenty other defendants.

Kannam oversaw a period of steady growth of the Wesleyan endowment, which peaked above $700 million in 2007, but dropped significantly after the stock market bust in 2008. He was the second-best paid employee on campus, with a $460,000 paycheck in 2007, but clearly that wasn’t enough.

According to the Argus, Kannam violated his contract with the University by spending more of his time on “personal entrepreneurial ventures” than his duties at Wesleyan, which involved presiding over investments and the growth of the University’s endowment. The University’s complaint states that Kannam had been improperly profiting from his position since 2001, by exploiting his privileged access to Wesleyan’s financial information with several outside investment ventures, including the Cross Border Capital Advisors (CBCA) and the Belstar Group.

He is also accused of sitting on several corporate boards without letting the University President know of his involvement with them, as his contract required him to do. Among the corporate boards he sat on were his father’s company, Advance[d] Device Technology Inc., which supplies infrared devices to the United States military, and Vietnam Capital Partners – sure to further enrage anyone (SEWI, SDS) who supported the University’s divestment from weapons contractors like Raytheon two years ago.

Despite receiving healthcare benefits and pension from the Belstar Group, and being named their “critical endowment asset” because of the secret financial information he was able to leak to them, Kannam apparently still took business trips on their behalf at the University’s expense. The University also accuses Kannam of fraudulently and routinely using Wesleyan funds for personal expenses, such as golfing outings, international travel, and a trip to the 2008 Super Bowl (!!), among other things.

Kannam allegedly used non-financial University resources for his personal ventures as well, by offering to have staff at the Wesleyan Investment Office handle Belstar projects, and using the services of Wesleyan’s Quantitative Analysis Center (QAC) for Belstar without paying any fees.

According to the University, Kannam was perfectly aware of the conflicts of interest and tried to hide them, especially in the wake of the post-Enron-scandal Sarbanes-Oxley Act, which set higher standards for oversight by corporate boards. He was also worried that he’d have to “lay low” after the arrival of new president Michael Roth in 2007, whose oversight would presumably not be as conducive to fraud and theft as former president Doug Bennet’s was.

The Investment Office was in North College when Kannam first started working at Wes, but the University claims that he lobbied to have his office moved into its current location at 74 Wyllys Avenue, which Kannam called “The Taj” and used mainly to conduct his personal non-Wesleyan business away from the prying eyes of colleagues.

The University released some of Kannam’s email correspondences from his personal work computer at “The Taj”, which include these somewhat implicating statements:

“Through my portfolio at Wesleyan, I have a window on some very interesting stock ideas… If possible I’d like to cherry-pick the best and capitalize on them. Would it be possible to feed Mike’s [Zaninovich] hedge fund and get paid some incentive on the performance of our ideas? Might be the fastest way to some real dough.”

– to Ralph Gill, his CBCA associate

“Another board seat ($=equity)…Whoo, whoo, whoo, whoooooo! They’re adding up.”

– to his wife.

“We need to handle this discreetly at Wesleyan since there’s major turnover on our Board now and the new members that are joining take their fiduciary duty seriously in the Sarbanes-Oxley environment.”

– to a CBCA associate in 2005

Kannam’s attorney denies all the allegations in the complaint, but from the evidence provided so far, it looks like he’s got his work cut out for him.

So there you have it, Wesleyan’s very own brush with white-collar crime, a symptom of our nation’s economic crisis writ small. Nothing like a financial scandal to start off the new year! Definitely more details to come, this will obviously be a huge case in coming months.

Thanks to Ezra Silk ’10 and Rob Wohl ’11 of the Argus for unearthing this – get all the sordid details over there.

Argus: University Sues Former Investment Officer Kannam for $3 Million
Connecticut Civil Inquiry: Wesleyan University v. Kannam, Thomas et al

56 thoughts on “Wes sues former VP Tom Kannam for $3 million

  1. re: stalker photo

    or how about the likelihood that both Wesleying and the Argus have received cease-and-desists from the owner of the Kannam-in-a-suit photo? (not sure whether that would be Wes or Kannam)

  2. re: stalker photo

    or how about the likelihood that both Wesleying and the Argus have received cease-and-desists from the owner of the Kannam-in-a-suit photo? (not sure whether that would be Wes or Kannam)

  3. stalker?

    You’ve got to be kidding me if you think that using a facebook picture is “unsettling.” Any google search “Thomas Paul Kannam” will turn up the first hit as “Thomas Paul Kannam is on Facebook.” which includes his PUBLIC profile picture, listed above. Not only that, but google directs users to facebook as it’s first link. It’s time people take responsibility for what they list about themselves on the internet. Content does not become private simply because it’s user generated. If it’s on the internet, it’s fair game. And if you can easily find it in a google search, definitely expect it to be used.

    By the way, I happen to think this picture makes Kannam look like much less of a sleeze ball than the last picture. I’d much rather feel for a guy who is smiling at some kind of family gathering than in a suit jacket smirking at the camera.

  4. stalker?

    You’ve got to be kidding me if you think that using a facebook picture is “unsettling.” Any google search “Thomas Paul Kannam” will turn up the first hit as “Thomas Paul Kannam is on Facebook.” which includes his PUBLIC profile picture, listed above. Not only that, but google directs users to facebook as it’s first link. It’s time people take responsibility for what they list about themselves on the internet. Content does not become private simply because it’s user generated. If it’s on the internet, it’s fair game. And if you can easily find it in a google search, definitely expect it to be used.

    By the way, I happen to think this picture makes Kannam look like much less of a sleeze ball than the last picture. I’d much rather feel for a guy who is smiling at some kind of family gathering than in a suit jacket smirking at the camera.

  5. Anonymous

    Is Wesleying stalking Kannam online?
    Although the article is dated Jan.5, it no longer has the picture of Kannam in a suit, but a more casual shot from his Facebook page.

    Sorry, but I find this stalking unsettling.

  6. Anonymous

    Is Wesleying stalking Kannam online?
    Although the article is dated Jan.5, it no longer has the picture of Kannam in a suit, but a more casual shot from his Facebook page.

    Sorry, but I find this stalking unsettling.

  7. Pingback: University Diaries » “Another board seat ($=equity)…Whoo, whoo, whoo, whoooooo! They’re adding up.”

  8. Anonymous

    If the school had any real evidence of what they are claiming, the pre-judgment remedy sought by the school would have been granted already. The school wanted all assets frozen of all these defendants. THIS DID NOT HAPPEN! That means that the judge must not have thought that this case was worth the paper it was written on otherwise the judge would have frozen the assets. What do they have for proof of any of this????? A few ridiculous emails taken out of context???? We’re only being fed a few facts that look bad when taken out of context. If that’s the best they can come up with, I fear the legal bills the school ends up paying their high priced firm will be what is the true detriment to its portfolio.

  9. Anonymous

    If the school had any real evidence of what they are claiming, the pre-judgment remedy sought by the school would have been granted already. The school wanted all assets frozen of all these defendants. THIS DID NOT HAPPEN! That means that the judge must not have thought that this case was worth the paper it was written on otherwise the judge would have frozen the assets. What do they have for proof of any of this????? A few ridiculous emails taken out of context???? We’re only being fed a few facts that look bad when taken out of context. If that’s the best they can come up with, I fear the legal bills the school ends up paying their high priced firm will be what is the true detriment to its portfolio.

  10. anon

    19, your point is moot – a professor still teaches at 100% capacity, and most to work on books during the schoolyear without any impact on quality of teaching.

    the only real question is: does the amount of money wes will spend in legal fees less than the amount they will win?

  11. anon

    19, your point is moot – a professor still teaches at 100% capacity, and most to work on books during the schoolyear without any impact on quality of teaching.

    the only real question is: does the amount of money wes will spend in legal fees less than the amount they will win?

  12. yessir

    Yes, but it’s not like he was “selling timeshares” on company time. If a professor publishes a book outside of his regular duties and it wins a Pulitzer Prize, thats all good for the university name. In the same vein, Kannam is a finance guy. What do you expect his interests to be?
    This activity that was going on since 2001 sounds like a de-facto sanctioning of it by Wesleyan Administration or “quid pro quo”. There may have been oral agreements (which are admissable in court). No body complained when things were going well.
    Perhaps Roth did the right thing by letting him go and should have just left it at that. A lot is on the line now to win this judgement.

  13. yessir

    Yes, but it’s not like he was “selling timeshares” on company time. If a professor publishes a book outside of his regular duties and it wins a Pulitzer Prize, thats all good for the university name. In the same vein, Kannam is a finance guy. What do you expect his interests to be?
    This activity that was going on since 2001 sounds like a de-facto sanctioning of it by Wesleyan Administration or “quid pro quo”. There may have been oral agreements (which are admissable in court). No body complained when things were going well.
    Perhaps Roth did the right thing by letting him go and should have just left it at that. A lot is on the line now to win this judgement.

  14. bllf

    hey 16,

    i agree with you on the scapegoat point, but the university’s endowment faired far WORSE than it should have. Most schools lost about 25%, but we were down about 40-50% at the lowest point last Spring. Kannam’s focus on his own ventures took effort away from managing our money during the crisis, making things much worse.

  15. bllf

    hey 16,

    i agree with you on the scapegoat point, but the university’s endowment faired far WORSE than it should have. Most schools lost about 25%, but we were down about 40-50% at the lowest point last Spring. Kannam’s focus on his own ventures took effort away from managing our money during the crisis, making things much worse.

  16. anon

    why would roth or the university need a scapegoat for the endowment’s performance during the WORST ECONOMIC CRISIS SINCE THE GREAT DEPRESSION? what a stupid meme, nevermind the fact the endowment proved quite resilient.

  17. anon

    why would roth or the university need a scapegoat for the endowment’s performance during the WORST ECONOMIC CRISIS SINCE THE GREAT DEPRESSION? what a stupid meme, nevermind the fact the endowment proved quite resilient.

  18. anon

    kind of annoyed by long wesleying posts that paraphrase argus articles i’ve already read, days after i read the original on the argus site

    of course, more often it’s the other way around (argus paraphrasing wesleying). but seriously, stop it

  19. anon

    kind of annoyed by long wesleying posts that paraphrase argus articles i’ve already read, days after i read the original on the argus site

    of course, more often it’s the other way around (argus paraphrasing wesleying). but seriously, stop it

  20. Def

    Although the case against him is strong, I’ve known him for a while and he’s a great guy (not at all a sleezbag, as some people are saying). Honestly, i think Roth is looking for a scapegoat.

  21. Def

    Although the case against him is strong, I’ve known him for a while and he’s a great guy (not at all a sleezbag, as some people are saying). Honestly, i think Roth is looking for a scapegoat.

  22. another student

    they didn’t release it. that’s why the wes spokesman wouldn’t comment. but lawsuits are a public record.

  23. another student

    they didn’t release it. that’s why the wes spokesman wouldn’t comment. but lawsuits are a public record.

  24. Rob

    Howdy, co-writer of the article here. In response to comment 6, the sum is for a pre-judgment remedy, money that Kannam would have to put aside before the actual trial even begins. I’m guessing they’ll be looking for a lot more by the end of the proceedings, but as I understand it you don’t actually have to request a certain amount in the pleadings. Of course, I’m just speculating. Nobody sue me.

  25. Rob

    Howdy, co-writer of the article here. In response to comment 6, the sum is for a pre-judgment remedy, money that Kannam would have to put aside before the actual trial even begins. I’m guessing they’ll be looking for a lot more by the end of the proceedings, but as I understand it you don’t actually have to request a certain amount in the pleadings. Of course, I’m just speculating. Nobody sue me.

  26. josef

    an error in Argus is repeated here. correction: the father’s company is “Advanced Device Technology Inc.” (not “Advance”). google it for confirmation.

  27. josef

    an error in Argus is repeated here. correction: the father’s company is “Advanced Device Technology Inc.” (not “Advance”). google it for confirmation.

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