A University Of Houston Foundation Is Embroiled In An Alleged Ponzi Scheme

The TicketCity Bowl is shaping up to be a who's who of scandalized universities. Penn State obviously is still most disgraced, but after losing over 40 percent of its assets in a potential ponzi scheme, a foundation that endows athletic scholarships for the Univeristy of Houston is at least putting forth an effort.

According to the Securities and Exchange Commission, the Houston Athletic Foundation has over $2.2 million of the $5.1 million worth of assets listed in its most recent filing with the IRS invested in bonds that never existed. "The foundation's losses are among the most notable in a scheme that allegedly defrauded more than 100 investors of $39 million, including millions of dollars from several high-profile college coaches."

At the heart of the scheme was David Salinas, a sixty year old "financial adviser for college basketball coaches who committed suicide last summer" with ties to the Houston Athletic Foundations board. Salinas shot himself in his home last July, weeks before the SEC filed suit against him for selling bogus bonds. Before taking his own life, Salinas managed money for Billy Gillispie and Lute Olson, among others.

In addition, Salinas operated a well-known AAU basketball program for high school players, many of whom were recruited by the coaches whose money he managed.

Court and other records examined by The Associated Press show that Salinas was just as closely aligned with the foundation, an organization that annually gives the university a grant equal to 5 percent of its assets to help cover the cost of athletic scholarships.

Salinas was among the foundation's board members when the group was started in 1995, and he remained on the board until his death, records show.

This brings us to, I think, "Exhibit AAZ" in the hypothetical case of College Athletics v. Ethics.

h/t Wayne Houston booster group hit hard by Ponzi scheme [AP]