A New York Times article released this afternoon alleges the Indiana University Foundation off-shored assets in the Cayman Islands, in a federal tax avoidance scheme.
The Times piece sources leaks from a Bermuda-based law firm called Appleby. A source from the firm has been at the center of the release of millions of documents spotlighting the world of offshore banking.
The ‘Paradise Papers’ implicate a host of investors, from Apple CEO Paul Allen, to Madonna, to Secretary of State Rex Tillerson.
The piece alleges that the Indiana University Foundation partnered with Texas Christian University through a Houston-based private equity firm called Quintana Capital. The partnership allegedly used a so-called ‘Blocker Corporation’ to avoid taxes on investments that would otherwise be subject to federal taxes.
The ‘blocker corporation’ also allegedly allows the IU and TCU foundations to make investments that would otherwise draw moral scrutiny to the non-profits.
The Cayman Islands charge low-or-no corporate taxes.
IU Foundation Director of Strategic Communications and Projects Matt Kavgian, issued the following statement to WFHB: “The investment activities of the Indiana University Foundation are well within the legal boundaries that govern such practices.”
IU Foundation President, and former Dean of the Kelly School of Business Dan Smith issued a statement to WFHB, admitting to the Foundation’s use of ‘blocker corporations:’ “The use of blocker entities is an accepted and long-standing common practice by university foundations across the country. IU’s use of them has been reviewed and approved by the IU Foundation Board of Directors Investment Committee, by the Foundation’s Audit Committee, and by the Foundation’s external auditors.”
The Indiana University Foundation’s assets are estimated at over 2.5 billion dollars, according to a publicly available 2015 financial audit.