NY Attorney General investigating department
Marchiony refutes kickback allegations printed in press release
New York Attorney General Andrew Cuomo announced in an August press release that the althletics departments of Kansas and 39 other universities are under investigation for possibly receiving kickbacks from education lenders.
By Thor Nystrom
Thursday, August 16th, 2007
New York Attorney General Andrew Cuomo began investigating the University of Kansas Athletics Department in early August along with 39 other college athletics departments to determine whether they received kickbacks for steering athletes and students to preferred education lenders.
The department fired back.
“In the press release,” Associate Athletic Director Jim Marchiony said, “they made what I consider a huge leap assuming that because a company was a sponsor of an athletics department that that athletics department was taking kickbacks. There were quotes in there that, in my view, were unconscionable and borderline unethical.”
Cuomo distributed the release on Aug. 1. He also served subpoenas and document requests to the 40 departments, 38 of which are Division I schools.
“Students trust their university’s athletics departments because so much of campus life at Division I schools centers around supporting the home team,” Cuomo said in a press release. “To betray this trust by promoting loans in exchange for money is a serious issue, especially when Division I schools already generate tremendous revenue from their student athletes. Today’s action is an important new step as we continue to examine the unethical conflicts that pervade the student loan industry.”
Marchiony said the department was not happy that the Attorney General’s office sent the press release to the media before contacting universities. He also was displease with the wording of the release.
“In my view, that is guilty before proven innocent,” Marchiony said. “That is insinuating athletics departments are taking kickbacks.”
University Financial Services, a student loan provider, and the office of Attorney General Cuomo did not return phone calls from the University Daily Kansan seeking comment.
The investigation began after the Attorney General’s office uncovered that Dowling College received $75 for every loan application that was directed to USF from the school’s athletic department.
The Attorney General also seeks to determine whether the departments are using school team names, mascots, colors and logos to imply that UFS is the school’s official lender. Dowling had agreed to put links to UFS on its athletics department’s Web site and distribute UFS promotional materials to direct students towards UFS loans.
The University of Kansas recently pulled a UFS advertisement that had been on display at kuathletics.com.
“While this process unfolds, we want to make sure that everyone understands that we want to cooperate fully with the New York Attorney General,” Marchiony said. “We thought that if this will help that process, then we were willing to do that. We know that we have done absolutely nothing wrong, but we just want to show the Attorney General that we want to cooperate as much as we can and then, after this issue is settled, we can talk about putting it back on the Web site.”
Marchiony said the University had no direct relationship with UFS. The school’s multi-media rights, which include corporate sponsorships, are owned by Host Communications. This permits Host to sell sponsorships of Kansas Athletics. Kansas must approve these sponsorships, but the contract is between the company and Host.
“UFS is not permitted to say that they are a preferred lender of Kansas Athletics,” Marchiony said. “That is very clear in the contract. It also specifies that UFS says that it is not a part of Kansas Athletics. Kansas Athletics does not receive or ask for money from UFS based on how many students apply for loans at UFS.”
Marchiony said the University participated in the federal direct-lending program, which allows students to get loans directly from the federal government.
The subpoenas and information requests ask the University to disclose documents relating to agreements made between the department and UFS and documents that reflect why UFS was chosen as the department’s recommended lender.
The Attorney General’s office wants the departments to prove a recommendation of UFS was not in exchange for payment from the business, but rather the culmination of an evaluation of UFS interest rates. A payment arrangement would constitute revenue sharing, which is a violation of federal law.
“Kansas Athletics has never asked for or received one penny from any financial institution service company based on the number of loan applications that are processed through that company,” Marchiony said. “We don’t give names to companies, to any companies, of current or past student athletes for any reason.”
— Edited by Kaitlyn Syring
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