Pitt might recoup money lost in alleged fraud

Pitt might get back some of the $70 million investment it lost to an allegedly fraudulent firm… Pitt might get back some of the $70 million investment it lost to an allegedly fraudulent firm more than two years ago.

A federal judge ruled a little over a week ago that the $815 million recovered from Westridge Capital Management Inc. should be distributed to the corporation’s investors, though the ruling didn’t specify which investors would receive money.

Pitt spokesman John Fedele said in a statement yesterday that University officials are “pleased with the judge’s ruling,” although Pitt might not receive money by the April 20 date the judge set. Lawyers representing the firm could request a stay, or halt, in proceedings.

University officials had previously guessed that Pitt could recover $35 million, but did not provide an estimate yesterdays.

The U.S. Securities and Exchange Commission accused Paul Greenwood and Stephen Walsh, the executives of the legally embattled firm, of misappropriating $553 million companies had invested in their business since 1996.

Pitt officials have said the University invested about $64 million in the company, which had grown to a value of $70 million by the time the SEC announced the case in 2009. A number of other universities, including Carnegie Mellon, had also invested money in the company.

Greenwood pleaded guilty over the summer, according to court documents. At the time, he also signed an agreement that would allow the court to distribute his holdings to various investors who were affected by the scheme.

Federal officials alleged that Greenwood and Walsh, former owners of the New York Islanders, had used Westridge’s money to buy a home, cars and various other items including rare books antd a teddy bear from Sotheby’s, an auction house specializing in high-end fine art.

Walsh pleaded not guilty in the case. Justin Sher, his attorney, said yesterday he could not comment without approval from his client. Greenwood’s attorneys could not immediately be reached for comment on the ruling.

The same year the Westridge proceeding began, Pitt’s endowment decreased by one-fifth, from $2.3 billion to $1.8 billion, according to the Chronicle of Higher Education.

In February 2010, Pitt’s Board of Trustees created an Audit Committee that would oversee the University’s investments and make an annual report on the endowment. The committee made its first report last October.