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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 26, 2012

Tax-Exempt School Gives President a Lavish Life

NGSThe Boston Globe, Tax-Exempt School Gives President a Lavish Life:

It is a tiny school, with an enrollment the size of a modest elementary school. There is no campus, just a small office building. Its 400 part-time students are invisible here, attending classes at off-site facilities across the country. Yet the National Graduate School of Quality Management awarded its president, Robert J. Gee, $732,891 in compensation two years ago. ...

Gee has champagne tastes. In 2009, he persuaded the Massachusetts Development Finance Agency to authorize $2.64 million in low-interest bonds. That made possible his school’s purchase of a $3.25 million waterfront compound on Oyster Pond with spectacular views of Martha’s Vineyard, especially from the six-bedroom house earmarked to be Gee’s presidential residence.

Five months later, the school, which focuses on a particular field of business management, purchased new automobiles to fit the estate setting: a silver Mercedes-Benz S550 sedan for Gee and a silver Mercedes-Benz station wagon for his wife, Aileen Waters Gee. The cost: $130,638, or about 2% of the school’s revenues that year. ...

For years, the school’s revenues have financed a lavish lifestyle for Gee and for his wife, who has been paid at least $100,000 a year since 2003. And they have vacationed together at school expense: The school owns a deluxe winter getaway in the US Virgin Islands for their use, part of a 17-year employment contract that expires in 2023, when Gee will be 79.

Gee, after ignoring the Globe’s calls and e-mails for more than a month, issued a statement Wednesday asserting that his compensation and perks are warranted. He said that they are comparable with those given to leaders of similar institutions, but did not identify any.

Attorney General Martha Coakley, who oversees public charities, said Gee’s “compensation, employment contract, and other benefits . . . seem excessive.’’ After reviewing the reports at the Globe’s request, Coakley’s office sent a letter to the school Wednesday demanding information from board members. ...

Gee’s extraordinary compensation was discovered as part of a Globe analysis, conducted by Northeastern University investigative reporting students, of data culled from publicly available tax returns filed by more than 22,000 nonprofits in Massachusetts. ... Gee’s salary and perquisites are so excessive that the IRS might levy substantial excise tax assessments against the school and Gee. If the IRS finds the violations extreme ... the school could be stripped of its tax-exempt status.

(Hat Tip: Eric Lustig.)

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If you go to the NGSQM website and read Robert Gee's short "President's Message," you will find the following sentence:

"We are proud of our achievements as sponsors such as FDA, Boeing, U.S. Coast Guard and White House Communication Agency."

Considering the kind of money that he is paid for heading a supposedly academic institution, one would think that he could write in comprehensible English. This is what I would call a red flag.

Posted by: GW | Apr 27, 2012 6:30:14 AM

I am simply gobsmacked that there really is "...a Globe analysis, conducted by Northeastern University investigative reporting students, of data culled from publicly available tax returns filed by more than 22,000 nonprofits...". The whole "non-profit" scam is one of great the underreported stories of our age. There is lots more where this came from. Two things jump out about this story: the lavish scale of the compensation, of course, but also the fact that an expensive graduate-level business school qualified as a charity for so long. And of course you gotta love that 17-year contract.

Posted by: Exurban | Apr 27, 2012 12:21:35 PM