ordered a halt to the program and all of the university's
holdings in the bond market were sold off. By that time,
Harwell had accumulated obligations totalling roughly
From late 1977 throughout 1978 and up to the early part
of January 1979, proved to be an arduous time of resolution of the university's short-term investment problems.
UH Regent Robert Grainger, vice president of one of
Houston's major brokerage firms and a member of the
regent's investment and finance committee, killed himself
with a shot gun in December 1977, after becoming increasingly upset over the growing magnitude of the scandal. Several UH financial officials were fired or pressured
into quitting. And in January 1979, audits from Arthur
Young and Co. told the university that more than $14
million had to be subtracted from the books in order to
set things aright.
Top UH officials, including Aaron Farfel, Philip C. Hoffman, Barry Munitz and Roger Singleton, all say the losses
will not be felt in the classroom, and to a certain extent,
they have been right. Accounts for faculty salaries and
academic departments were not affected by the "downward adjustment." But monies for construction were. So
were emergency funds for the residence halls.
As for Sam Harwell? He and his half-brother, Patrick
Sullivan, were tried in federal court on charges of mail
fraud, wire fraud and conspiracy to defraud in a different
incident. Harwell allegedly wrote a letter to a bank in
California saying that Sullivan could act on the university's
behalf in some financial matters. Sullivan allegedly used
that authorization to secure a $2 million line of credit at
the bank, using certificates of deposit owned by the university as collateral. Sullivan allegedly used the money to
buy office buildings, a Nevada mining operation and a
contract to manufacture laundry trucks for the Kingdom
of Jordan. Harwell and Sullivan were sentenced in 1978 to
serve four years in a federal penitentiary.
Another money game, a $136,000 one played at UH's
Continuing Education Center, was described by university
officials as "money that just didn't make it to the bank."
In June 1978, when KULF radio first triggered an investi
gation into the Center's funds, the amount missing was
reported at $5,000. Chancellor Barry Munitz then began a
university investigation into the Center.
The university began audits of the ( entei going back to
1975. As the audit continued, the amount ol missing funds
increased constantly and when completed in December
1978, the audit showed a $136,428 loss.
The missing funds were cash that was paid for real estate
courses offered at the Center. Most ol the money, about
$104,000, was lost in 1976 and 1977. Almost $30,000 was
lost in 1978 and a smaller amount, $2,877, was lost in 1975,
the last year audited.
Unlike the university's investment scandal, no one has
yet been held responsible for the Center's losses. The
only explanation offered by [l\\ olln i.ils is that, "Money
collected for the courses was never pul into the h.mi-
George Young, an assistant dean and assistant professor
at the Center, was assisting the university in its mtcm.il
investigation when he committed suicide on )une 1 1,
1978. He had not been a< i used ol an
The finane iaI problems at 1 he ( enter have led to ti^litei
policies and proc eclures ior handling < ash and an admit
trative reorganization. Dean James Taylor, formerly the
director of the entire Center, is now dire* tiny; the I lilton
School of Hotel and Restaurant Management. Judy Mar-
koe is temporary director of the educ ation c enter while a
search is on for a permanent direc tor. lei ry I or d is operations manager for the CEC.
But the answers to this money game are still a mystery.
UH officials know the money is gone, but that is about all.
Although Young was never accused, any light he could
have shed on the matter is gone forever and his death, the
day after the university began its investigation, only adds
to the mystery.
To this day, no one has been indicted for the Center's
losses, and no one is currently under investigation.
— Dave Hurlbut
Mark Lang ford