Sep 4, 2018

What we're reading: The University of Chicago's bogus billionaire

Felix Salmon

Campus North Residential Commons residential and dining facility at the University of Chicago. Photo: Raymond Boyd/Getty Images

Financier Steve Stevanovich, the subject of a fantastic investigation by the Chicago Maroon, sits on the storied board of trustees of the University of Chicago, alongside real billionaires like Ken Griffin and David Rubenstein.

Background: In 2006 he pledged $7 million to endow the the Stevanovich Center for Financial Mathematics; in 2014, he followed that up with another $10 million for something called the Stevanovich Institute on the Formation of Knowledge. And in 2017, he started talking about a "nine-figure" donation, saying that his funds were worth billions of dollars.

Why it matters: Stevanovich's funds weren't worth billions. The Maroon reveals that far from being a billionaire, Stevanovich hasn't even managed to meet his existing pledges.

  • He's $2.8 million short on the $7 million pledge, he hasn't coughed up a penny of the $10 million pledge, and the university "has agreed not to accept payments" from him while he's embroiled in litigation surrounding his loans to a $3.65 billion Ponzi scheme. He's also being investigated by the SEC.

Between the lines: Stevanovich made $280 million lending money to convicted Ponzi schemer Thomas Petters; he got out, suspiciously, just before the scheme collapsed.

  • He also contrived to turn $12 million of loans to a company called Groen Brothers Aviation into a total debt, after interest, of $150 million.
  • That in turn allowed him to take control of the company and enter into a joint venture in Inner Mongolia which allegedly came with rights to 20 million tons of coal worth some $1 billion.

The SEC says that GBA only has one full-time employee. Its former employees are suing it for unpaid wages. But as recently as last year, Stevanovich was claiming that GBA (since renamed to Skyworks) was worth $1.7 billion, and that as soon as he could liquidate that investment, he could make good on all his pledges.

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