CSU's $3.9 million settlement OK'd in Parish fraud case

A federal judge has approved a $3.9 million settlement that will shield Charleston Southern University from liability in the multimillion-dollar fraud of Al Parish, the school’s former star economist.

In documents filed Monday, U.S. District Judge David Norton said the agreement would be more efficient and fair than allowing the estimated 600 aggreived investors to sue the Baptist institution, where Parish worked from 1990 to 2007.

Rutledge Young, CSU’s attorney, said the school is cash-strapped and could have been forced out of business by “outcome-unpredictable” lawsuits.

“It is critical for CSU to be able to put this issue behind us,” he said in an April hearing.

Government investigators said they built a strong case that CSU could be held liable in part for Parish’s actions. The economist often met investors in his university office and convinced many of them that the mathematical research he conducted on the job would help him generate outsized returns, according to court documents. Federal investigators said CSU knew of and consented to Parish running investments from its campus.

Nine of Parish’s investors objected to the settlement agreement. Their lawyers argued that the receiver did not have the legal authority to settle the case for all investors.

As part of its settlement, CSU, which lost $8.4 million of its own savings under Parish’s care, agreed to surrender its claim on its lost funds unless the other victims receive at least 18 percent of their investment back. Investigators have estimated that no more than 10 percent will be returned. If the court-appointed receiver collects enough to pay 10 percent of the lost $90 million, CSU would forfeit a potential repayment of $840,000, based on the settlement agreement.

Most of the university’s $3.91 million payment would be covered by insurance, although $160,000 will come from CSU coffers.

Parish, who was charged with fraud and fired by CSU almost a year ago, pleaded guilty in October. Legal experts expect the former professor to receive a 15- to 20-year prison term when he is sentenced June 26. For more details, see Wednesday's Post and Courier.