A top University of Louisville executive who was under FBI investigation for alleged misuse of funds was given a $1.15 million parachute this week to leave.
David Dunn, executive vice president for health affairs, has been on paid leave since last December, collecting an $809,000 annual salary even though his contract expired in July.
University officials previously acknowledged that Dunn was under investigation, at least internally, as early as 2014 for allegedly using federal money for private purposes. He was placed on leave in December 2015 as the university acknowledged Dunn and another former staffer were under FBI investigation. The status of a federal criminal probe remains unclear.
Dunn couldn't be reached for comment Tuesday night. The departure was first reported by the Kentucky Health Policy Institute, a blog written by a former university faculty member.
University spokesman John Karman said Dunn’s exit was negotiated Monday. Karman referred questions about the criminal probe to the FBI.
An FBI spokesman said Wednesday morning he could not "confirm or deny the existence or nonexistence of an investigation."
“Dr. Dunn leaves the university as a tenured, full professor in good standing,” Karman said in the statement. “To compensate for his relinquishing his tenured position, Dr. Dunn will receive $1.15 million.”
Karman said the settlement money will come “from the same funding source used to pay his salary.”
The university announced the deal Tuesday evening, on the eve of the release of a state auditor’s special investigation into the school’s nonprofit fundraising arm, the U of L Foundation. The audit is expected to be highly critical of the foundation, its governance and its ties to the school.
In recent weeks, a college accrediting association placed U of L on probation, putting the school’s accreditation in jeopardy unless reforms are made. Also, the credit ratings service Moody’s downgraded the school’s credit rating, citing instability, a shrinking endowment and reputation risks.
This story has been updated.
Kate Howard can be reached at khoward@kycir.org and (502) 814.6546.
Disclosures: In 2015, the University of Louisville, which for years has donated to Louisville Public Media, earmarked $3,000 to KyCIR as part of a larger LPM donation. University board member Stephen Campbell and former member Sandra Frazier have donated.
