Charleston Southern University has filed suit against Parish Economics LLC and its owner, Al Parish, a former economics professor at CSU and a professed high-profile financial expert, to protect $10.6 million that the university had invested in Parish Economics.
That suit, filed on April 5, came on the same day that the U.S. Securities and Exchange Commission filed a complaint against Al Parish, Summerville Hard Assets LLC, and Parish Economics LLC for fraudulent operations.
According to the Charleston Post and Courier newspaper, Parish Economics LLC claimed earlier this year to have assets of $134 million, but investigators for the federal government have said that Parish’s statements to clients during the past two years misrepresented returns as well as the amount of money left in the fund pools. The SEC complaint alleges that as many as 300 companies and individuals had invested with Parish.
A statement released by Charleston Southern University on April 5 said that the university was “assessing the potential impact” of the projected losses while giving assurances that “university personnel and student scholarships will not be adversely affected.”
“While this situation will require budget adjustments,” the statement continued, “Charleston Southern has operated in the black for more than 20 consecutive years and plans to continue to do so.”
The statement concluded by saying that “the Charleston Southern family continues to pray for everyone impacted by this unfortunate situation.”
Speaking to the state Baptist convention’s Executive Board during its spring meeting April 10, CSU president Jairy Hunter said the $10.6 million investment included $5.3 million from the school’s endowment and $5.3 million from current operating reserves.
As of Feb. 28, 2007, the investment pool of Charleston Southern University had grown to $15.6 million, compared to $725,000 when Hunter became president 23 years ago.
Hunter explained that the approximately $2 million in the current convention budget received by CSU this year, was not included in the investment transaction with Parish Economics. All the cooperative program funds were awarded to Baptist students in the form of scholarships.
Carlisle Driggers, executive secretary-treasurer emeritus of the South Carolina Baptist Convention, said that no convention funds have been invested with Parish Economics LLC at any time. “The convention,” he said in a statement to The Baptist Courier, “invests with rock-solid financial agencies such as The Baptist Foundation of South Carolina, national banks and other religious foundations.”
The CSU president stressed that the university plans to restore the endowment over the next few years through “frugal management, belt-tightening, and fund-raising.” He did say that Charleston Southern, which recently completed campus construction totaling $20 million, will delay several projects that were to begin this summer.
Hunter also stated that the university followed an established approval process when investing funds. The university’s diversified portfolio includes investments with such entities as the Bank of America, the South Carolina Baptist Foundation and the Bank of South Carolina.
Hunter said that the investment committee routinely reviewed options for strengthening investment results for the university, especially during 2002 and 2003 when the stock market was volatile and the economy was weak. The investment committee sought fixed investments with a guaranteed income. One of the means that the investment committee reviewed was the fixed bond pool offered by Parish Economics LLC with a guaranteed 9.5 percent return.
Parish, 49, who graduated from the College of Charleston and earned his Ph.D. from the University of North Carolina at Chapel Hill, established Parish Economics LLC in 1986 to oversee investment pools for individuals as well as corporations.
Charleston Southern hired Parish as a professor in 1990 and recognized him two years later as one of its outstanding faculty members. He directed CSU’s Center for Economic Forecasting and developed a model for economic forecasting that has been used by the Charleston Metro Chamber of Commerce. His Parish Economics office was not located on the campus.
On April 5, on the advice of its legal counsel, the university terminated its relationship with Parish as a faculty member and director of the forecasting center “due to misconduct,” according to a statement from CSU.
According to its lawsuit filed on April 5, CSU gave Parish the money to invest over a period of five years. University attorneys also have written that, so far, neither Parish nor any of his associates “has offered an explanation as to the whereabouts” of Charleston Southern’s investment funds. Among its other causes of action, CSU has demanded an accounting of these invested funds in its lawsuit.
Meanwhile, the investigation of Parish has been stepped up, according to the Charleston Post and Courier, as officials of the Securities and Exchange Commission inventory the economist’s assets, which include at least seven properties in North and South Carolina, along with paintings and jewelry. The newspaper reported that the FBI has opened a criminal inquiry into Parish’s financial dealings.