[CPProt.net] State Examines Spending at Getty

[Ellie Bruggeman]

State Examines Spending at Getty
By Robin Fields and Jason Felch, Times Staff Writers

In the latest in a series of setbacks for the world's richest art 
institution, the California attorney general's office has opened a 
wide-ranging inquiry into financial practices at the J. Paul Getty 
Trust, according to a confidential memorandum.

The memo, written by the Getty's general counsel and circulated to the 
trust's upper management, said the attorney general has requested eight 
years of records relating to trust Chief Executive Barry Munitz's 
compensation and expenses, as well as expenditures made for his wife, 
grants, gifts to trustees and a 2002 real estate transaction.

State regulators also have asked for documents connected to criminal 
charges pending in Italy against Marion True, the Getty's curator for 
antiquities, for allegedly conspiring to purchase looted artifacts.

Times stories describing Munitz's spending, perks and favors for friends 
prompted the state's review, according to the memo by Peter Erichsen, 
the Getty's top lawyer. He cautioned 17 senior Getty officials, 
including Munitz, not to destroy records related to the attorney 
general's areas of interest and instructed them to preserve all 
communications with The Times.

The attorney general's office said policy prohibited it from confirming 
or denying the existence of an investigation.

Sen. Charles E. Grassley (R-Iowa), who has led a national push for 
stricter oversight of nonprofits, called the attorney general's inquiry 
into Getty transactions "the responsible course of action." Under state 
and federal law, foundations such as the Getty Trust must use their 
resources for the public good, not private benefit.

"Nonprofit status is government-conferred and taxpayer-supported," said 
Grassley, chairman of the Senate Finance Committee, which is considering 
the first major overhaul of laws governing tax-exempt groups in 30 
years. "Nonprofits have to abide by certain standards to enjoy that 
status. Public scrutiny is part of keeping nonprofits accountable for 
their special position."

Getty officials would not respond to The Times questions, but issued a 
written statement through their public relations consultant saying that 
it will "fully cooperate" with the inquiry.

"Counsel to the Getty has already met with representatives of the 
attorney general's office to ensure that information or documents 
responsive to any request are produced as quickly as possible," the 
statement said.

In the past, Getty officials have denied that Munitz's practices were 
out of step with the law.

They have also said the IRS recently concluded an audit of the Getty's 
2001, 2002 and 2003 fiscal years and found nothing wrong with Munitz's 
pay, perks or financial dealings.

They would not provide a copy of the IRS findings letter, which 
identified other areas of concern.

Experts on nonprofit law said that, in certain regards, California's 
statutes are written more broadly than the federal tax code. For 
example, officers have a far-reaching "duty of loyalty" to protect 
nonprofits' resources.

The attorney general's office is likely to look for patterns of 
excessive spending or instances when Getty resources may have been 
diverted for personal benefit, they said.

The Times reported in June that Munitz has traveled the world 
first-class at Getty expense, sometimes with his wife.

His total compensation, which topped $1.2 million in the fiscal year 
ending June 2004, ranks him among the nation's highest-paid nonprofit 
leaders.

In 2003, when the trust was laying off staff and making cutbacks, the 
Getty paid $72,000 to provide Munitz with a Porsche Cayenne SUV.

At times, records show, Munitz has dispatched Getty employees to do 
personal tasks for himself and his wife.

His office spent more than $20,000 on gifts for four retiring trustees. 
Federal and state law prohibit nonprofits from giving resources to 
insiders, and J. Paul Getty's will bars trustees from receiving any form 
of compensation. The Getty has said the gifts were appropriate.

In 1999, two grant payments totaling more than $90,000 were rushed out 
at Munitz's direction without the due diligence required by the tax code.

The attorney general's office also is reviewing the Getty's 2002 sale of 
a Brentwood property to billionaire Eli Broad for $700,000 less than its 
appraised value. As The Times reported in Dec. 2004, Munitz played a 
direct role in negotiating the sale to Broad, a close personal friend.

The Getty has said the transaction was conducted properly, and the trust 
received fair market value for the land.

The attorney general's inquiry adds to the troubles that have surrounded 
the Getty since late last year.

Museum director Deborah Gribbon abruptly resigned in October, citing 
differences with Munitz. Her position has yet to be filled, and her 
interim replacement has taken a job elsewhere.

The Getty's curator for antiquities, True, faces trial in Rome on 
charges that she conspired to purchase looted antiquities. True also 
directs the Getty Villa, the museum's soon-to-be-re-opened Malibu campus.

After the publication of The Times story in June, the Council on 
Foundations, the industry group that represents nonprofits, also 
initiated a review of the Getty.

The attorney general's request for information will not necessarily 
result in regulatory action against the trust, experts said.

If state regulators were to conclude there had been misuse of the 
Getty's resources, they could impose penalties, require the misspent 
money to be repaid, or, in an extreme measure, remove trustees.

California is among the few states with the resources to investigate 
private foundations, and is considered more aggressive than most, said 
Janne Gallagher, the Council on Foundation's general counsel.

"They bring cases fairly frequently," said Douglas Mancino, a Los 
Angeles attorney who specializes in nonprofit legal matters. "If they 
smell a rat, they would be very much willing to make demands on the 
organizations and the individuals involved."

http://www.latimes.com/