Authorities in New York said Sunday that the founder of a nonprofit group there used ill-gotten proceeds to buy a second home in Aspen.
The New York Attorney General's Office also announced that a $5.5 million settlement was reached with part-time Aspen resident George Scott and his wife, Yun Suk. The couple agreed to pay $4.5 million toward the settlement; the nonprofit's board of directors must pay another $1 million for breach of fiduciary duty, the office said. Neither the Scotts nor the board members face jail time.
George Scott founded Educational Housing Services Inc. and was the nonprofit's president until he left it last month.
Authorities said that since 2003, Scott and his wife fleeced millions of dollars from Educational Housing Services, which provided affordable housing for students in New York City.
"Throughout the period that Scott was siphoning off millions of dollars the board (of Education Housing Services) rewarded Scott with high executive compensation as well as numerous other expensive perks, including the cost of his travel between New York and the Scotts' second home in Aspen, Colorado, and a housing allowance to pay for a luxury Brooklyn Heights penthouse," said a statement from the Attorney General's Office.
In a prepared statement, Attorney General Eric Schneiderman said, "The breakdown in corporate governance at Educational Housing Services was stunning. Siphoning millions of dollars at the expense of college students is deplorable. Mr. Scott's conduct and the role of the (nonprofit) board in enabling his abuses represent the complete opposite of what is expected from the leadership of not-for-profit organizations in New York state. We have no tolerance for officers and directors who treat a not-for-profit organization as a vehicle for personal enrichment, and we will hold them accountable for breaking the law."