State investigation of FSC Foundation finds possible ethics violations

'Weak internal controls' allowed college president to use foundation funds


JACKSONVILLE, Fla. – Florida's Inspector General has found evidence of weak internal controls that allowed former Florida State College at Jacksonville's President Steven Wallace to use college foundation funds for travel without clear benefit to the college.

The investigation into allegations against Wallace, began last year after former FSCJ employee, Celine McArthur brought the professional misconduct to the attention of the state.

DOCUMENT: IG's final report on FSC Foundation

"If you look in my report from March of 2012, they both prove that the leaderships money that didn't belong to them and they partied hard on it," Celine McArthur told Channel 4.

The report also recommends that the board of trustees and Foundation's board of directors specifically approve donations to any organization where the college president or a senior college official serves in a leadership role. Wallace agreed to resign last fall, although his modified contract called for him to be paid nearly $1.2 million in pay and benefits over 18 months.

"At the end of the day, I think we all want to know why proven theft, fraud, deception and incompetence in public office can go unpunished," said McArthur.

FSCJ's interim president, Dr. Willis Holcombe, issued a statement saying a discussion of the IG's report will be a topic on the agenda at the board's Aug. 13 meeting.


"We will also present the work done thus far to address the recommendations contained in the report. Further direction will come from the Board at their meeting," Holcombe said. "The Foundation Board will go through a similar process at their next meeting, which is in September."

After a preliminary Inspector General report came out in December, the Foundation's board of directors voted to require board approval of any unbudgeted expenditure over $1,000.

That change was made in the wake of an Inspector General's initial report on the college and its foundation that found financial irregularities, and questioned benefits paid to outgoing President Steven Wallace and one of his vice presidents.

Last yea, the college came under scrutiny for the compensation package of Wallace and one of his vice presidents. After an audit of the college was critical of its leadership structure, FSCJ's Board of Trustees ultimately eliminated the job of the controversial vice president and suspended four employees.

"Every penny that exists in the foundation of Florida State College of Jacksonville should be funneled to the students, not to parties, not to booze, not to trips, you know, it is so inexcusable. It so inexcusable that I don't think it's enough to say what we will just change the politics. I don't understand that it is a smack in the face to students," said McArthur.

About the same time, the federal government demanded repayment of $4.7 million in Pell Grants to 1,300 students by mistake.