Med School Says Prez Pulled a Fast One

KANSAS CITY, Mo. (CN) - The Kansas City University of Medicine and Biosciences claims its former president and CEO bilked it of hundreds of thousands dollars through false invoices. The school claims Karen Pletz, whom it fired in December, "directed that hundreds of thousands of dollars of KCUMB assets be donated, often in her personal name, to other nonprofit corporations in order to promote her own agenda to be viewed as a leading philanthropist in Kansas City."

Pletz had been the university's president, CEO and a member of its board of trustees since 1995, according to the complaint in Jackson County Court.

The school says that in October 2009 it began investigating allegations that Pletz was providing false information to the Internal Revenue Service. It claims the investigation showed that Pletz had defrauded the school of hundreds of thousands of dollars over the years, until she was fired on Dec. 18, 2009.

"During her tenure, Pletz directed that hundreds of thousands of dollars of KCUMB assets be donated, often in her personal name, to other nonprofit corporations in order to promote her own agenda to be viewed as a leading philanthropist in Kansas City," the complaint states. "She then fraudulently took hundreds of thousands of dollars in KCUMB contributions as deductions on her personal tax returns in at least 2005 and 2006."

The school says Pletz donated $45,000 to Benedictine College in 2005 and 2006 and another $35,000 in 2003 and 2004. Pletz then allegedly had the school reimburse her for the donations without the knowledge or consent of the Board of Trustees.

The school claims Pletz did not report the reimbursement on her personal income for those years.

Pletz allegedly did the same thing for the United Way's Tocqueville Society, to which she donated $270,800 between 2005 and 2009.

"Eventually, when the IRS later questioned her personal deductions, Pletz acknowledged they were erroneous," the complaint states.

The school claims that Pletz borrowed hundreds of thousands of dollars from other school employees and affiliates to satisfy IRS penalties. After the affiliates died, Pletz allegedly told their families that they had forgiven the loans, but that she would make a donation to the school instead of repaying the loan.

The school also claims Pletz made early hardship withdrawals from the its 457(b) plan in 2008 and 2009 without proper documentation, which potentially places the whole plan at risk.

Pletz allegedly reported that the school received gifts, grants and contributions of more than $1 million a year. But the special committee claimed that she failed to report that the associated costs exceeded the total amount of gifts, grants and contributions.

The school claims that Pletz, an attorney, sent a memo on Sept. 26, 1999 to the school board's chairman, stating that it was legal and appropriate for the school to pay her an additional stipend above her $195,000 annual salary for her to make political contributions that the school was prohibited from making because it was tax exempt.

The school says that was false, and was just a money grab by Pletz.

"From 2003 through 2009, Pletz spent over 2.3 million dollars of KCUMB assets for her activities, which provided little or no benefit to KCUMB and the true purpose of a substantial majority of which was not disclosed to the Board of Trustees," the complaint states.

Pletz allegedly pillaged the school's coffers for thousands of dollars more to fund personal trips under the guise of fund raising and other benefits to the school. In reality, the investigating committee said, the trips were for a nephew's wedding, for cosmetic surgery in San Antonio, and a $23,000 vacation to Jackson Hole, Wyo.

The committee claims Pletz also took $124,000 to take 28 trips to Ft. Lauderdale, where her parents have a condominium.

Pletz also allegedly hosted or ate false business meals. Between 2003 and 2009, Pletz charged $22,000 in business expenses to the school.

"The investigation of a select sample of expense reimbursement transactions claimed by Pletz revealed that approximately 70 percent of the charges or reimbursements were based upon false or materially incorrect information," the complaint states. "The investigation of the remaining over two million dollars in claimed reimbursements and expenses by Pletz is ongoing."

The school seeks actual and punitive damages and wants Pletz enjoined from altering or discarding any of her bank, investment, tax or any other financial records during her time with the school.

The school is represented by David Oliver with Berkowitz Oliver Williams.

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