The New Hampshire Attorney General's office said on Tuesday it is reviewing allegations of mismanagement and conflicts of interest at Dartmouth College's $3.4 billion endowment.
The Attorney General's office received an anonymous letter in February alleging that Dartmouth's endowment steered business to well-known investment firms like Apollo Global Management and Lone Pine Capital, which were owned by members of the Ivy League college's board of trustees and investment committee.
"We are reviewing it and looking into the issue in that regard," said Anthony Blenkinsop, director of the charitable trusts unit of the state attorney general's office. He declined to comment further.
The letter alleged some powerful and wealthy Dartmouth alumni had "directed the college's three billion dollar endowment to themselves, their firms and their friends." The letter, which claimed to be written by former and current faculty, said the investments were conflicts of interest with the college's not-for-profit status.
Dartmouth, situated in Hanover, New Hampshire, denied any wrongdoing. "The investments are explicitly legal and entirely proper," Dartmouth spokesman Justin Anderson said. In all cases, Dartmouth's initial investments with the firms occurred prior to the individuals becoming trustees, he said.
"For firms managed by individuals who are trustees of Dartmouth, New Hampshire law imposes special requirements to assure that the transaction is conducted on an arms-length basis and is in the best interests of the non-profit organization," the college said in a statement. "Dartmouth complies with these requirements."
Lone Pine Capital is run by Stephen Mandel, a 1978 graduate of Dartmouth and chairman of the college's board of trustees. Mandel is also helping Dartmouth search for a new president after its previous president, Jim Yong Kim, was named to head the World Bank last month.
Lone Pine did not immediately return a call for comment.
Apollo Global Management founder Leon Black served as a trustee from 2002 until 2011. Earlier this year, he and his wife agreed to donate $48 million to the college for a new visual arts center. Black and his firm declined to comment, spokeswoman Carolyn Sargent said.
Dartmouth's endowment was the 23rd-largest in the United States last year, ranking just behind those of Vanderbilt University and ahead of New York University, according to the National Association of College and University Business Officers.
The fund gained 18.4 percent for the year ended June 30, 2011, trailing a benchmark index of similar foundations and endowments by 1.6 percentage points, Dartmouth reported in its most recent endowment report. Over the past 10 years, the fund gained an average of 7 percent a year, beating the benchmark by 1.1 percentage points annually.
The contents of the anonymous letter were publicly disclosed last week by Dartblog.com, a blog that reports on Dartmouth news.
(Reporting by Aaron Pressman and Svea Herbst in Boston and Katya Wachtel in New York; Editing by Dan Grebler)