An independent examiner’s report made public on Tuesday recommended further investigation into the finances of Shepherd University, a nonprofit Christian college in Los Angeles, and opened the door to future lawsuits against the university’s founder, former officers and board members, WSJ Pro Bankruptcy reported. In a 120-page report filed with the U.S. Bankruptcy Court in Los Angeles, Mark Hashimoto, the court-approved examiner, said he “struggled to find any semblance of regular management” of the California school and said its reorganization is unlikely. Shepherd began experiencing financial trouble in 2014, failing to pay taxes and taking on high-interest, short-term loans to keep its doors open, according to the report. Eventually, the high financing costs, continued spending and dwindling donations caught up with the university, which sought chapter 11 protection August. Hashimoto’s report is based on an analysis of available financial documentation as well as interviews with former managers and board members. However, Hashimoto, who was appointed examiner in October, says the university had essentially “no accounting internal controls or cash procedures.” Bank statements and cancelled checks for 2014, 2015 and much of 2016 were nowhere to be found, and Hashimoto said that Shepherd has not been keeping track of debts it continues to accrue while in bankruptcy.
