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Ben Johnson
Former Peru State College president Ben Johnson (LJS file)

The former president of Peru State College apparently used about $43,400 from a university-related account to pay personal bills, State Auditor Mike Foley said Monday.

Ben Johnson, who left the college in 2008, also didn't reveal a felony conviction and misled state college leaders about his previous employment when applying for the Peru presidency.

Johnson committed suicide April 12 while he was under a criminal investigation by Nebraska Attorney General Jon Bruning related to the use of college funds, according to Foley.

"This is a horrible tragedy," Foley said. "Obviously this is more than the money. His reputation was also tarnished."

The payments to Johnson's American Express account included $2,500 for clothing, $8,394 for food and meals, $5,810 for home supplies and $13,990 for travel including airfare, motel and a cruise, based on the auditor's investigation.

The charges did not appear to be related to Peru State College activities or functions, according to the audit.

Because of the unusual circumstances, Foley did not use a news conference to release the 46-page report, and instead let reporters know individually Monday.

Johnson was president of Peru State for nine years from 1999 until August 2008. He had been living in Florida since then and was recently named an administrator at Fairmont State University in Fairmont, W. Va.

In addition to the apparent misuse of college funds, Foley's staff also discovered Johnson did not reveal a 1989 felony conviction in California when he applied for the Peru job.

He also used letterhead for his resume cover letter from a college where he was no longer employed.

Nebraska State College System leaders were unaware of Johnson's criminal history when he was hired, said Stanley Carpenter, chancellor of the system.

The money Johnson allegedly used for his credit card bills came from a discretionary account through a private nonprofit company, Peru State Advancement Inc., that oversaw management of the school's bookstore.

The profits were put into a discretionary fund that was to be used by the college president for university-related expenses.

Only the nonprofit company's board monitored this account, and in recent years Johnson had not provided the board with detailed information about how the money was spent, according to Foley's report.

The auditor's office had discussions with a board official, who confirmed that, in recent years, virtually no detailed accountability and no supporting documentation had been provided by Johnson for expenditures.

Johnson apparently closed the account in January 2010 after Foley talked with him by phone.

During that call, Johnson, living in Florida at the time, said the account had been closed earlier and he no longer had any statements or documentation, according to the audit.

When Johnson would not provide statements from the account, Foley turned the information over to Bruning's office, which issued a subpoena in early February for the American Express records. The payments were made between July 2007 and June 2009, according to the audit.

"This is yet another example of how the University of Nebraska and the state colleges entangle themselves with outside foundations and nonprofits and lose scrutiny and oversight of their operations," Foley said.

By this spring, the Nebraska State College System had changed the Peru College bookstore system.

The board eliminated the nonprofit group's role and began channeling bookstore profits into the college's revenue bond fund, Carpenter said.

During the investigation, Foley's staff also discovered problems with the resume Johnson used when applying for the Peru State presidency:

* Johnson was found guilty of a felony -- making an untrue statement and/or omission to state material facts to investors -- in 1989 and spent almost nine months in a California county jail in the early 1990s, according to the audit.

According to Foley, documents show Johnson was found guilty of selling limited partnerships improperly in excess of $100,000.

* Johnson's Jan. 28, 1999, cover letter seeking the Peru State job was on Thomas College letterhead. Johnson signed the letter as a vice president at the school, but he had been terminated from Thomas College in Thomasville, Ga., two months earlier.

Johnson later filed a civil suit against Thomas College for breach of contract. The school responded that Johnson had misrepresented his qualifications in applying for the job.

A court dismissed that suit in October 1999, four months after Johnson was hired at Peru.

Johnson's problems surfaced soon after he retired from Peru, when it became public he failed to disclose more than $450,000 in deferred compensation he received from the college's private foundation while he was president of the college.

A year ago, Johnson agreed to pay a $1,200 fine under a settlement with the Nebraska Accountability and Disclosure Commission.

Before he left, Johnson's leadership at Peru had been praised.

"He came at a time when there were questions about the future of Peru, with a lot of energy and new ideas," Carpenter said.

"He was a great cheerleader for the institution and helped Peru regain its confidence," he said.

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.

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