Penn donor alleges trustees misused some funds meant for Wharton scholarships

A University of Pennsylvania alumnus who donated around $168,000 to aid financially burdened business students is alleging that the school instead gave some of those scholarships to student athletes, according to a federal lawsuit filed Monday.

Attorneys for the plaintiff, Saul B. Rosenthal, alleged that Penn’s Trustees violated an agreement with the New York-based alumnus, who has given his alma mater a total $168,000 since 2012. The funds were reserved for scholarships that benefited economically disadvantaged students in the Wharton School, according to the complaint.

Rosenthal is a Wharton graduate and is president of Connecticut-based Oxford Square Capital Corp., where he also serves on the board.

According to the terms of Rosenthal’s donation, the funds were meant to aid students within the elite business program with a “first preference” to those specializing in entrepreneurship or concentrating in finance, the complaint, filed in Pennsylvania’s Eastern District, states.

But instead, Rosenthal’s lawyers said, Penn’s Trustees awarded an undisclosed portion of his donation to at least two students attending the university for soccer and track and field. According to the complaint, there were other Wharton students who met Rosenthal’s academic criteria and “needed financial aid.”

Ivy League policy does not permit schools to offer students athletic scholarships, though they are eligible for need-based financial aid.

The lawsuit accuses Penn’s trustees of one count of breach of contract, and asks Penn to end Rosenthal’s scholarship program, and either return the full amount of Rosenthal’s donation, or transfer remaining funds to another educational institution or charity.

The complaint refers to two students who received Rosenthal’s scholarship for athletics, but does not name them. Neither student was involved in the two business programs for which the scholarship donation was intended, Rosenthal’s lawyers said.

In one instance, the complaint alleges that Penn “falsely” told Rosenthal that a Penn soccer player who received a scholarship was pursuing a minor in “entrepreneurship and innovation” at Wharton.

“But no such minor is offered by the University, and the student never obtained such a minor,” Rosenthal’s lawyers wrote. The complaint did not state the value of the soccer player’s scholarship.

Both a spokesperson for the University of Pennsylvania and Rosenthal’s lawyer, Elizabeth Sher of Day Pitney LLP, said they would not comment on pending litigation.

In the complaint, Rosenthal’s lawyers said their client previously complained to Penn about the alleged misuse of his donation. The school “temporarily changed its practices” as a result, according to the complaint, but Rosenthal’s lawyers allege that Penn later reverted to offering the scholarship to its student athletes.