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East Lansing — More than half of the money that has been paid out of the suspended Michigan State University Healing Assistance Fund has involved fraud, but the fund should be up again in three to four months, Interim President John Engler said Friday.

The $10 million fund was approved by the Board of Trustees in December as pressure was mounting on the university to do something for the victims of serial sexual predator Larry Nassar.

But the fund, the first overture by the university to assist Nassar victims and their families with counseling and mental health services, was frozen in late July when fraud was discovered. The fund had paid out $1,159,106.81 through June 30, before it was frozen and officials have said that neither Nassar victims nor their families committed the fraud. 

"It's a fund that is deeply troubled," Engler said during a meeting of MSU's Board of Trustees. "There are several individuals under criminal investigation for fraud and we've now terminated the contract with the vendor, who was clearly not capable or unsupervised for their performance ... For the 330 individuals who are part of the settlement, they'll have their settlement to deal with their expenses. If there are others that need to be addressed, there will be rigorous criteria but we'll see. We'll have to get a firm in place."

He predicted the timeline for the fund to be up again would be "probably in three or four months," and after the criminal investigation is completed.

The fund's status is an issue that is resonating among Nassar victims and their families because they haven't been able to access funds to pay for counseling services. Several allies showed up to the meeting, and some held signs that read "Restart the fund" and "Believe Survivors."

During the meeting, Trustee Brian Mosallam said he thought "it important that we address the Healing Fund.

"There's been a lot of discussion about it," Mosallam said. "It's been well-documented that there has been fraud, it is under investigation, the current claims administrator has been terminated and (officials) are in the process of putting together an RFP (request for proposals) to hire a new claims administrator."

Prior to the meeting,Valerie von Frank, a parent of one of Nassar's victims, said that she thought it was ironic that the Healing Assistance Fund was "curiously" suspended around the time the historic $500 million settlement with Nassar victims was signed.

"There's $9 million that was earmarked for these women's mental health," von Frank said. "It's not like they can access that money from the settlement now and they need help now."

She said she was fighting for the young women because some of them are not doing well and need professionals to help them get through their struggles linked to Nassar.

During the meeting, von Frank held a sign: "Where is the $9 million for survivors?" At one point, she also turned on her cellphone and played an anthem by the heavy metal band Twisted Sister, "We're Not Gonna Take It."

"It makes me sick that MSU thinks that because it has signed a settlement that it's all over," von Frank said.

Jacob Denhollander, the husband of Rachael Denhollander, the first woman to publicly accuse Nassar of sexual assault, said on Twitter that he was dumbfounded by the developments with the fund.

"I'm sorry, but how on earth could you be so dumb to set this fund up in such a way to be immediately defrauded of half a million dollars by a THIRD PARTY?" Denhollander tweeted. "And then shut the whole thing down for months on end? Gross negligence and incompetence, again." 

John Manly, the attorney who represented the majority of the Nassar victims in the settlement, added that MSU is punishing the victims.

"The primary fraud here is on the victims," Manly tweeted. "No survivor was involved with this misconduct. It was the result of the incompetence of Engler and the Board. As usual MSU punishes the innocent victims -denying them access to care for the molests that MSU allowed to happen. Vile."

Emily Guerrant, an MSU spokeswoman, apologized in a statement posted earlier this week.

 "While the investigation is ongoing, the fund has remained frozen to avoid interference and to prevent any more fraudulent activities from accessing funds that should be going to those who need it most," Guerrant wrote."We apologize for any delay this may cause survivors in getting support and help."

MSU recently announced that it was severed ties with Commonwealth Mediation and Conciliation Inc., the Massachusetts firm hired to administer the fund. 

Last week, Michigan State University Police Chief Jim Dunlap issued a statement that an investigation continues into fraudulent claims filed for funds in the MSU Healing Assistance Fund. 

"To date, there appears to be significant fraudulent financial claims made for reimbursement by the fund and payouts for those claims," Dunlap said. "The investigation shows that no Nassar survivors who made criminal complaints or civil filings or their family members made any fraudulent claims for funds."

"Due to the complex nature of the fraud, it is expected the investigation will continue for some lengthy period of time. "

In other news, the Board of Trustees:

  • Approved the integration of the MSU College of Law into the university. The private law school, formerly Detroit College of Law, is affiliated with the university but operating with a separate governing board and administrative practices. 
  • Approved $2.5 million for light installation at the McLane Baseball Stadium and Secchia Softball Stadium.
  • Approving the repatriation of mummified remains of a young Bolivian girl and associated material to Bolivia. The remains were donated to MSU in 1890.

kkozlowski@detroitnews.com

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