In addition to losing his school a lot of money last year, Lewis & Clark College president Michael Mooney also may have violated federal law. A Willamette Week review of his stock purchases indicates that Mooney may have committed insider trading in connection with his purchase of stock in a company to which he loaned college funds.

This news comes one week after WW first reported Mooney's ill-fated decision to loan $10.5 million of Lewis & Clark's money in March 2001 to Environmental Oil Processing Technology Corporation--also known as EVOP--an Idaho company that was developing a technology to convert waste oil into diesel fuel. The loan, more than 10 percent of the college's annual budget, was made in direct violation of college policies and without the knowledge of the board of trustees. EVOP ultimately filed for bankruptcy and hasn't repaid the college any of its $10.5 million (see "The Mooney Trail," WW, June 4, 2003).

WW also reported last week that Mooney had personally purchased stock in the publicly-traded company.

On Monday, WW learned that Mooney's first purchase of EVOP stock occurred on March 28, 2001. This was eight days after Mooney had agreed to loan EVOP the $10.5 million, but two days before the firm filed a notice with the Securities and Exchange Commission, informing the federal agency of the loan. The SEC requires that publicly traded companies make public disclosure of significant developments, such as the $10.5 million loan. (The document, dated March 30, 2001, can be found at

The timing of Mooney's stock purchase is significant because buying or selling stock based on important information not yet available to the general public could constitute insider trading, a violation of federal law.

According to Robert Banks, a local securities lawyer, "when a person trades in securities on material non-public information, that could qualify as a violation of the 1934 Securities Exchange Act."

When Mooney made the loan, EVOP was a financially strapped company with millions of dollars of losses and no working capital. Lawyers consulted by WW said that loaning $10.5 million to a company in such a situation would clearly qualify as a materially significant development.

"It seems to me that speculating on the approval of a loan before it is publicly known is insider trading," says securities lawyer Mike Esler. "The lender-borrower relationship is a confidential relationship. As a result, the lender and its officers have a responsibility to treat the information as confidential and not to use it until it becomes public."

As of press time, Mooney was unavailable for comment.

It's not clear how much stock Mooney initially purchased, though he eventually acquired more than 100,000 shares. All were purchased through an account he had at Bidwell and Company, a local discount brokerage, according to sources on Lewis & Clark's board of trustees.

On March 28, when Mooney made his first purchase of stock in EVOP, the Nasdaq-traded company closed at 47 cents a share. Within two months, the stock was trading as high as $1.42 per share.

Mooney told WW last week that he acquired more stock but disposed of all of his holdings in September 2002--at a loss--around the time he visited EVOP's operation in Nampa, Idaho. At that point, the stock was trading as low as 38 cents a share.

In that same interview, Mooney, who has a Ph.D. in the philosophy of religion from Columbia University, said that he dabbled in the stock market and, among other things, would buy stock in companies in which the college's endowment invested. "I have bought stock in companies that board members run," he said, "companies that the endowment invested in. Stock tips."

The term "insider trading" has become part of the cultural vernacular in recent months, in part due to the publicity surrounding the dealings of Martha Stewart. The high priestess of living well was indicted last week on criminal charges related to allegations that she sold 4,000 shares of biotech company ImClone based on inside information she had from that company's CEO. Stewart sold her stock one day before the public was told of a disappointing report on an ImClone cancer drug.

News that Mooney may have committed insider trading came as a shock to many board members. "We knew that Mike owned stock, but we had no idea when he bought it," says Cheryl Perrin, a member of the board's executive committee.

After EVOP defaulted on the loan last September, the trustees appointed a committee to investigate Mooney's actions. That committee was chaired by board member Ken Novak, who was charged with finding out what happened and whether the college could recover any money from EVOP.

Novak delivered the findings of his investigation on Oct. 21, 2002, when more than 20 members of the board of trustees gathered at the Governor Hotel. Among other things, he reported that, before loan documents were finalized, Stoel Rives, the college's law firm, had written a letter to Mooney warning him about the proposed loan to EVOP and how it was, in the words of one board member, "extremely risky."

Board members say Novak did not, however, mention that Mooney had purchased stock before the SEC filing. Several board members told WW they believed that Novak did a thorough job and that his failure to flag the possible insider trading was an oversight on his part rather than an attempt to cover anything up. Novak was unavailable for comment.

As of early this week, several trustees said Mooney continues to enjoy support from the two board members whose words carry the most weight: Harold Schnitzer, who has extensive real-estate holdings, and Robert Pamplin Jr., who owns the Portland Tribune.

Pamplin and Schnitzer are among Lewis & Clark's largest benefactors, and, in the words of one board member, "The confidence of those two major donors is a huge factor in Mooney's future."

At the same time, the Lewis & Clark board has clearly become a less attractive place to serve. In addition to the three board members who resigned late last year in protest over the board's handling of Mooney's actions, other board members are leaving. In recent weeks, Rocky Dixon, who runs Endeavor Capital, and Bill Furman, the chairman of Greenbrier Companies, have decided to leave the board, though both insist their departures have nothing to do with the current controversy.

The current state of affairs is having some effect on the larger Lewis & Clark community. In the past week, WW has received dozens of emails and phone calls expressing sentiments similar to the one offered by 1986 grad Robert C. Bress of Laramie, Wyo., who wrote, "I will be seriously considering dropping my financial support of the school given the recently revealed financial shenanigans involving Michael Mooney."