Albuquerque Journal

Judge's $2.5M Gift Goes Awry
By Martin Salazar
Copyright © 2008 Albuquerque Journal; Journal Staff Writer

    RATON— In his mind's eye, Leon Karelitz saw his late wife's portrait hanging in the University of New Mexico School of Law, looking down on students benefiting from their roughly $2.5 million gift.
    The retired Raton judge imagined generations of students better prepared for the courtroom because of the couple's role as one of the law school's most generous benefactors.
    But Karelitz spent the last three years of his life locked in legal combat with UNM over the money he and his wife, Lee, gave the school.
    The former state District Court judge contends in a legal case filed in 2005 that the school wasn't following his wishes and was "gambling" away part of his donation in risky investments.
    Karelitz died April 4 at the age of 89, but his estate battles on. Among other things, the lawsuit seeks permission to move the gift to another unspecified law school.
    UNM disputes any wrongdoing.
    It also says it tried for years to settle the dispute to Karelitz's satisfaction.
    "It's very emotional and sad that he passed away without (this being resolved)," said Suellyn Scarnecchia, dean of UNM's law school and a defendant in the case.
    "My hope was always that we would have a resolution of it, and that he would again really be able to enjoy the fact that good things were happening in his wife's name in the law school."
    The Karelitz dispute is not exactly the story touted in the UNM Foundation's brochures and newsletters as the university embarks on an ambitious campaign to raise about $500 million in six years.
    And while many donors are perfectly happy, Karelitz wasn't alone in his dissatisfaction.
    A former dean of the Anderson School of Management is accusing the university of misusing a gift given for a specific academic program and has hired an attorney.
    Michael Kingan, UNM's vice president for institutional advancement and president of the UNM Foundation, said the foundation had 20,000 donors last year and that the vast majority are pleased with their relationships with UNM.
    "We take donor intent, both on the university side and foundation side, extremely seriously," said Kingan, who began working for UNM after Karelitz filed his lawsuit.
    "Our job is always to try to get the understanding of what the donors' intents are and to follow those."
    Relations go south

    Court filings in the Karelitz case paint a picture of university and foundation officials wooing the judge, who had no children, before he signed over about two-thirds of his assets.
    Letters, calls and visits from university and foundation officials were common.
    After Lee Karelitz died in 1995, foundation officials visited the retired judge at his Raton home "to offer our support during this period of grief following his wife's death and to learn of his latest intentions regarding his gift to the law school."
    They reported that they had learned the history of the furniture and art in the home, and about pottery, jewelry and a municipal bond portfolio then estimated by Karelitz to be worth $2.5 million.
    They noted that UNM stood to inherit those assets, along with the house.
    "He has a painting hanging in his living room by an artist named Bety Sowers, who he identified as 'the richest woman in northeast New Mexico,' '' foundation officials wrote.
    Relations soured and the house was never turned over to UNM.
    Once the portfolio was handed over, Karelitz alleges in court filings, Scarnecchia became too busy to take his calls, insisting that he instead speak to the law school development officer.
    The lawsuit and subsequent documents allege UNM violated its trust obligations in several ways: