E. Donald Shapiro, one of the Reagan administration's new appointees to the Legal Services Corp. board of directors, withdrew yesterday.
Shapiro's withdrawal came six days after the White House was asked by NBC News to comment on its report, broadcast last night, that he was under investigation last year in New York on allegations of unlawfully enriching himself as dean of the New York Law School. The investigation was later closed.
Shapiro could not be reached for comment last night. In an off-camera interview with NBC, however, he noted that the New York attorney general's office concluded that there was no basis for suing him or the law school.
The White House said only that he "notified the White House staff that he declined to accept appointment" to the Legal Services board.
Timothy Gilles, a spokesman for New York Attorney General Robert Abrams, last night confirmed the NBC report that Shapiro was the subject of a two-year probe started after confidential complaints that he profited illegally as dean and operator of the private, tax-exempt institution.
Under New York law tax-exempt schools are considered charities, and their operators can take no more than "reasonable" compensation.
Gilles said Abrams' office concluded last July that Shapiro's total compensation package--including use of a car, free college tuition for his children and a non-contributory pension plan--might be at least $150,000 a year, which approached or exceeded the upper limit of what might be considered reasonable.
He said the investigation focused on allegations that Shapiro's outside business activities may have conflicted with his duties as dean and that he "may have applied for and obtained reimbursement from the school for expenses that should not have been reimbursed."
A spokesman for the law school could not be reached for comment.
Former faculty member Nancy Erickson told NBC that Shapiro may have made more than $250,000 a year, including payments from the Kenneth Laub Real Estate Co., which was doing business with the school.
Erickson told NBC that Shapiro was receiving $250 a month from the company for "services rendered" at the time the company was receiving $1,000 a month from the law school to search for a new building site.
In a legal deposition, Shapiro acknowledged a "conflict of interest" on the Laub matter, but said he had not made a secret of the arrangement, NBC reported.
Gilles said Abrams had received confidential complaints about Shapiro. "We looked into it because the attorney general has the responsibility to oversee charitable entities to make sure funds and assets are used for charitable and not for personal or private purposes," Gilles said.
Shapiro was informed last May 26 that there was "no basis for legal action," but Gilles said discussions in the case continued until last December, when Shapiro's attorney informed Abrams' office that Shapiro would leave the law school at the end of this academic year.
Gilles said the case was closed after the law school agreed to adopt tighter procedures in the future. "We did clearly feel . . . that tighter procedures for the reimbursement of expenses for top executive personnel . . . were essential," he said, adding that the file was closed after Abrams' office received a letter from the school's board of directors saying they are prepared "to adopt most or all of our recommendations."
NBC said that Shapiro attended a White House meeting last Friday to discuss the matter after the network had approached the administration Wednesday for comment.
In his letter to the White House, Shapiro said his decision was prompted by a belief that "motivated interests," whom he did not name, might try to make an issue of a personal controversy. He also said he could not see how attendant "controversy" stirred by his appointment could serve his interests or those of the board.