As early investors with Warren Buffett, Donald and Mildred Othmer quietly amassed a fortune that they believed would sustain their favorite charities for generations.
Among those organizations: Long Island College Hospital in Brooklyn, N.Y., for which the Othmers created a $135 million endowment in the 1990s, "to be held in perpetuity," according to their wills.
Less than 20 years later, much of their gift is gone. And the hospital's owners have been cleared by state regulators to close the money-losing nonprofit, which has sparked protests because the 155-year-old facility was one of Brooklyn's largest private employers.
In a series of court-approved transactions, hospital administrators repeatedly tapped the fund to serve as collateral for loans and to cover malpractice and other costs, according to court records. The transfers were permissible to keep the hospital going, the court ruled, saying that is what the Othmers would have wanted.
Doctors, nurses and community activists say the treatment of the Othmer gift illustrates a pattern of financial mismanagement on the hospital's part.
Mr. Buffett has even expressed concern. "This came as a huge surprise to me," said the billionaire investor, who learned of the situation earlier this year in an email from a Brooklyn resident. "I would think if [the Othmers] were alive they would feel betrayed."