Iowa State pays, praises ex-director to end Lego art dispute

CORALVILLE, Iowa (AP) — In 2016, Iowa State University accused an employee of fraud and theft in a dispute over the unusual but lucrative campus assets she managed: popular outdoor sculptures made of thousands of Lego bricks.

Three years later, the school has withdrawn its allegations against Teresa McLaughlin under a settlement reached last month. The university paid McLaughlin $225,000 in wages and attorneys' fees, will offer her health insurance until 2022 and has given her a glowing letter of recommendation from its president calling her an honest employee who made major contributions over 17 years. Iowa State will also dedicate a bench for McLaughlin in Reiman Gardens, the campus landmark that she spent much of her career building as its director.

Those steps end a dispute that derailed the unique Lego art program conceived by McLaughlin, called Nature Connects. The traveling exhibits featured sculptures of plants and animals, were displayed at zoos and gardens nationwide and brought in revenue for Iowa State.

McLaughlin said she wants to restore her reputation, which she believes was unfairly sullied by her alma mater. She said the university made claims of wrongdoing against her without evidence and while in possession of records that exonerated her.

She said the dispute hurt her finances and "took a great toll on me and my family."

"I did not think Iowa State would do this to me," she said in an interview in Coralville, where she lives. She called the experience "confusing, unfair and unfortunate."

The university does not admit wrongdoing in the settlement, which avoided a June trial.

McLaughlin envisioned the sculptures as a way to draw visitors to Reiman Gardens, a 17-acre (7-hectare) space on the Ames campus. McLaughlin began working there in 1999 and built one of the "finest and most unique public gardens in the country," according to university President Wendy Wintersteen's recommendation letter.

Iowa State hired Brooklyn artist Sean Kenney to build the sculptures, which went on display at Reiman Gardens in 2012. Seeing demand to market them nationwide, the school reached agreements with Kenney to build four more.

McLaughlin stepped down as gardens director in 2014 to become director of Nature Connects. Dozens of institutions from Hawaii to Chicago agreed to pay between $70,000 and $150,000 to display the exhibits for several weeks. Directors of zoos and gardens raved about how they boosted attendance.

But by 2016, an aide to Roy Reiman, a top university donor who helped fund the exhibits and for whom the gardens are named, was questioning the costs, including payments to Kenney and McLaughlin, who received a 10% commission on exhibit sales under her university contract.

Emails show that a top aide to then-President Steven Leath pushed to change the formula for splitting the profits with the artist so the school could get a larger "administrative fee." McLaughlin objected to the request, noting the contracts had been signed after reviews by Iowa State officials and could not be changed unilaterally.

A school-ordered restructuring then laid off McLaughlin's assistant and transferred oversight of the program's finances to the administration. Kenney began complaining that the university took away support that was critical to making the exhibits successful and wasn't paying him what he was promised. A frustrated McLaughlin announced she would take an early retirement but agreed to stay a few months to finalize several pending sales. Things soon got worse.

She received a surprise letter from a law firm hired by Iowa State. The letter ordered her to stop working and telling her she was under investigation for alleged conflicts of interest related to her outside work with Kenney's company.

Iowa State stopped paying commissions McLaughlin was owed, and she filed a lawsuit seeking payment. The university filed counterclaims accusing McLaughlin of breaching her fiduciary duty and committing fraud and unjust enrichment. It alleged that she was profiting at the university's expense by secretly helping Kenney market competing exhibits.

McLaughlin said the claims were false, noting that Iowa State approved her limited work for Kenney's company. She denied ever putting Kenney's interests ahead of Iowa State's and she earned little from the arrangement. Iowa State settled its dispute with Kenney in 2017. McLaughlin, 62, said she doesn't understand why the school fought her for two more years.

On the bench honoring her, McLaughlin has asked the school to enshrine a Dalai Lama quote: "Be kind whenever possible. It is always possible."