Every Princetonian knows that Nassau Hall cares about ethics—students have to swear on every test and quiz that they did not cheat.

Less clear, though, is whether these standards apply to investments by Princeton’s $23 billion endowment. PRINCO, the University office that manages the endowment, is supposed to follow some ethical standards, but it does not say what the standards are or whether they are closely followed.

A thorough investigation found that PRINCO has invested for more than a decade with Bracebridge Capital, a Boston-based investment firm whose founder, Nancy Zimmerman, has twice been accused by the federal government of breaking the law with her investing in Russia. Both disputes led to payouts to the government worth tens of millions of dollars.

As of 2016, Bracebridge manages at least $800 million of Princeton’s endowment. That is the most recent data available from public records.

The legal troubles faced by Bracebridge and its founder are exceptional among the large investment firms that PRINCO works with, according to thousands of pages of court records, SEC disclosures, and press clippings reviewed for this article.

Princeton’s investments with Bracebridge are hidden behind multiple layers of secrecy. The only public information is from Princeton’s tax return, where it notes that it owns the entirety of a partnership called BPI. BPI is worth $814 million, and its listed address is a post office box in the Cayman Islands.

Funds from BPI feed into BIL, another Bracebridge fund registered in the Cayman Islands, according to Bracebridge’s disclosures with the Securities and Exchange Commission. BIL, in turn, feeds its money into FFI, Bracebridge’s main hedge fund, which holds more than $17 billion in assets.

Partnerships are a common investment vehicle for the University. PRINCO funds a corporation and an investment manager, such as Bracebridge, manages the money. Princeton reported 15 of these arrangements on its 2016 tax return, which were collectively worth more than $4.8 billion, or more than a fifth of the total endowment.

Most of the partnerships besides BPI, especially most that are worth more than a couple hundred million dollars, are transparently named—the investment firm that manages them can be easily identified. Funds run by Farallon Capital and Värde Partners, for example, are named after the firms. Other funds, run by Abrams Capital and the Baupost Group, have the addresses of the firms’ main offices listed as their own addresses.

Acting University Spokesperson Michael Hotchkiss declined to comment on the size of Princeton’s investments with Bracebridge. He defended PRINCO’s investing as ethical and noted that University President Christopher Eisgruber, PRINCO’s board, and Princeton’s board of trustees review investments by PRINCO.

“PRINCO expects the highest legal and ethical standards from its fund managers,” Hotchkiss wrote in an emait. “PRINCO reviews their activities, portfolios, operations and performance on an ongoing basis.”

Hotchkiss was asked twice, but would not describe any specific ethical standards that are used to judge PRINCO’s investments.

Andrew Golden, who has run PRINCO since 1995, declined to comment for this story. Likewise, Bracebridge Capital did not comment, after repeated requests.

Zimmerman’s most recent legal troubles ended in March 2017, when a federal appeals court upheld district court and IRS decisions against the Russian Recovery Fund, a hedge fund she created and operated.

The fund had used a series of transactions to take on another hedge fund’s bad bets on derivatives of Russian sovereign debt at a steep discount, then sell them and claim their drop in value as a loss. Basically, the Russian Recovery Fund bought the derivatives for $15 million, sold them for a profit, then claimed a $223 million loss on the deal, which was useful as a tax write-off.

“As it turns out, sometimes things really are too good to be true,” a federal judge would later write about the deal. It seemed like a win for everyone, but it violated the tax code, according to the IRS and the multiple federal courts. Zimmerman’s fund had deliberately shuffled the money around in an effort to underpay taxes.

Zimmerman, her firm, and the Russian Recovery Fund underpaid their taxes by more than $220 million in taxes, the IRS determined. The courts found that Zimmerman’s fund was also liable for an additional penalty that would not have applied if courts believed the underpayment had been made “in good faith.”

The case was between the fund and the IRS, but the federal judge who first heard the case made it clear that Zimmerman was closely involved in the matter.

“The star of the drama was Mrs. Zimmerman,” the judge wrote. Zimmerman had claimed some of the losses as a write-off on her personal tax return.

The judge repeatedly wrote in his opinion that he thought James DiBiase, who was the CFO of Zimmerman’s firm when it underpaid the IRS, was not being honest while he was on the stand.

“Mr. DiBiase’s purported ignorance … is unconvincing,” the judge wrote at one point in his opinion. “His answer, ‘I don’t recall,’ is not credible.”

Princeton had invested more than $200 million in the Russian Recovery Fund as of 2007, Princeton’s tax records show. That was during the middle of the fund’s legal fight with the federal government.

Zimmerman’s other run-in with the law started in 2000, when the federal government filed a lawsuit against her. She was a defendant alongside Andrei Shleifer, her husband, who was briefly an assistant professor at Princeton in the late 1980s; Harvard University, where Shleifer was a professor; and another Harvard professor and his wife.

The group had “defrauded the United States out of at least $40 million dollars,” the government alleged in a court filing.

Shleifer and another Harvard professor, Jonathan Hay, were advising the federal government on how the U.S. Agency for International Development could invest in Russia to make it a stable partner of the West in the years after the collapse of the Soviet Union.

Instead, Shleifer worked with his wife and her hedge fund to use his position as an advisor for his own personal financial gain, the government alleged. Zimmerman and Shleifer made investments that profited off of Shleifer’s advice to the government.

“Defendants’ actions undercut the fundamental purpose of the United States’ program in Russia—the creation of trust and confidence in the emerging Russian financial markets and the promotion of openness, transparency, the rule of law, and fair play in the development of the Russian economy and laws,” the government alleged.

The defendants settled the case after years of legal wrangling, damaged reputations, and an 18,500-word exposé in Institutional Investor written by David McClintick, who had previously spent more than a decade at the Wall Street Journal as an investigative journalist.

Zimmerman’s firm paid $1.5 million. In a press release announcing the settlement, USAID said that the firm “improperly diverted US taxpayer resources for its own purposes and profit.”

Shleifer, Zimmerman’s husband, paid $2 million.

Harvard paid $26.5 million, and it had to shut down the decades-old institute that arranged Shleifer’s work for the government.

Princeton administrators have acknowledged that PRINCO must follow ethical standards to fulfill its mission to the University, but they have not gone into specifics of what that means.

“PRINCO’s long-term perspective requires the incorporation of ethical perspectives on decisions,” Eisgruber wrote in a publicly released April 2015 letter to a student and faculty committee that advises administrators on investments. “Our managers must pursue sustainable strategies that take full account of legal, reputational, and political considerations.”

Golden, PRINCO’s longtime director, agreed.

“We and our managers follow the highest business ethics standards,” Golden wrote in response to Eisgruber’s letter. “While it may go without saying, we expect our managers and the management of companies in which they invest to follow the spirit, not just the letter, of laws and regulations.”

It is difficult to evaluate PRINCO’s claims because the University has consistently refused to release details of its investments. For example, the University declined to say if PRINCO has investments with Bracebridge apart from the roughly $800 million in BPI.

“We do not disclose holdings in the endowment,” Hotchkiss wrote in an email.

BPI accounted for less than half of Princeton’s investment with Bracebridge in 2007, when additional tax records were released. (The IRS and other government agencies occasionally release records by accident.)

Princeton does not publicly acknowledge on any of its websites or publications that it works with Bracebridge, although the existence of the relationship has previously been reported by the Boston Globe. Princeton is not the only Ivy League university to invest with Bracebridge. Yale, where Golden worked before he took over PRINCO, was an early investor in Zimmerman’s fund.

Investments with Bracebridge seem to contradict the values that Princeton’s administrators like to press, said Micah Herskind, a Princeton senior and a current president of Students for Prison Education and Reform.

Herskind helped lead the movement for the endowment to divest from the private prison industry, which reached a peak in spring 2017. After months of meetings with committees and administrators concerning the possibility of divestment, the University announced that it did not have any investments in private prisons.

“Princeton in the nation’s service and the service of humanity” is the University’s informal motto, Herskind noted. Making money with a firm like Bracebridge that profited by dealing in Russian debt then attempting to defraud the federal government does not seem to fit with that motto, he said.

“They like to have their stated values up front, and then they like to profit off anything on the back end,” Herskind said. “It always feels immediately contradictory when you see Princeton is investing in something that appears to utterly contradict those stated values.”