The Stevens Institute of Technology and its president are under investigation by not only the New Jersey Attorney General, but also the IRS.

Harold Raveché, the president of the Hoboken, N.J.-based college, earns more than the salaries of the presidents of Harvard, Princeton and MIT, according to a report in The New York Times, thanks to friends on the board of trustees. The state attorney general, Anne Milgram, filed suit in September accusing Raveché of keeping multiple sets of books to hide the college’s disintegrating finances.

The 16-count civil complaint charges the college with financial mismanagement, misuse of endowment assets, and excessive compensation for Raveché, whose salary and bonuses soared from $362,458 in 1999 to $1,089,780 in 2008. He received approximately $1.8 million in loans from Stevens since the time he became president in 1988. About half the loans were forgiven in a 2007 employment agreement.

PricewaterhouseCoopers served as the college’s independent accountant from 2000 to 2005, but “fired” the school as its client due to the high risk the school posed to the firm, according to the attorney general.

Grant Thornton, which has been the school’s auditor since that time, has repeatedly found internal control deficiencies and other material weaknesses, and issued multiple internal control letters with instructions and criticism related to the college’s financial management practices, according to the attorney general. Stevens paid the IRS $750,000 last year in penalties and unpaid taxes of its subsidiaries, mainly spin-off technology companies.

Raveché isn’t the first college president to get in trouble over compensation matters, as the Times points out. Adelphi University, Towson University and Texas Southern University have also gotten into hot water in recent years over similar matters.

Nonprofits such as universities can be incredibly profitable to the executives who run them, regardless of the institution’s tax-exempt status. That is emerging as an increasing problem, but it’s not an easy one for the IRS to police. The agency is relatively understaffed in that department.

According to a thought-provoking article on nonprofit executive compensation in the Charlotte Observer, the IRS office that monitors nonprofits is able to examine only 1 percent of the returns it receives, and only has 460 people in the office responsible for enforcement, with each of them responsible for monitoring about 4,000 charities on average.

The revised Form 990 that the IRS is requiring nonprofits to begin submitting is going to demand more disclosure of executive compensation, but it’s not likely that the IRS will be increasing its examination staff for nonprofits anytime soon. That will allow more executives at nonprofits to count on earning multimillion-dollar salaries, especially if they have a compliant board of trustees that is all too willing to pay top dollar to the guy at the top of the organization.