So it sounds like Harvard officials had a pretty good idea this was a sleazy operation designed to evade regulations, but didn't care as long as they got their returns. It's complicated, go read the whole thing. The bottom line? Never mind the broken lives of Cane Bay's victims -- Harvard Business School types don't bother themselves overmuch with issues of morality, only profit:

Alex Slusky was under pressure to put the money in his private-equity fund to work.

The San Francisco technology financier had raised $1.2 billion in 2007 to buy and turn around struggling software companies. By 2012, investors including Harvard University were upset that about half the money hadn’t been used, according to three people with direct knowledge of the situation.

Three Americans on the Caribbean island of St. Croix presented a solution. They had built a network of payday-lending websites, using corporations set up in Belize and the Virgin Islands that obscured their involvement and circumvented U.S. usury laws, according to four former employees of their company, Cane Bay Partners VI LLLP. The sites Cane Bay runs make millions of dollars a month in small loans to desperate people, charging more than 600 percent interest a year, said the ex-employees, who asked not to be identified for fear of retaliation.

Slusky’s fund, Vector Capital IV LP, bought into Cane Bay a year and a half ago, according to three people who used to work at Vector and the former Cane Bay employees. One ex-Vector employee said the private-equity firm didn’t tell investors the company is in the payday-lending business, where borrowers repay loans out of their next paychecks.

Vector’s investment in Cane Bay shows the continuing allure of the payday-loan business, even after most states from California to New York restricted or banned it to protect consumers. The crackdown has driven borrowers online. Internet payday lending in the U.S. has doubled since 2008 to $16 billion a year, with half made by lenders based offshore or affiliated with American Indian tribes who say state laws don’t apply to them, according to John Hecht, an analyst at Jefferies Group LLC in San Francisco.

“A lot of these businesses, they run it just knowing that there’s regulatory risk and they may have to terminate the business,” Hecht said.

Ronn Torossian, a spokesman in New York for Cane Bay, said the company provides services to financial firms and doesn’t make payday loans.

“Cane Bay Partners is a management-consulting and analytics company,” Torossian wrote in an e-mail. “In the past, the owners held minority positions in some licensed short-term lending businesses, which are no longer in operation.”

[...] Vector, which makes only a few investments a year, struggled to find enough companies to buy for the new fund, according to the three ex-employees. It bought an English fleet-management software maker in 2010 and invested in Technicolor SA (TCH), a French digital-video company.

By 2012, Harvard was trying to pull out its money because of the investment delays, two people with direct knowledge of the matter said.

The former Vector employees said when they discussed Cane Bay internally they were clear it was in the payday-lending business. Unlike other deals, the investment wasn’t announced in a press release or listed on Vector’s website.