Horace M. Evans was a VU alumnus who had taught on the faculty for ten years (department?) and worked in the business world, but he faced the nearly insurmountable task of leading an almost bankrupt, unaccredited University with falling enrollment. Facing a debt of $375,000, Evans resolved to sell the University in order to save it, but after unsuccessfully soliciting the Rockefeller Foundation, the Indiana legislature, church groups, and wealthy individuals, Evans nearly ended up selling the University to The Invisible Empire of the Ku Klux Klan. According to historian Lance Trusty, Evans “was willing to shake hands with the devil for his desperate school, and he very nearly did.”
In the 1920s, the Klan was a large mainstream organization with a veneer of respectability and patriotism that somewhat masked its hatred of foreigners, African-Americans, Jews and Catholics. Evans was lured by the relatively benign public face of the KKK, and naively believing the Klan would operate a standard university, entered into negotiations and tentatively agreed to the sale of VU for $340,000 and a million dollar endowment fund. VU faculty opposed the sale and national publications like The New Republic and New York Call put VU in an unwelcome spotlight, mercilessly lampooning the idea of a Klan University. Fortunately, the KKK failed to produce any money, and Evans and the board of trustees later repudiated any connection to the Klan. Then in 1925, various members of the National Lutheran Education Alliance (NLEA) and the American Luther League (ALL) interested in establishing a Lutheran university converged to form the Lutheran University Association with the specific intent of purchasing Valparaiso University. President Evans helped oversee the transition of VU as a Lutheran institution and then resigned in January 1926.