The Foundation suffered its gravest reputational blow in 1974, when Walter J. Levy Jr., the young researcher Rhine had personally selected to direct the Institute for Parapsychology as his own successor, was caught by his own colleagues manipulating the recording equipment used in psychokinesis experiments with rats to produce fraudulent positive results. Levy confessed and resigned, and Rhine himself, then in his late seventies, took the unusual step of publicly reporting the fraud rather than concealing it, a decision that won him some credit for institutional integrity but could not undo the wider damage: skeptics cited the Levy affair for decades afterward as evidence that even parapsychology's own flagship laboratory could not police its results, and it cast retrospective doubt over experiments Levy had directed before the fraud was caught.
The Foundation continued its research and educational programs under subsequent directors after Rhine's death in 1980, and in 1995, the centenary of his birth, it was renamed the Rhine Research Center to honor him and his wife Louisa, who had built much of its case archive. The Center remains active today as an independent nonprofit, running a program of parapsychological research, public education courses, and a professional training program, and it continues to copublish the Journal of Parapsychology with the Parapsychological Association.