By: Donald V. Watkins
Copyrighted and Published on August 14, 2024
An Editorial Opinion
On May 12, 2024, I published an article describing how top officials at Florida A&M University (FAMU) were duped by an apparent $237 million tax fraud scheme. The public was shocked. Based upon my legal background, I was not.
These university officials thought FAMU had hit the jackpot when The Isaac Batterson Family 7th Trustdonated $237 million in Batterson Farms Corp. shares of private stock to the FAMU Foundation last month. The “Gift Agreement” between FAMU and the Trust was publicly announced at the university’s commencement ceremony in May.
The facts and circumstances surrounding the “gift” were kept secret from the FAMU board of trustees under the terms of a non-disclosure agreement (NDA), which I reported was amateurish and unenforceable in an article published on May 18, 2024. The NDA enabled the donor to perpetuate the tax fraud scam to the point where he was an invited FAMU commencement speaker in May.
In the May 18th article, I assumed that no attorney for FAMU or the Foundation reviewed the NDA. I wrote: “It also appears that no qualified and capable attorney for the Foundation or FAMU board of trustees reviewed the NDA before it was signed by the Foundation's Executive Director -- who resigned this past week.”
I was wrong. Two university lawyers reviewed and modified the donor’s original draft of the NDA. Yet, the NDA was still amateurish and unenforceable.
On June 4, 2024, I published an article charactering FAMU’s $237 million “gift” fiasco as an exercise in incompetence, malfeasance, and breach of fiduciary duty. As revealed in the investigative report discussed below, this characterization was an understatement.
My June 4th article also exposed a nonsensical attempt by FAMU’s sister HBCU institution, Alabama A&M University (AAMU) in Huntsville, Alabama, to pay an “above-market-rate” purchase price for the distressed real property, special-purpose buildings, and other tangible assets on the 192-acre campus of defunct Birmingham-Southern College in Birmingham, Alabama, which closed on May 31, 2024. In addition to the distressed condition of BSC's property, the campus is located in a high violent crime area of Birmingham and situated within a redlined zip code in the city.
Like FAMU's failure to conduct proper due diligence with respect to the $237 million "gift," AAMU had not conducted proper and thorough due diligence in connection with its proposed BSC purchase transaction.
After I criticized the AAMU-BSC purchase transaction in my June 4th article, AAMU unceremoniously withdrew its foolish, ill-conceived, highly-publicized offer to purchase the BSC campus.
On August 5, 2024, the Florida Board of Governors released a report of its investigation into the facts and circumstances surrounding the $237 million "gift" to FAMU and presented its findings to FAMU and Gov. Ron DeSantis. [Click here to read the full 176-page report.]
The report affirmed the nature and scope of the tax fraud scam I described in my May 12th article. It also documented a level of incompetence, malfeasance, and breaches of fiduciary duty beyond anything I could imagine.
In the aftermath of the investigation and report, FAMU president Larry Robinson and 19 other members of the university’s top leadership team, including the university’s general counsel, were forced to resign their jobs. Gov. DeSantis is also expected to purge and replace members of FAMU's board of trustees, as well.
Why did this Fiasco Happen?
On September 18, 2023, the U.S. Departments of Education and Agriculture determined that FAMU is due $1.9 billion from the state of Florida since September 18, 2023, due to systematic underfunding over the past 30 years. The Departments also determined that AAMU is due $527 million from the state of Alabama due to systematic underfunding over the same period of time.
In a clear breach of fiduciary duty, neither university has attempted to collect the equity funding money that is owed to them. Instead, FAMU and AAMU engaged in harebrained schemes to distract public attention away from the fact that they are scared to collect the $1.9 billion and $527 million that is legitimately owed to them, respectively.
Like nitroglycerine, FAMU’s fraudulent “gift” scheme blew-up on its top officials. When AAMU saw what happened to FAMU officials after the $237 million "gift" was exposed as a fraud in May, AAMU backed off its foolish BSC property purchase scheme before it could blow-up on the university's president and trustees.
FAMU and AAMU have suffered irreparable reputational damage to their institutional brands in the world of institutional financial services because of these two harebrained schemes.
The only cure for incompetent institutional leadership is the replacement of the university's leadership team. This has occurred at FAMU.
AAMU remains a leadership disaster in progress and a willing participant in Donald Trump's Project 2025.
FAMU has fallen short of hitting the marks in all four of its professional licensure programs — law, nursing, pharmacy and physical therapy. Because its students cannot pass the licensure exams in these fields at an acceptable rate, FAMU may lose these programs completely.
https://www.tallahassee.com/story/news/local/famu-news/2024/06/28/state-says-florida-am-law-nursing-pharmacy-programs-in-jeopardy/74243639007/?fbclid=IwY2xjawEp5Z5leHRuA2FlbQIxMAABHbrd943T5w2fhc4ebukuQtRv53mv9u6yYnGqClgcLOev4Ea0ZgIBLCTr_A_aem_ukOn16mv1-a2Hu4KUSNvBA
I am truly shocked by the level of incompetence, malfeasance, and breaches of fiduciary duty at FAMU and AAMU. I would not be surprised if these universities are phased out or merged into each state's historically white land-grant university. Whether we acknowledge it, or not, Project 2025 is in full force and effective in Florida and Alabama.