Bethune-Cookman Trustees Could Face Personal Liability in Construction Scandal

The Daytona Beach News-Journal outlines a new set of details in the years-long scandal involving a construction deal, bad contracts and potentially insurmountable debt for the private university which could place members of its board of trustees at risk for class action lawsuits.

A letter obtained by the News-Journal and verified by BCU officials as written by its strategic counsel lead to trustees illustrates potential board negligence in the approval and amendment of contracts which resulted in $25 million in unaccounted spending by the university and a student center which was never constructed. From the Journal:

For example, while the project was supposed to cost $60-$68 million, the letter states that the final bill totaled $85 million, leaving up to $25 million unaccounted for. Further, plans called for the developer to build a student center — which later disappeared from board-approved plans — only to reappear later as a separate proposal from the same developer.

The story continues:

According to Dudley’s letter, here’s how it happened: In a note to trustees, Gonsalves asked the board to approve the contract with TG Quantum, develop a campus master plan, and begin construction on a 1,200-bed student residence hall and other “ancillary student amenities.”

The note called for 200 more beds. More importantly, it swapped the words “student center” for “student amenities” — and its approval meant the difference between students having an entire new building or a set of new lounge chairs.

The board’s ignorance of the changes was evident at a finance committee meeting later that month. There, trustee Larry Handfield, the first B-CU alumnus to serve as board chairman a few years earlier, said he hoped students would be involved with decisions on the student union.

The letter concludes with an ominous warning to trustees about potential risk to their personal finances and assets as a result of gross mismanagement of the project.

“I am concerned that the board has great exposure at this point. Be advised the students could file a class action suit against the university and the board based on the foregoing,” she wrote. “If this occurs … a legitimate point of concern would be whether you are personally exposed and therefore would have no coverage for legal expense but have personal assets also be at risk if it is determined that your decision making and or involvement in the dorm transaction is found to constitute a breach of your fiduciary duties.”

Sharon King Dudley, B-CU’s vice president of strategic counsel via the Daytona Beach News -Journal

Last week, BCU officials revealed a strategic framework for addressing its accreditation issues, while not specifically providing details or resolutions to the faulty dorm deal which could cost the university more than $300 million and potentially collapse the institution.