Daily Progress, Jacksonville, TX


December 4, 2012

BREAKING NEWS: Attorney General: Endowment money should not be used to pay bankruptcy costs

"The AG agrees with the Texas Methodist Foundation that such trust assets are not assets of the bankruptcy estate."



Meanwhile, the AG also is investigating $1.3 million missing from an endowment created by Rusk native Dr. James “Jimmie” Duncan Long, an educator, philanthropist and Lon Morris College grad. The endowment should have reverted to Sam Houston State University after LMC declared bankruptcy. Dr. Miles McCall, college president from July 2005 until he resigned May 24, was questioned regarding management of that particular endowment.

The Texas Methodist Foundation lawsuit, filed Nov. 6, asserts that the funds were created with the intention of furthering educational, charitable and religious endeavors of the Methodist church and "Methodism" and not to be used as financial fodder for liquidation costs. The lawsuit specifically seeks to prevent the college's chief restructuring officer, Dawn Ragan, from taking such action.

TMF officials filed suit after Ragan requested they wire her $100,635.36, the principal balance of "The Faubion Funds" endowment. In the request, the lawsuit contends, Ragan stated the funds were needed to "assist in managing current liquidity constraints" and further stated any additional funding provided will be used to cover payroll, utilities, insurance and general overhead costs as well as certain marking/advertising costs," reads the lawsuit.

Ragan did not respond to several LMC bankruptcy estate question until hours after the Jacksonville Daily Progress' stated Monday deadline.

"We have been quite busy but expect to issue a press release on Wed or Thurs after the hearings on a variety of things," she said in her emailed response. "Thanks."

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