Daily Progress, Jacksonville, TX

December 10, 2012

WHERE'S THE MONEY? Top Lon Morris officials were paid hundreds of thousands of dollars prior to bankruptcy proceedings, records show

Former LMC employees are outraged

Ben Tinsley
Jacksonville Daily Progress


Bankruptcy documents filed by the Lon Morris College estate in July indicate hundreds of thousands of dollars in compensation was awarded to four upper level college officials before bankruptcy proceedings had even kicked into gear.

Additionally, records indicate bankruptcy estate officials charged the financially-strapped college an additional hundreds of thousands before proceedings had even started.

Dawn Ragan, chief restructuring officer of the Lon Morris College bankruptcy estate, did not return several requests for comment. But former LMC president Dr. Miles McCall, who documents indicate received a $167,181.52 payment in July — the highest such award — strongly denied it.

"I'm not sure what court documents you refer to but you need to read them again," McCall said in a email. "Like all employees, I am still owed back wages, deferred compensation, and I am a creditor listed in the bankruptcy due to a personal loan I made to the college during the difficult time."

However, McCall -- college president from July 2005 until he resigned May 24 -- declined to comment further after a reporter texted and emailed him a copy of the financial affairs statement from which the $167,181.52 amount was cited.

In his only response, McCall declined to answer many questions posted by a reporter on advice of his attorney. These queries revolved around the circumstances of his May resignation, if McCall believes Dawn Ragan is effective in her handling of LMC's bankruptcy, and the current status of the college's pension fund.

According to bankruptcy paperwork, McCall was paid, prior to July 19, for duties performed from July 2011 through December 2012 — in essence, for seven months he did not work.

The three other officers also were paid from July 2011 through December 2012, all receiving payments prior to July, all no longer employed for the remaining five months for which they were paid.

Loretta Gallegos, a former provost,  received $63,125; Kent Willis, the former dean of students, received $44,873.21 and Scott Gilpin, the former vice president of advancement, received $36,458.31, records show.

In an adamant response, Kent Willis, former dean of students, vehemently denied receiving any payment, stating the last time he'd been paid by Lon Morris was during the winter of 2012.

"No, it's not true," he said. "I don't want to answer any questions about it and I just want to move on."

Attempts to contact the other two were largely unsuccessful, although a reporter was able to email questions to Gilpin through his Facebook account. There was no response.

The statement of financial affairs also indicates payments were made for bankruptcy services provided to the university between June and July. These were to Ragan's company Bridgepoint LLC, which received $204,391.12 and to two law firms, McKool Smith PC of Houston, $127,602.50 and Webb, $57,840.

McKool representative Hugh Ray III, LMC attorney and Webb representative Timothy Webb did not return emails seeking comment.

These bankruptcy dealings are upsetting many employees of the college, which was founded in 1854 and which has hosted such extraordinary students as Sandy Duncan, Tommy Tune and Alan Tudyk over the years.

All but a core group of employees were furloughed in May shortly after McCall resigned. A great many of those furloughed became upset upon learning recently that Ragan is angling for a $144,001 paycheck after a judge authorized a $150,000 loan for the university.

"So Dawn Ragan is trying to get paid before the former employees of Lon Morris get their monies?" asked Jason Thomas, a former LMC athletic trainer. "I understand she's doing a job, but the staff and faculty that was at Lon Morris for two to three months without pay did a job too. And we are still waiting for ours!"  

Other parties in the bankruptcy proceedings have taken measures to shield themselves from fallout – even if employment is their only connection to the case. For instance, officials with AmeriBid, which has been hired as the Lon Morris bankruptcy estate's auction company, hired Dallas Attorney Michael J. Quilling to protect their interests.

"Because the sale was delayed, the anticipated expenses will exceed what was originally contemplated and approved," Quilling said. "We wanted to be sure the court and all parties understood that in connection with determining whether the sale should be delayed and that we would expect to be paid for the increased costs. I am being paid hourly by Ameribid out of their funds and not the estate. My representation has no financial impact on the estate."

Michelle Zenor, a former associate professor of English at LMC, isn't convinced Ragan understands that being a chief restructuring officer for a college is a much different process than for a business.

Zenor said while Ragan may be considered a relative expert in business dissolution, there is much about college bankruptcy she has failed to comprehend — such as when an academic institution declares bankruptcy it is no longer eligible for federal funds; that when the health insurance of employees has lapsed due to nonpayment, those individuals are ineligible for COBRA; that the thousands of dollars still owed to faculty who completed their contracts for the 2011-2012 academic year would be unsecured debt; and that restricted endowment monies cannot to be used at her discretion.

"Dawn Ragan is not only the last in a long line of incompetent administrators at LMC, she may be the last student to leave the campus," Zenor said.