Daily Progress, Jacksonville, TX

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November 30, 2012

BREAKING NEWS UPDATED: More endowment controversy for Lon Morris bankruptcy estate

Texas Methodist Foundation contends LMC restructuring officer wants to liquidate five charitable endowments, AG seeks to halt auction of assets

(Continued)

JACKSONVILLE —

 

When asked to respond to these allegations, Ragan emailed the following statement to a reporter:

 

"The college has been the recipient of many gifts over time, and some of those gifts have been restricted, and some have not," she wrote. "Monetary gifts are generally held at various foundations that manage the investment of those funds, which then remit earnings or other distributions to the College periodically.  The debtor has been seeking to obtain unrestricted funds to be used to help pay its debts, in particular the unpaid employee wages as well as unsecured creditors such as local vendors and suppliers."

 

Tom Kelley, Texas Attorney General's Office spokesman did not immediately have a response to the ATF complaint on Friday, but said his office will be filing an answer to it in the next seven days.

 

This Eastern District lawsuit is the second major legal challenge to the manner in which the college has managed its endowments in the wake of bankruptcy. The first came when a representative of the Texas Attorney General's Office announced an investigation into a missing $1.3 million from an endowment that 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 the endowment, according to officials and court documents.

 

In her response, Ragan also addressed the Texas Attorney General's investigation, about which she initially declined comment. This $1.3 million endowment was created by Rusk native Dr. James “Jimmie” Duncan Long, an educator, philanthropist and Lon Morris College grad.

 

"Money from the Long endowment was given primarily for the library, but also included a provision that the school could invest those funds as it saw fit, and since the money was earning less than 1 percent at the time, it is my understanding the decision was made to further invest in the school and ongoing improvements," Ragan wrote. "The funds are not missing, but the question is whether they were spent appropriately. We are cooperating with the Attorney General’s office in their investigation, as well as conducting a parallel investigation ourselves.  These actions happened long ago well in advance of any sale or liquidation process."

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