Daily Progress, Jacksonville, TX


December 7, 2012

BREAKING NEWS: Attorney General to Lon Morris College auction bidders: We're not the enemy

"The OAG is simply doing its duty on behalf of the public's interest in nonprofit institutions and preserving such assets." -- Thomas Kelley, spokesman, Texas Attorney General


The Texas Attorney General's Office on Friday issued a strongly-worded letter assuring potential Lon Morris College bankruptcy auction bidders that the ongoing investigation into LMC's financial restructuring dealings is not intended to endanger estate sales.

The letter, released by AG Spokesman Thomas Kelley, was issued in response to criticism in federal bankruptcy court this week from LMC chief restructuring officer Dawn Ragan, Hugh Ray III, LMC attorney, and Stephen Karbelk, founder of AmeriBid.

The three contended during a Wednesday hearing that the publicity from the AG's ongoing investigations into the bankruptcy estate is hurting the sale — and that any further “negative publicity" that is allowed to be published will be to its detriment.

The Attorney General's Office is only doing its job, Kelley said to a reporter.

"The OAG is simply doing its duty on behalf of the public's interest in nonprofit institutions and preserving such assets," Kelley stated in an email.

But the accusations made by LMC officials in court and to reporters outside court alleged AG officials have manipulated the media into publishing negative stories that are hurting the estate.

"The attorney general has been playing poker your honor," Ray said to the judge during the hearing. "They've been communicating with the press."

Despite LMC's repeated attempts to make scrutiny of the bankruptcy estate a focus of the hearing,

U.S. Bankruptcy Judge Bill Parker, Eastern District, shifted to the issues at hand, which included a request to postpone the date of the Lon Morris College bankruptcy estate's upcoming auction until January, which he approved; and LMC's request to take a loan to offset the costs of the coming auction — which the judge approved in part but lowered from $500,000 to $150,000.

The accusations that the office of Attorney General Greg Abbott is taking an adversarial stance against the college were strongly rebutted Friday. AG officials contend they are only interested in enforcing their charge of protecting the public's interest in charity. The AG has initiated at least one investigation and filed numerous court documents to that effect.

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