Daily Progress, Jacksonville, TX

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September 3, 2013

LMC estate sues trustees for ‘$20 billion’

(Continued)

TYLER —

Ragan also did not return a request for interview Tuesday.

The action lists the current LMC attorneys as representatives of the Dallas law firm Munsch, Hardt, Kopf & Harr PC — specifically represented in court by Phil C. Appenzeller, Michael C. Lee, and Joseph J. Wielebinski Jr. None of the three returned phone calls or messages for comment Tuesday.

The LMC estate previously had been represented in court by McKool Smith, PC of Houston. But that firm — along with its most visible attorney Hugh M. Ray III — handed the reins over on June 19.

The suit states that before its dissolution, Lon Morris was the oldest existing two year college in Texas, having survived two World Wars and the Great Depression.

“But, Lon Morris could not survive Dr. Miles McCall,” the suit reads. “Indeed, the fiduciary failings, incompetence, mismanagement, gross negligence, and cover-up of McCall and certain members of Lon Morris’s Board of Trustees would ultimately destroy Lon Morris and cause millions of dollars in damages to the institution that they were entrusted with protecting.”

The suit alleges McCall, who served as president from 2005 to 2012, was required under the law to act with "complete candor" on Lon Morris’s be half — failing miserably in that regard.

The suit alleges McCall caused well over $20 million in damages to Lon Morris, inflicting the following damage:

• Encouraging Lon Morris’s Board of Trustees to authorize a secured loan transaction with

Amegy Bank in 2006, which included a side agreement swapping the floating rate of interest provided for in such loan with an obligation to pay Amegy a fixed rate of interest. The detriment was extra interest payments over what the loan would otherwise have paid — costing the an additional $1 million.

• Improperly using certain endowment funds — from the $1.017 million Long Endowment — for operational expenses and not disclosing these actions to his board.

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