Daily Progress, Jacksonville, TX


September 3, 2013

LMC estate sues trustees for ‘$20 billion’



• Executing an unauthorized wraparound real estate lien note with Tilley, LLC in excess of $6 million to replace an existing lease with Tilley, when doing so significantly increased Lon Morris’s secured debt and its overall liability exposure in the event of a default.

• Refinancing existing debt facilities with Texas National Bank without authority and imprudently pledging Lon Morris’s valuable mineral interests as collateral for a loan that would almost certainly be in default—and did result in default—soon thereafter, costing LMC at least, $400,000.

• Failing to collect approximately $1 million in tuition from students who were allowed to take classes, earn credit for those classes, and-or graduate. Plus:

• Destroying Lon Morris’s value by implementing a grossly negligent business plan that included unlimited student population expansion that would cause debt and grievous expense beyond the ability to pay. Additionally, adding programs such as football, hospitality, and agriculture when the addition would require massive expenditures well beyond the remedy of any increase in revenues.

• Grossly mismanaging the estate, taking unauthorized actions, and not disclosing crucial information in a manner that devalued Lon Morris by millions of additional dollars — including $8 million to $10 million million in accreditation value alone.

• Engaging in McCall’s grossly negligent conduct, unauthorized actions, and nondisclosures also exposed Lon Morris to another $17 million in claims filed in the bankruptcy case by Sam Houston State University (the alternate beneficiary of the Long Endowment) and the Texas Attorney

General for violating the public trust.

In regard to the alleged improper actions of the LMC board of trustees, the lawsuit essentially blames members for allowing Dr. McCall to to commit the aforementioned actions, contributing to the millions in subsequent damages he is alleged to have caused.

“The Board Defendants were required to act in Lon Morris’s best interest and supervise McCall’s actions, including by authorizing financial and endowment transactions made outside of day-to-day operations,” it states. “The Board defendants breached their duties to Lon Morris during McCall’s tenure.”




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