Daily Progress, Jacksonville, TX

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December 11, 2012

DISCONNECT: Can an Texas Attorney General investigation into missing money cost Lon Morris College even more money?

(Continued)

JACKSONVILLE —

As last week's hearing was still taking place, the LMC issued a press release mentioning the loan and the fact that the estate's planned auction had been delayed until January — but nothing about the comments about the attorney general, written or spoken.

The attacks by Lon Morris officials prompted a letter to Ragan from AG representative Hal Morris emphasizing that the investigation should not impact the auction or any bidder's ability to acquire real estate free and clear of any existing liens and claims.

The next disconnect is that in the petition to Judge Parker, Ragan acknowledges that "certain of the college's trust funds may have gone missing in 2010." However, in person, Ragan has gone to great lengths to assert to the Daily Progress and other media that there was no missing money.

"The funds are not missing, but the question is whether they were spent appropriately," Ragan asserted in a Nov. 30 email to the Jacksonville Daily Progress. "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."

Is the parallel investigation even needed? Neither Ragan nor Ray responded to requests for further comment Tuesday.

This began in October, after 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.

Ragan's explanation to the Progress for the missing funds: "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."

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