BY KELLY GOOCH, email@example.com
A recent lawsuit against former Lon Morris College president Dr. Miles McCall and a group of former board members claims that "breaches of their duties" caused more than $20 million in damages "to the institution that they were entrusted with protecting."
The claim, filed Aug. 29 by Lon Morris plan agent and liquidating trustee Dawn Ragan, names McCall as a defendant.
The lawsuit also names as defendants former board members Bill Wagner, Frank Ashcroft, Bob Staton, Gene Brumbelow, Windol Cook, Helen Dubcak, June Deadrick, Jim Crawford and Dr. Mark Brown, claiming that they "breached their duties to Lon Morris during McCall's tenure" by "allowing McCall and his staff to invest the Long Endowment in a manner contrary to the endowment policy," not ensuring that the school pulled in about $1 million in tuition money "from students who were allowed to take classes, earn credit for those classes and/or graduate" and giving the go-ahead to implement a plan that entailed "expanding (the school's) student population in a manner that would cause Lon Morris to incur substantial debt and new expenses beyond (its) ability to pay same," among other things.
When reached by phone on Wednesday morning, McCall, who is now with Commercial Bank of Texas, declined to comment.
"Please understand I can't comment on any pending legal action," he said.
Ashcroft and Ms. Deadrick also declined to comment, while Ms. Dubcak said, "I don't want to make a statement at this time."
Crawford said he thinks most trustees thought growth was necessary to sustain the school. However, he said there was not a lot of discussion about how they would do it, "just the general concept the school was too small to sustain itself."
Brown said, "Every attempt, to my knowledge, while I was on the board, was made to do things correctly from a financial and fiduciary perspective."
"Every effort was made to do everything correctly," he added.
Joe Wielebinski, an attorney for Lon Morris, said he believes the litigation offers a potential source of recovery for creditors.
"We're very confident in our legal position …," he said. "We intend to move the litigation forward as promptly as possible to not delay and to get a quick determination so that we can get to the next step."
Last month's lawsuit is not the first filed against McCall since Lon Morris closed amid bankruptcy and financial woes.
In a lawsuit filed Feb. 13 in Travis County, the Texas attorney general alleges "breach of fiduciary duty" and "negligent management."
The lawsuit asserts that McCall "failed to oversee the management of Lon Morris College in a prudent and reasonable manner" and "jeopardized the institution and its charitable educational purpose, and knowingly and repeatedly placed its charitable assets at extreme risk."
Additionally, Sam Houston State University filed a lawsuit in December through the Texas Attorney General's Office in reference to the James Long Endowment.