FAMU, a questionable donor and a $237 million gift that isn’t what it seemed

NEW YORK (AP) – It could be the largest-ever private gift to a historically black college or university: $237 million – far beyond the recipient’s means. The money was promised by the 30-year-old, who shared his journey from a childhood spent in foster care to becoming, as he put it, “the youngest African-American industrial hemp producer in Texas.”

And so, on the primary weekend of May, Florida A&M University celebrated Gregory Gerami’s extraordinary contributions with all of the mandatory pomp. He spoke at first. Administrators wearing regalia posed with a large check. Gerami even assured listeners that “the money is in the bank.”

This has not been the case and may never be the case.

In response to public backlash over the apparent failure to properly vet Gerami and the donation, FAMU said the donation had been suspended, dashing expectations for increased financial stability for the 137-year-old institution and its 9,000 students. Gerami maintains that all the pieces will work out ultimately, but other small universities he has approached with offers of larger donations have never received any money.

An eye-catching gift from a little-known company

According to Shawnta Friday-Stroud, then vp for university advancement, Gerami contacted Florida A&M’s advancement office in regards to the donation last fall. Shortly thereafter, university officials, including President Larry Robinson and Athletic Director Tiffani-Dawn Sykes, began meeting with him.

In January, Spelman College in Atlanta announced a $100 million gift, which was considered on the time the most important single donation to any HBCU. FAMU officials say Gerami desired to exceed that number. Ultimately, they agreed this might be through 14 million shares of his fledgling industrial hemp company.

However, the worth of the corporate – and these shares – stays unclear.

Gerami founded Batterson Farms Corp in 2021 with aspirations of becoming a leading producer of hemp-based plastics. While Texas Department of Agriculture records confirm that the corporate is licensed to grow hemp, there’s little else to point that that is the case.

The company’s website is poor. Affiliate links to buy HempWood products were severed and the checkout cart function was not working when an Associated Press reporter visited the positioning in late May and early June. The confusing message to investors also warned of late fees for missing monthly payments.

Kimberly Sue Abbott, a founding board member who told the AP she was incorrectly listed as co-CEO, forged doubt on Gerami’s stated stake value and said Batterson Farms “does not grow hemp anywhere that I am aware of.”

She and Gerami met around 2013 when she was a member of the Birmingham, Alabama City Council. She felt she needed guidance on how one can “do something good with her money”. Since then, he has invited her to take part in various ventures, but none of them last, she said.

“He never sticks to a schedule. The information he has is always wrong in some way. Technical issues are always a problem,” she said.

Greg Wilson, founding father of HempWood, confirmed that Gerami is a customer, but said he doesn’t buy much. High rates of interest have reduced each home sales and interest in remodeling with products like his, Wilson said, making it a bad time for wood alternative corporations.

Gerami called Abbott’s characterization “inaccurate” and outdated. Without answering whether Batterson Farms grows hemp, he said his company acts as an intermediary between farmers and consumers. He declined to supply details in regards to the company’s contracts, revenue and staff.

He also claimed that the corporate’s website was created by a third-party developer, which he said was never intended to be a place where people could buy flooring directly.

NDAs, ‘misrepresentation’ and lack of due diligence?

Florida A&M officials have shared little about Gerami and the vetting process.

Last month, Friday-Strroud told FAMU Foundation board members that an “extensive review” of Gerami’s past yielded the identical information that ended up “on social media,” an apparent reference to online upset over his previous reported donation attempts and the anomaly of his corporations.

Still, she said, they moved forward after Robinson’s loop. According to a recent report, Friday-Strud signed a confidentiality agreement on behalf of the inspiration’s board on April 26 at Gerami’s request. copy obtained by AP.

They also announced the donation pending a still-independent estimate of the worth of the private shares, which Gerami said he assessed based on existing but undisclosed sales agreements.

Officials admitted that the appraisal could end in a much lower valuation.

Stock donations and NDAs aren’t unusual for university development offices. But based on some higher education fundraisers, such donations typically come from wealthy shareholders of high-profile public corporations, and NDAs should involve the complete foundation’s board.

“Before you announce that decision, you always want to make sure those resources will be available,” said W. Anthony Neal, a longtime HBCU fundraiser who has worked with the Gers previously. “Because you don’t want to come back with egg on your face.”

Before making a gift of stock, corporations typically obtain a so-called 409A valuation from an independent third party, said Bob Musumeci, a business professor at Indiana University with a background in corporate finance.

The value of equity, variety of employees, financial projects and other details are taken into consideration within the assessment. Outside investment, resembling a family trust, may also increase a company’s value beyond what sales numbers and public data, when available, may suggest.

Gerami didn’t break any law by flouting this standard, Musumeci said, but the very fact that the gift was not properly assessed before publication raises questions.

“I would definitely be cautiously pessimistic about this. But I can not say whether that’s the case or not,” he said in regards to the accuracy of the valuation.

Both FAMU and Gerami said the transfer of share certificates between their accounts took place in April.

A spokesman for Carta, the capital management company that they are saying accomplished the exchange, only confirmed that the platform notified Gerami on May 14 that his contract had been terminated on account of “misrepresentation.” They declined to comment on FAMU’s claims that it had an account with Carta and Gerami’s claim that the corporate sent documentation confirming the transfer.

Small schools with little funding

Florida A&M just isn’t the primary school to receive a suggestion from Gerami.

Neal, an HBCU fundraiser, was overseeing a $3.4 million fundraising campaign in 2023 to have a good time the a hundred and fiftieth anniversary of Wiley University in Marshall, Texas, when Gerami reached out to us. Neal said they discussed funding for brand spanking new campus facilities within the range of $1 million to $2 million, and he began the “normal review process” as then-senior vp for institutional advancement.

However, not much information has emerged. After at the very least seven interviews, Neal requested a one-on-one meeting to personally confirm Gerami’s legitimacy. Communication then broke down.

“Sometimes donors just pull out,” Neal said. “It doesn’t mean anything bad.”

But three years earlier, Coastal Carolina University also withdrew a $95 million contribution from an anonymous donor because it “failed to meet prior expectations of the deal,” a news release said.

Although CCU declined to discover the anonymous donor in an email to the AP, Gerami was identified as a benefactor last spring. The Sun News in Myrtle Beach, South Carolina.

Gerami told the AP that he has “considered” as many as 15 colleges and universities lately as a part of a strategy to determine research partnerships that he believes will make his company eligible for grants. Although Gerami didn’t reveal the names of those schools, all those documented are small institutions with modest funding. He said he’s institutions that need funding and have capabilities in hydroponics, a approach to growing plants without soil.

The transformative gift was gone

The consequences at FAMU are tangible.

The school ended its cooperation with the Gers. Friday-Strud resigned. University trustees – surprised that they were kept at the hours of darkness throughout the six-month process – approved a third-party investigation involving government officials He joined.

In a May 15 speech to trustees, Robinson called the announcement of the Gerami gift “premature at best.”

“I saw the potential in this unprecedented gift to serve our students and our athletic programs in ways unimaginable at the time,” Robinson said. “I wanted it all to really happen, and I ignored the warning signs along the way.”

Days after announcing the donation, Robinson reportedly withdrew a $15 million request to the local economic development board to upgrade FAMU’s soccer stadium. documents obtained by AP.

Although he didn’t provide a reason and the university refused to comment, amongst other things: gift agreement shows a one-time allocation of $24 million from the Gerami gift to athletics facilities.

Millions a 12 months would also fund scholarships, a nursing school and a student business incubator over the subsequent decade.

The public embarrassment has apprehensive some HBCU supporters who hope a lot negative attention won’t dampen the resurgent fundraising atmosphere.

“For someone who wants HBCUs to always be successful, it’s really heartbreaking because there was so much emotion,” said Marybeth Gasman, an education researcher at Rutgers University and a three-time HBCU board member. “Just real, real excitement for a transformative gift of this magnitude.”

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There was a time when HBCUs needed to depend on an unknown miracle donor, but Gasman said that’s less common lately. Long missed by foundations and underfunded by some states, these schools have gained renewed interest from corporations lately.

However, disparities in public financing persist. Historically, Black land-grant universities in 16 states have lost $12.6 billion over the past three many years — including $1.9 billion that must have gone to FAMU, based on a 2023 Biden administration evaluation.

For his part, Gerami believes that questions on his donation are unnecessary. He admitted that the donation amount was his own estimate, but he expected an independent valuation to verify the worth of the shares inside a month. He said he also believes FAMU will accept the gift after an independent investigation is accomplished.

“Until a third-party valuation is done, this is purely speculation,” Gerami said.

“We want to act very carefully because we don’t want to play games that lead to speculation without actual, fact-based information,” he added.