Education
Investigator says $237M fraudulent gift to FAMU was ‘invalidated’ due to procedural errors
A record multimillion-dollar gift to Florida A&M University (FAMU) was invalidated in May, an independent investigator said Thursday, because a third-party report found that university officials failed to confirm the “fraudulent” contribution and the donor’s self-assessment of his fledgling cannabis company was “baseless.”
A $237 million gift from Gregory Gerami, a little-known entrepreneur, was “voided” due to procedural errors in a move that got here 10 days after FAMU disclosed the big gift during its graduation ceremony, investigator Michael McLaughlin told trustees. FAMU is the one public historically black university in Florida.
Gerami violated the terms of his equity management account by improperly transferring 15 million shares early on, according to an Aug. 5 report from the law firm Buchanan Ingersoll & Rooney, PC. When the firm terminated Gerami’s contract on May 14, McLaughlin said, any stock certificates held by the FAMU Foundation were canceled.
Moreover, the muse never signed the donation agreement, regardless that on the day the agreement was signed each parties signed an incorrect version of it.
Thursday’s meeting got here three months after that celebratory event, with the university president posing on stage with a jumbo check alongside Gerami, who was invited to speak despite a documented history of questionable business ventures and failed donations to higher education.
It all fell apart soon after. After an almost immediate public outcry, the varsity withdrew its donation and the vice chairman left her position. President Larry Robinson resigned last month.
Gerami, who founded Batterson Farms Corp. in 2021, told The Associated Press he hadn’t read your complete report. He agreed that his internal valuation “doesn’t have any meaning,” but said he obtained a third-party valuation after the crash.
According to investigators, Gerami gave a FAMU Foundation official on June 28 the primary two pages of a valuation by Stonebridge Advisors Inc. The valuation suggests Batterson Farms Corp. is value $9.93 per share — well below the $15.85 in the unique donation agreement.
Gerami declined to provide the AP with any documents supporting that request, saying, “You don’t need a full report.” He also denied that he improperly transferred company shares to the FAMU Foundation. He said he followed “the process I’ve always followed.”
Millions earmarked for scholarships, athletic facilities, a nursing school and a student business incubator is not going to materialize. In their place, there was reputational damage and withheld contributions from previous donors who assumed the university’s financial windfall made additional donations unnecessary, according to the report.
The investigation blames administrators for failing to exercise due diligence due to their overzealous pursuit of such a transformational gift and misunderstanding private stock donations. Robinson repeatedly told employees “not to mess this up,” according to investigators. The ignored warning signs alleged within the report include:
- An April 12 email from financial services firm Raymond James retracting a previous review of Gerami’s assets. In an email to two administrators, a vice chairman on the firm said that “we do not believe the valuation of certain securities was accurate.”
- ‘Offensive’ information uncovered by communications director while writing Gerami’s commencement address. It included a failed $95 million donation to Coastal Carolina University in 2020. The report said the official “chose to ignore the concerns and did not report them to anyone else, assuming others were responsible for due diligence.”
- An anonymous tip from the ethics hotline on April 29 that the Texas Department of Agriculture could back up claims that Gerami is a fraudster. The Office of Compliance and Ethics reviewed the tip but took no motion since the secrecy of the gift meant the office had no knowledge of Gerami.
As the report concluded, the senior management team “were deceived by the Donor — Mr. Gregory Gerami — and allowed themselves to be deceived.”
“Neither Batterson Farms Corporation nor any of its subsidiaries had the resources to fulfill the promises made in the Donation Agreement,” the authors wrote.