Lawsuit Creates More Construction Controversy for Bethune-Cookman

One week after officials at Bethune-Cookman University announced a lawsuit against former administrators for what they called fraudulent dealings in establishing a dorm construction contract, the university is being sued by a different private developer which alleges the school owes more than $1 million in funds used to secure land and building permits for an off-campus apartment project.

http://www.news-journalonline.com/news/20180129/fraudulent-misrepresentation-developer-sues-b-cu

The Daytona Beach News-Journal reports on the suit filed last Friday by the Heron Development Group, which charges Bethune-Cookman with fraudulent and negligent misrepresentation and breach of contract for attempting to nix a deal which would’ve allowed the university exclusive leasing rights to students for an apartment complex near the school, but which city officials and school trustees say they had no idea former president Edison Jackson was negotiating.

From the Journal:

The suit argues that B-CU duped Heron into thinking it was dealing with a financially sound partner interested in providing housing for 500 students beginning with a 290-bed apartment building known as the MLK Lofts that should have been under construction by now. B-CU stood to make up to $45 million over the next 30 years renting to students at an average of $1,700 per month.

“While B-CU and its representatives were negotiating and then renegotiating with Heron the terms of the initiative, including Phase I, and otherwise inducing Heron to perform its obligations … B-CU was in dire financial straits with a sinking credit rating, engaged in a corporate governance free-for-all, and already embroiled in an unrelated student housing fiasco that would cost the university in excess of $300 million over the life of the deal, making it impossible for B-CU to proceed with Phase I and the initiative,” the suit claims.

According to the suit, Heron alleges that BCU faced a $17.8 million operating loss for during its 2015 fiscal year, and because it was forced to borrow more than $7 million from its endowment to cover expenses, is in no position to finance its existing student housing issue or to accommodate the signed agreement with the Heron Group.

https://www.educationdive.com/news/bethune-cookmans-interim-president-files-suit-against-former-president-ot/515773/

Interim President Hubert Grimes, who served as Bethune-Cookman’s general counsel during the alleged construction kickback scheme, did not offer a comment for the Journal story.

 

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