Things fall apart, the center cannot hold.
Mere anarchy is loosed upon the world…Surely some revelation is at hand;
Surely the Second Coming is at hand
W.B. Yeats, The Second Coming (1920)
DATELINE, November 4, 2007, Chicago
We suspect that the IRS would love to jump into the controversy at Oral Roberts University, but is being efficient, waiting for the lawsuit and the Miller and Chevalier investigation to surface the critical facts. It is unclear to us why the Oklahoma Attorney General has not already intervened. ORU may have its roots in religion, but it is still a tax-exempt charitable entity, meaning that the regulators must be prepared to protect ORU's assets. The school's Web site proclaims that it has over 4,000 for-credit students. That is a significant charitable class. It deserves the protection that only the regulators can provide.
Why the need for immediate action on the part of the regulators? This past Friday, ORU, Richard Roberts, and three administrator-defendants filed a...
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motion to disqualify the Richardson Law Firm as counsel to the plaintiffs. The motion asserts that the Richardson firm has a significant conflict of interest. Specifically, the motion claims the Richardson firm "was also until quite recently the counsel for Stephanie Cantees." As you may recall, Cantees is the sister of Richard Roberts' wife, Lindsay Roberts. More importantly, she is the alleged author of the memo attached to the seconded amended petition that first placed the allegations in the public eye.
Setting aside the conflict for a minute, this latest motion seems to at least indirectly acknowledge that Cantees was the author of the now infamous memo by alleging that the memo was stolen from her computer. The motion also alleges that "a majority of the material [on her computer] consisted of hearsay, unsubstantiated rumors, or personal comments from anonymous persons." This could be taken as the first formal attempt on the part of Cantees to claim that the statements in the memo were rumors she had heard, not statements of facts she had uncovered.
Now returning to the facts surrounding the alleged conflict, the motion states that Cantees first became a client of the Richardson firm on December 24, 1996, when she consulted the firm regarding a domestic matter. According to the motion, she consulted the Richardson firm in April 2002 and December 2004 regarding two separate automobile accidents. Cantees also alleges that she received legal representation regarding the formation of corporation in connection with a real estate foreclosure. She also alleges three other representations by the Richardson firm.
And then, in Paragraph 13 of the motion, Cantees drops the bombshell, stating:
I consulted with my attorney, Gary Richardson, for advice regarding how I should proceed in recovering the material that had been illegally removed from my computer. I advised Richardson of the issues and information regarding the theft and sharing my information by ORU Professor Dr. Tim Brooker and ORU student, and Mr. Richardson and I discussed various options in response to the theft.
If that statement is true, then Gary Richardson, the attorney for the three plaintiffs, would seem to be using evidence that Cantees alleges was wrongfully taken from her computer, to further the efforts of the three former professors, also Richardson's clients, in a lawsuit naming Cantees' sister and Cantees' brother-in-law as defendants. Those allegations are truly astonishing.
Enter Tulsa World reporter April Marciszewski who reported yesterday that Richardson acknowledged some of the earlier representations by his firm of Cantees, but then told Marciszweski,
I can say without question that Stephanie Cantees has never discussed any of the matters pertaining to this lawsuit with me. There is no basis for me to be disqualified.
ORU Targets Suit's Lawyers, November 3, 2007. Unless someone is being very artful in his or her phrasing, it is hard for us to see how someone isn't lying: The two statements appear to be in direct conflict. Technically, if Cantees consulted Richardson regarding recovery of the memo and did so before the lawsuit was filed, Richardson could make the statement that he did. It is also noteworthy that Cantees is not named as a party in the underlying lawsuit, permitting the technical argument that the three plaintiffs are not adverse to her. We would hope, however, that no attorney would rely on that sort of technicality given the importance of the memo to the lawsuit.
In light of this recent disqualification motion, we suspect the parties are now more focused than ever on strategic advantage. Gaining the upper hand could take months. Meanwhile, Marciszewski reported last week that the rumors that ORU is negotiating the sale of its TV station (KGEB) are true. Sale of TV Station is Being Negotiated, November 3, 2007. Today, Tulsa World reporter Ziva Branstetter, offered a likely explanation for the sale in an article entitled Debt Weights Down ORU: It's Grappled with Shortfall, November 4, 2007. Internal documents obtained by Tulsa World demonstrate that ORU officials were concerned about the possible impact of ORU debt levels on its accreditation as early as 2002, according to Branstetter. One PowerPoint slide states "The University is not able to operate within available resources and must identify initiatives to reverse this trend." Another slide states "The ratio shows an inability to raise funds from outside sources. The ratio also points to an inability to react to adverse conditions." Offering confirming evidence, Branstetter looks at debt and revenue levels, pointing out that:
During the 14 years, the university spent $73 million more than it brought in. It recorded only two years with a positive balance when expenses are subtracted from revenues: 1993 and 1995.
ORU's losses ranged from nearly $29 million in 1994 to $2 million in 2004, records show.
The publicity from this lawsuit and the allegations centered on lavish spending certainly cannot help fundraising efforts. If we were high school seniors, we would certainly be hesitant about accepting admission to ORU.
The regulators have a lot to be concerned with. Obviously, the memo should raise concerns over whether charitable assets were misused. There are also a number of for-profit and nonprofit affiliated entities referred to in Branstetter's article and listed on ORU's Form 990. Although the presence of these entities does not necessarily indicate inappropriate activity, we certainly would like to know more about these entities, whether they have engaged in related-party transactions, and if so, whether those transactions have been priced at market rates. We would hope the regulators would share our interest.
The entire ORU situation is quickly spinning out of control. That needs to be stopped. The glacial pace of a lawsuit simply is not going to provide answers to the questions soon enough. That could result in signficant harm to the student body.
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