MORGANTOWN, W.Va. — West Virginia Radio Corp. alleges that its competitor, West Virginia Media Holdings, not only netted $5 million in 2007 from a WVU Foundation loan that violated state and federal non-profit laws but has continued to benefit from cronyism by university officials.

WVRC’s wide-ranging lawsuit, filed Wednesday in Monongalia County Circuit Court, names 10 defendants in all, including WVU president Jim Clements, athletics director Oliver Luck, WVU Board of Governors chairman Drew Payne and WV Media president Bray Cary.

The suit claims unlawful dealings tainted the 2008 purchase of a scoreboard for Milan Puskar Stadium and, more recently, that Luck and Payne conspired to rig the bidding for the university’s third-tier media rights package.

“These blatant and unlawful actions are not the result of inadvertence or errors made in good faith, but instead are the purposeful result of a fraudulent scheme to benefit WV Media, a corporation certain defendants own, or to personally enrich themselves or friends,” the suit claims.

WVRC, the parent company of MetroNews, was among the firms unsuccessfully bidding for WVU’s third-tier rights last fall. WVRC did not enter the second round of bidding and has been critical of the university for failing to grant the company a hearing in light of missteps by Luck.

But Wednesday’s lawsuit touches on other matters involving WV Media that predate Luck’s arrival as athletics director in June 2010.

FOUNDATION LOAN

In 2001, the WVU Foundation loaned $7.75 million to Cary’s company, which was founded the same year. Cary was a member of the foundation’s board of directors at the juncture, and the lawsuit contends five additional board members were personal investors in WV Media.

In 2007, WV Media bought out the loan for only slightly more than $2.7 million. WVRC alleges the loan was illegal because it violated the foundation’s mission of bettering education.

The $5 million loss “constituted monies raised from individuals, corporations and other supporters of West Virginia University in hopes of bettering WVU,” reads the complaint. “These donations were not made to further the business ventures of Cary.”

Read the 50-page lawsuit, and another 155 pages of exhibits, here.

The lawsuit seeks “exemplary damages” from Payne, Clements, Luck and BOG member David Alvarez “for their outrageous and scandalous behavior and to deter other future such breaches of their fiduciary obligations.”

The lawsuit was filed on behalf of WVRC by Clarksburg attorney Frank Simmerman, Jr.

WVRC stipulated in the lawsuit that any damages collected, exceeding attorneys fees, will be donated to WVU Children’s Hospital.

MEDIA RIGHTS

MetroNews file photo

West Virginia AD Oliver Luck was listed among 10 defendants in a lawsuit WVRC filed Wednesday.

WVRC seeks an injunction delaying WVU from awarding its third-tier rights, the rebidding of which faced a Wednesday deadline for new proposals. The lawsuit restates WVRC’s request for the exclusion of IMG College and WV Media, which partnered on the original winning bid.

That bid was thrown out at the request of state Attorney General Patrick Morrisey after Luck was discovered to have shared confidential information with Payne, a stakeholder in WV Media. Morrisey’s report also questioned Luck’s autonomous decision last October to add three members to the evaluation team when the other original panelists — deputy athletics director Mike Parsons and associate AD for business operations Mike Szul — didn’t give immediate approval to the IMG College/West Virginia Media bid.

“I concur with the Attorney General’s findings that these communications were improper but agree they did not impact the evaluation or selection process,” Luck said in an April 17 statement. “The department looks forward to the rebid.”

The suit charges Luck with “improperly, incompetently, and unlawfully managing the media rights RFP process.” WVRC claims the university subsequently tailored the second media rights RFP “to render WV Media’s partner, IMG College, the only qualified bidder, thereby transforming the RFP process into a sham.”

Though Luck was barred from overseeing the second round of rights bidding, the suit cites Clements for failing to exercise reasonable control over Luck and other defendants, “exposing WVU and its Foundation to unnecessary expense, management and ridicule.”

SCOREBOARD ALLEGATIONS

Two other defendants in WVRC’s lawsuit — WV Media investor Ralph Ballard of Charleston and his brother, Panasonic salesman Richard Ballard of Alpharetta, Ga. — were figures in a football stadium scoreboard purchase that skirted WVU procurement policies.

Former WVU athletics director Ed Pastilong in 2008 objected to Richard Ballard encouraging administrators to buy a $5 million football scoreboard from Panasonic even as a university-hired consulting firm, Ellerbe Becket, was assembling bids from 12 other competing electronics companies.

The lawsuit alleges Richard Ballard pitched the notion of Panasonic gifting a basketball scoreboard for the WVU Coliseum in return for the athletics department agreeing to skip the RFP process and purchase the football scoreboard from Panasonic. The purchase, which the lawsuit claims received a behind-the-scenes push from Payne, ultimately was approved by Narvel Weese, WVU’s vice president of finance, and R.Wayne King, president of the WVU Foundation.

“My concern that WVU is not following proper purchasing practices regarding the scoreboards continues,” Pastilong wrote in a May 2008 memo to Weese. “This project has gone from one free board to buying two boards for $5,000,000 and now providing Panasonic the best advertising soon on the boards for free.”

Despite Pastilong’s concerns, the scoreboards were purchased and installed in 2009. WVU’s agreement with Panasonic subsequently included purchases of a scoreboard for the men’s basketball practice facility and the Milan Puskar Center.

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Comments

  • Earl

    Amen!

  • Jay

    Boycott Kramerica Industries, too!

  • Alum Standing Up for Integrity

    Shocked and amazed of all these comments. Seriously people!! Read the complaint in full and all the exhibits that prove that corruption occurred. Don't blame the messenger for exposing the truth. Are you so filled with hate that you are willing to ignore the truth and allow these corrupt individuals to continue? I for one want WVU to be restored to the great university it was. Get rid of all these officials that are running the university in an illegal and corrupt manner. Educate yourself before you comment. Ignoring the truth doesn't change it.

    • Gwendolyn

      Ditto.

    • Mountie in Richmond

      I see you practice the guilty till proven innocent view of the law. Fortunately, our Founding Fathers saw otherwise. These are merely allegations, some of which likely will not make it past a dismissal because Mr. Raese lacks standing to allege the claims.

    • gwp

      I love how you guys are making JR to be a saint, he never mentioned any of these issues when he was involved with the school only after he got cut out of the deal. I will be happy when this is all over and JR is still not involved with WVU.

  • JL

    Bray Cary's firm received a $7.75 million dollar loan that the Foundation lost $5,000,000 on - and that's OK?

    • Tina B

      I think I may be able to start a business in WV with a 5 MILLION DOLLAR CUSHION!

  • John R

    I see you can't take the heat!

  • Bruiser

    It amazes me what we justify. Ethical behavior is essential, I knew a long time ago that Mr. Luck needs to study ethical guidelines, if this proves true, it is just another example of how low we stoop to get what some want. Too bad.

    • Greg

      Just curious, but what led you to believe Ollie needed to study ethical guidelines? Would you please share those with us so that those of us who feel this is all just a bunch of bunk can maybe look at this from another perspective?

      • JL

        Greg - one example: Bill Stewart. Oliver's new coach gets kicked out of a Casino in the middle of the night and the next step is to smear Bill and run him off like a dog. That was so badly handled and Stewart was wounded by Luck. He could have just fired him or asked him to step aside - but when Dana's behavior arrived in West Virginia, and the bad press began, Stew was made the scape goat.

        • Integrity

          I agreed Stew should have just been fired. But, in the end Ollie was trying to help him save face and give him a golden parachute to fall back on. And the end result was that Stew, or more accurately his wife, started a smeer campaign against Dana. How many of her allegations actually turned out to be warranted? None. The biggest mistake Ollie made in the 3rd tier rights was giving others around the state the opportunity to bid. And Raese lowballed the bid because his company had a sweetheart deal with the university for over 50 years. How many times in the past were the media rights put out to bid when JR had them? Check into that.

          • Allan Taylor

            @Integrity: As I've mentioned on several occasions, sources within the athletics department and the university say bidding WAS a necessity, and what's more, Luck was entirely wise to do so, because it maximized the value of the bids. Also you really have no idea what WVRC's bid was, nor that it was lowballed, because WVU didn't release the first round of bids. The only figure the media has — an approximated $110 million tag on IMG College's bid — hasn't been examined to determine what inventory/incentives that entails. And as far checking into how many times the media rights were bid out by WVU in the past previous, the answer, as has been reported widely and repeatedly, is never. WVU retained the rights and handled the advertising in-house.

          • Wilson

            JR and WVRC never had the media rights! Can't you read? WVU itself has said they owned the 3rd tier rights NOT WVRC, and they always have. PLUS they (WVU) kept 100% of the revenue generated from those rights. those of you who continue to say WVRC owned these rights either can't read, or don't care about the facts. I personally don't care about who had or who gets the media rights. I just want our university to be squeaky clean in all of its transactions....and in this case it seems they were far from that.

  • John R

    Allan Taylor get your resume polished. After this is all said and done, there will be major budget cutbacks and you will be the 1st to go.

    • Allan Taylor

      Hey, John, learn how the media industry works and I'll begin subscribing to your career advice.

    • Gwendolyn

      Don't doubt it. It wouldn't be the first (nor last) time that WVU succeeded in hurting upright, honest people for being truthful.

      Thank you, JR and Allan Taylor, for stating the facts.

      • Big John

        All we have is a smokescreen hiding what has been done in the past.WVU did nothing wrong.

  • Big John

    On page 5 Number 19 it statest the bid is to go to the lowest bidder, no wonder JR thought he won. Item 22 How much WVRadio donate.?Page 6 item 23 they think they will win-How much will they pay WVU legal team when they win-0- from this frivious lawsuit.

  • Alum

    Collusion, interesting. How about EP and JR for all those years... or does he conveniently forget?

    • Guardian

      How about EP just continued what was started under the legendary athletic director Schaus? Oh that's right - Schaus was popular, so he couldn't possibly have done any harm, right? Sheesh - folks bias sure does come out at times like this and they then conveniently ignore who began the relationship between WVU and WVRC.

  • Big Larry

    And so it begins....

  • Bob Melphis

    Hey Taylor I bet you were just poopin' your pants waiting to put this story on line!

    • Allan Taylor

      Hey, Bob, wading through 200-plus pages of court filings merely left me pooped — not poopin'.

  • cutty77

    SORRY I LEFT OUT SCANDALOUS. LOL

    • Wilson

      Do tell. Please tell all you know. Cause I don't think you have any idea. If you read the complete case, you will see that WVU states that they have always owned the 3rd tier rights. Not sure why YOU and others continue to say WVRC had a 'free ride' or 'sweetheart' deal when it is absolutely not true.

    • Wilson

      Cutty77, the answer to your question "How much did WVRC pay"? Pay for what? They (WVRC) didn't own or receive the 3rd tier rights from WVU? Tell me please what we're they expected to pay for?

  • WVU 74

    About time someone opened the door on all these "backroom deals" ! When enough of the onion gets peeled back, there will be the realization that these guys aren't really very smart.

    • Michael Walker

      If an injunction is granted it will cost WVU over $4 million per year in increased third tier income as the case languishes in the court system.

      The lawsuit doesn't bother me. It is the right of WVRC (John Raese) to seek relief in the courts for wrongs they believe have been committed against them.

      I would be surprised if an injunction would be upheld in federal court for two reasons.

      First nothing irreversible would happen without one. Second, bidding was not required any more than taking bids on which conference to join was.

      WVU did not purchase anything. Bids are only required for purchases or the expenditure of state money.

      • Allan Taylor

        Michael, thanks for raising valid points. The one seemingly pervasive myth about this third-tier business — and granted, it's a myth based on AG Morrisey's news conference — is that WVU wasn't required to bid out the rights. But numerous sources both within the department and others involved with the administration have told me the RFP process was a necessity. And in theory, opening it up for bidding can only maximize the revenue if the process is properly handled.

        • Michael Walker

          Thank you for responding to my comment. As far as this situation goes, it will be resolved, hopefully without delay.

          I appreciate your being as unbiased as possible in your articles.

          As a sports writer, I hate to see you put in the middle of something outside the true realm of sports.

          It does however, show that you have the capacity to present information outside the sports arena in an intelligent, articulate manner.

          What I don't like is the negative effect it has on your relationship with your followers. This is your career.

          I do agree that bidding out the third tier rights is the best way to maximize income.

          • JS

            You have got to be Allan's best friend or JR writing as Michael Walker. What a suck up!

      • Michael Walker

        JS and Slim: Allow me but to clarify my position. I do not like JR or what he's doing. But he obviously has a right to. That doesn't make it smart.

        The suit was filed in state court in the hopes of getting an injunction to block the rebidding process. If one is granted, the case will be moved to federal court.

        A federal judge will dissolve the injunction. A short time later there will be a hearing and the case will be dismissed. A couple of people on both sides will be embarrassed.

        I don't know Allan, but I enjoy his sports articles. I'd like to see him be allowed to get back to sports writing.

      • Tina B

        I can't imagine that there would not be a fiduciary duty, especially when WVU has so much public money funding it, to make certain they are getting the best bid to bring in the largest profit.

        I think the AG needs to look at WV law and not New Jersey. Are his attorneys able to even practice in WV yet? I know the one wasn't but didn't he hire more out-of-staters?

  • leroy j gibbs

    Wow

  • Mike

    Man, What a sore loser.