MORGANTOWN, W.Va. — West Virginia Radio Corp. alleges that its competitor, West Virginia Media Holdings, netted $5 million in 2007 from a WVU Foundation loan that violated state and federal non-profit laws and 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.
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.”
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.
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.”
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.