TALLAHASSEE, Fla. (WTXL) — Florida A&M University released the final report on the investigation into the "Major Gift" from Gregory Gerami Batterson Farms Corporation The Isaac Batterson Family 7th Trust to The Florida A&M University Foundation, Inc. This follows the announcement that Dr. Larry Robinson was stepping down as president in July. Watch that report in the video above.
This investigation has determined the Major Gift to be fraudulent and the valuation performed by Mr. Gerami to be baseless. Read the executive summary below.
EXECUTIVE SUMMARY:
On May 4, 2024, during a commencement ceremony, Florida A&M University announced a historic donation of $237,750,000 worth of privately held stocks had been transferred into the Foundation’s account by the Donor. “The money is in the bank!” Mr. Gerami proclaimed to cheering members of the graduating class of 2024.
VIDEO OF ANNOUNCEMENT:
Within hours, however, concerns about the Major Gift began to emerge as other universities and individuals familiar with Mr. Gerami contacted FAMU officials to alert them of possible fraud.
On May 9, 2024, former President Robinson decided to pause the Major Gift to carefully study the value of the 15 million shares of private stock donated by Mr. Gerami. This decision came after it was revealed that an independent appraisal of the stock’s value had not been completed prior to the announcement. The only valuation provided to the Foundation prior to commencement was performed by Mr. Gerami. Typically, a 409A valuation from an independent third-party is obtained before gifting shares, but this step was not taken, raising concerns among members of the University Board of Trustees and the Foundation Board of Directors about the true value of the Major Gift.
WATCH OUR REPORT ON THE GIFT PAUSE:
This investigation has determined the Major Gift to be fraudulent and the valuation performed by Mr. Gerami to be baseless.
Read the full report:
There were four driving factors that primarily contributed to FAMU’s improper handling of the Major Gift:
1. Leadership Involvement and Influence
Both former President Robinson and Dr. Friday-Stroud had direct involvement and oversight of the Major Gift. Former President Robinson repeatedly told staff members “not to mess this up,” influencing those involved to continue moving forward despite the existence of derogatory information about the Donor. Dr. Friday-Stroud's support for the Major Gift in her roles as Vice President for University Advancement, Executive Director of the Foundation, and Dean of the School of Business and Industry left no proper chain of command for individuals to raise concerns or seek financial advice without appearing to undermine her authority. The presence and support of senior leaders like former President Robinson and Dr. Friday-Stroud created an environment where those involved felt pressured not to ask questions, to assume that proper due diligence had been performed, and to avoid seeking outside advice. This atmosphere of implicit trust in leadership's judgment and directives contributed significantly to the acceptance of the fraudulent gift without adequate scrutiny.
2. Secrecy and Non-Disclosure
The involvement of only a small group of individuals aware of the Donor and the Major Gift, combined with the perception of being subject to a non-disclosure agreement (NDA), created an environment where individuals believed it was impermissible to seek advice of experts from the University Board of Trustees or the Foundation Board of Directors. Parties involved in discussions concerning the Major Gift were required by Dr. Friday-Stroud to sign a confidentiality agreement with the Foundation. Former President Robinson’s lack of trust in the University's Senior Leadership Team and the University Board of Trustees’ ability to maintain confidentiality and not leak information about the Donor to the media led to a perceived need to prioritize secrecy. This mistrust and emphasis on confidentiality discouraged open communication and collaboration, leaving individuals feeling isolated and unable to voice their concerns or seek guidance.
3. Truncated Timeline Due to Commencement
The urgency to announce the Major Gift at a commencement ceremony significantly truncated the timeline for proper due diligence, valuation, and scrutiny. Expediting acceptance of the Major Gift, suggested to Mr. Gerami in late February 2024 by the Director of Communications without adequate coordination with University leadership, led to an intensified emphasis on creating a significant and notable event for the University. This emphasis on accepting the Major Gift at commencement, driven by the Communications Department and strongly endorsed by former President Robinson and Dr. Friday-Stroud, came at the expense of proper due diligence. The pressure to deliver a high-profile announcement caused individuals to overlook and ignore critical red flags. The combination of leadership influence, the rush to showcase the Major Gift, and the subsequent lack of thorough vetting created an environment where scrutiny and caution were sacrificed for perceived immediate gains, ultimately allowing the fraudulent Major Gift to proceed unchecked.
4. Lack of Due Diligence and Understanding of Private Stock
FAMU officials did not conduct or require an independent valuation of the gift, a critical oversight that compromised the integrity of the vetting process. Instead, they relied exclusively on the Donor's claims without seeking independent verification, demonstrating a significant lapse in due diligence. This reliance exposed a fundamental misunderstanding of the complexities associated with private stock donations. Despite these glaring issues, FAMU officials continued to negotiate with the Donor, reflecting a profound lack of awareness regarding the legal and financial implications involved. Compounding this problem was Dr. Friday-Stroud's presumed expertise in finance, as Dean of the School of Business and Industry, which further discouraged those less knowledgeable in business matters from questioning the process. The combination of unverified reliance on the Donor's assertions and the intimidating influence of perceived expertise in the area of financial matters created an environment where critical scrutiny was absent, allowing the fraudulent donation to proceed unchallenged.
Conclusion and Recommendations
Due to a lack of trust among senior leadership, the former President of the University and the former Executive Director of the Foundation failed to provide adequate information to their respective boards. This lack of transparency prevented the University Board of Trustees and Foundation Board of Directors from fulfilling their respective fiduciary responsibilities. The failure to share critical information resulted from the direct, hands-on involvement of the former President and the former Executive Director of the Foundation in the donation process and their decisions to prioritize the Donor’s request for anonymity over their respective boards’ requirement for information. To address this issue, we recommend two changes to FAMU policies and regulations. First, we recommend modifying FAMU Foundation Policies and Guidelines to place the determination for whether gifts over a certain threshold are in the “best interest of the University” at the sole discretion of the Foundation Board of Directors. Second, we recommend clear language be added to Florida A&M University Regulation, Chapter 1.021, detailing the President’s responsibility to provide timely and adequate information to the University Board of Trustees related to financial matters above a certain threshold.
These amendments will ensure that the University Board of Trustees and the Foundation Board of Directors receive the necessary information to carry out their oversight duties related to financial matters effectively and prevent similar issues from arising in the future. This may also necessitate a modification to the FAMU Regulations to permit the University Board of Trustees to discuss financial matters germane to the University and Foundation in a closed session. Additionally, the Foundation lacked proper procedures for accepting and processing a gift of private stock. In the absence of well-defined procedures, personnel relied solely on the judgment and expertise of senior leaders, thereby absolving themselves of responsibility and oversight. This event underscores the critical need for stringent procedures to conduct thorough due diligence on donors and to ensure more transparent decision-making processes within the Foundation. Currently, there is no procedural requirement for the Foundation to conduct due diligence into donors, which is a significant oversight. To prevent similar issues in the future, we recommend that the Foundation Board of Directors direct a comprehensive review of all gift acceptance procedures to ensure their sufficiency and effectiveness. Implementing clear guidelines and mandatory due diligence processes and independent valuations will enhance accountability and safeguard the integrity of the Foundation's operations. Finally, the concentration of multiple senior positions in a single individual diminishes organizational effectiveness and creates significant risks. Assigning multiple critical roles to one person results in a single point of failure and severely limits the necessary checks and balances within the leadership structure. Therefore, it is crucial to separate these positions to enhance accountability and operational integrity. We recommend the Interim President evaluates separating the roles of Vice President for University Advancement and Executive Director of the Foundation into two distinct positions. Additionally, we recommend the University undertake an analysis of senior leadership reporting chains to ensure positions are staffed with qualified individuals that provide a strong framework of oversight and accountability. However, the Executive Director of the Foundation should continue to report directly to the President and the Foundation Board of Directors, as the head of a direct support organization. Implementing these changes will strengthen leadership effectiveness, enhance checks and balances, and ensure a more robust governance structure.
