FAMU’s vice president resigned and the president said he would step down after the debacle
A record multimillion-dollar donation to Florida A&M University (FAMU) was declared void in May, an independent investigator announced on Thursday. A third-party report said the university administration failed to investigate a “fraudulent” donation and that the donor’s self-assessment of his fledgling cannabis company was “unfounded.”
The $237 million donation from Gregory Gerami, a little-known entrepreneur, was “cancelled” due to procedural errors 10 days after FAMU announced the generous donation at its graduation ceremony, investigator Michael McLaughlin told trustees. FAMU is the only public, historically black university in Florida.
Gerami violated the terms of his stock management account by improperly transferring 15 million shares, according to an Aug. 5 report from the law firm Buchanan Ingersoll & Rooney, PC. When the company terminated Gerami’s contract on May 14, all stock certificates held by the FAMU Foundation were canceled, according to McLaughlin.
In addition, the Foundation never countersigned the donation agreement after both parties signed an incorrect version on the day it came into effect.
Thursday’s meeting came three months after that celebratory event, with the university president posing on stage with a giant check next to Gerami, who was invited to speak despite a documented history of dubious business ventures and failed donations to higher education.
Things soon went haywire. After an almost immediate public outcry, the school suspended the gift and a vice president resigned. President Larry Robinson submitted his resignation last month.
Gerami, who founded Batterson Farms Corp in 2021, told The Associated Press he had not read the full report. He agreed that his internal assessment “carries no weight” but said he sought a third-party assessment after the debacle.
According to investigators, Gerami presented the first two pages of a valuation by Stonebridge Advisors Inc. to a FAMU Foundation official on June 28. The estimate shows that Batterson Farms Corp. is worth $9.93 per share – significantly less than the $15.85 in the original gift agreement.
Gerami declined to provide AP with any documents supporting that conclusion, saying, “You don’t need the full report.” He also denied that he improperly transferred company shares to the FAMU Foundation. He said he “used the procedure I’ve always followed.”
Millions earmarked for scholarships, athletic facilities, the nursing school and a student incubator are not being paid out. Instead, the report says, the university has suffered reputational damage and reluctance from previous donors who assumed that the university’s unexpected financial gain made further donations unnecessary.
The investigation blames the administrators’ lack of due diligence on their overzealous pursuit of such a transformative gift and their misunderstanding of private stock donations. Robinson repeatedly told staff not to “fuck this up,” according to investigators. The report cites ignored warning signs that include:
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An April 12 message from financial services provider Raymond James retracting its previous review of Gerami’s assets. In an email to two bankruptcy trustees, the company’s vice president said, “We do not believe the pricing of certain securities was accurate.”
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“Derogatory” information the communications director discovered while drafting Gerami’s graduation speech, including a failed $95 million donation to Coastal Carolina University in 2020. The report said the official “chose to ignore these concerns and not report them to anyone else, assuming others were responsible for due diligence.”
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An anonymous tip to the Ethics Hotline on April 29 that the Texas Department of Agriculture said could support claims that Gerami was a scam. The Office of Compliance and Ethics investigated the tip but took no action because the office was unaware of Gerami due to the secrecy of the gift.
The top management “was deceived and allowed itself to be deceived by the donor, Mr. Gregory Gerami,” the report concluded.
“Neither Batterson Farms Corporation nor any of its affiliates had the necessary resources to fulfill the promises made in the gift agreement,” the authors wrote.
