What’s New
Top administrators at Florida A&M University ignored several warning signs that a high-profile $237-million pledge from an entrepreneur might be fraudulent, according to a 176-page report commissioned by the college and released on Monday.
The report says the university rushed the process of accepting the pledge — a donation of shares in the Texas-based hemp entrepreneur Gregory Gerami’s Batterson Farms Corporation — ignored warnings about the would-be donor’s finances, and created an environment that dissuaded staff members from asking questions.
The administrators “left no proper chain of command for individuals to raise concerns or seek financial advice,” according to the report, which was produced by the law firm Buchanan Ingersoll & Rooney.
The donation, if legitimate, would have been the largest ever made to a historically Black college or university and would have doubled the endowment of Florida A&M, commonly called FAMU.
Apparently as a result of the episode, FAMU’s longtime president, Larry Robinson, resigned in July. Shawnta Friday-Stroud, the FAMU Foundation’s executive director and vice president for university advancement, resigned earlier in the year. She remains on the faculty of the university’s School of Business and Industry.
The Details
Florida A&M was initially contacted by Gerami in September 2023 about making a donation, and he first pledged $25 million over three years, according to internal emails at FAMU included in the report. If Gerami were satisfied with how the money had been spent, he would donate an additional $12 million, bringing the total to $37 million, according to the report.
At Gerami’s request, FAMU officials traveled to Atlanta in December to meet with the Gerami’s foundation board. According to the report, the meeting never happened.
In January, Spelman College announced it had received a $100-million gift, the largest ever to an HBCU. Gerami emailed FAMU to say he planned to exceed that amount, according to the report.
On February 5, Gerami sent the university a verification of deposits and assets in an account with Raymond James Financial, and on a Zoom call a day later raised his pledge to $200 million, according to the report. On this same call, Gerami demanded the university sign a nondisclosure agreement that would prevent it from publicly releasing details about his business. In the view of the investigators, the agreement made Robinson and Friday-Stroud reluctant to ask for outside advice on accepting the large gift.
From February to April the size of Gerami’s pledge ballooned further, and at one point he pledged as much as $250 million, according to the investigation. Warning signs began to appear.
There were questions about the nondisclosure agreement, which appeared to have been copied and altered from a LegalZoom open-source document rather than prepared by a lawyer, according to the report. Gerami said he would not proceed with the gift unless the agreement were signed.
In April, FAMU received a letter from Raymond James Financial, in which the shares in Batterson Farms Corporation were deposited. In the letter, the financial institution said that it didn’t stand by the bank statements presented by Gerami and didn’t believe the shares he was donating had been accurately valued.
When FAMU officials asked Gerami about the Raymond James letter during a call on April 15, Gerami, who is Black, said the bank had acted “out of racist intent” and didn’t “want that much money going to an HBCU.”
Robinson accepted that explanation, according to the report. Later that month, Friday-Stroud signed the nondisclosure agreement. Eight days later, Gerami was flown to the university and put up in a hotel. Then, at FAMU’s spring commencement ceremony, he presented a large cardboard check representative of the donation.
Shortly after the ceremony, Robinson learned that Gerami’s company might not be as financially sound as Gerami claimed and that the donation might not be real. A gift officer at another college, who had been contacted in the past by Gerami, warned FAMU that the purported donor had made previous pledges that didn’t materialize. Robinson grew concerned.
The 15 million shares Gerami pledged to donate, at a value of more than $237 million, might not be worth anything, according to the report.
Robinson put a pause on the gift, and opened an investigation, according to the report.
What to Watch For
Buchanan Ingersoll & Rooney, the law firm that conducted the investigation and wrote the report, said decisions of whether to accept large gifts should lie solely with the FAMU Foundation’s Board of Directors. The university’s president should not determine whether donations are in the “best interest of the university.” The firm also recommended that FAMU revise its policies to make it clearer how quickly and effectively the president must report financial matters to the university’s Board of Trustees.
Meantime, the State University System of Florida’s Board of Governors is conducting a separate investigation, the results of which have not yet been released.
Florida A&M University will be led by an interim president, Timothy Beard, who took office on Monday, while it conducts a search for a permanent leader.
