Nonprofit, university in dispute over donated land

A nonprofit corporation that provides therapeutic horseback riding for children with disabilities has filed a lawsuit accusing the Rogers State University Foundation of fraud.

The foundation (RSUF) is accused of scheming to manipulate Bit by Bit Therapeutic Riding Center into agreeing to raise $1.3 million for land previously donated to the university for Bit by Bit’s benefit.

The lawsuit was filed last week in Rogers County District Court.

The defendants are the foundation and the University of Oklahoma Board of Regents, which governs both OU and RSU.

The general counsel’s office of the OU Board of Regents referred questions to the public relations department at RSU. David Hamby, director of public relations for RSU, declined to comment Thursday, saying the university had not yet been served with the lawsuit.

The therapeutic riding center once operated as a department within RSU, but was spun off and became an independent tax-exempt organization on Feb. 23, 2013, the lawsuit states.

Before the split, Wanda

Sanders, a longtime supporter of Bit by Bit, made two separate donations of land totaling 60 acres to RSU and the OU Board of Regents, specifying that the land was to be used for a new equestrian center.

Bit by Bit was always required to pay its own expenses and development costs and from 2004 to 2012 it independently raised more than $300,000 that was used to construct horse stalls and barns and make other improvements to the property, the lawsuit says.

The riding center officials said that without their knowledge, RSU officials “surreptitiously” began the process of selling the property in 2014 “to obtain funds for parking and road repairs and improvements.”

Ultimately, the university sold the property to the RSU Foundation for $1.1 million, the lawsuit says.

The nonprofit claims Maynard Phillips, vice president of development and foundation for RSU, informed nonprofit officials that he had devised a plan to save Bit by Bit, with the university’s foundation acting as a “white knight.”

Under the plan, the foundation would purchase the property from the university, but Bit by Bit would be allowed to continue to use the property if Bit by Bit officials would commit to raising $1.3 million for the foundation through a capital campaign, the lawsuit alleges.

Phillips told Bit by Bit founder Linda Barron she was “lucky” to be given this opportunity because an OU regent had suggested “slaughtering the horses and being done with the place,” the lawsuit states.

“The ‘sale’ of the BbB (Bit by Bit) Equestrian Center to RSUF was part of a scheme to enrich both RSU and RSUF at the expense of BbB and its supporters, and in total disregard of the donation agreement,” the nonprofit claims.

Based on what Bit by Bit officials claim were false representations, the nonprofit agreed to participate in the capital campaign and has secured $960,210 in donations and pledges, the lawsuit says.

The nonprofit says Phillips assured officials that the foundation would use its resources to help raise the $1.3 million, but “has not raised the promised funds.”

Bit by Bit officials say Phillips attempted to get even more money out of their nonprofit by stating at a Bit by Bit board meeting that there would be a “Phase 2” to the capital campaign and that Bit by Bit would be required to raise an additional $2.5 million for an endowment.

“There has never been an agreement or understanding that BbB would create the ‘endowment’ Phillips mandated,” the lawsuit states. “RSUF never notified BbB before that time of any such endowment, BbB does not need an endowment, and neither RSUF nor Phillips ever provided information regarding the application of funds donated for an endowment. The so-called ‘endowment’ was for the benefit of RSUF, not BbB.”

Efforts to reach Phillips and the foundation’s attorney for comment were unsuccessful.

Bit by Bit supporters include a number of prominent Oklahoma individuals and foundations, including The Anne & Henry Zarrow Foundation, The Oxley Foundation, The Kaiser Family Foundation and The Hille Foundation. They provided grants to the university’s foundation for the capital campaign, the lawsuit said.

Even though Bit by Bit is now separate from the university, the RSU Foundation manages financial accounts for the nonprofit.

Bit by Bit said it has “serious concerns” its funds are being “misused or misappropriated by the foundation.” The nonprofit wants a judge to order an accounting.

It is also asking for financial damages in an amount to be determined at trial.