The ongoing legal battle over the University of Wisconsin-Oshkosh Foundation’s financial troubles has taken another turn.
The nonprofit foundation has filed an $18.5 million claim against the UW System and its Board of Regents over a set of failed development projects that they financed for the school.
In court documents filed June 28, 2018 the foundation accused the university of breaching its contract and causing, “chaos,” because the “university will not honor its promises.” The introduction of the claim reads:
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The University of Wisconsin Oshkosh (“University”), through Chancellor Richard Wells and Vice Chancellor Thomas Sonnleitner, entered into a series of binding agreements that it now seeks to evade. The University wanted help from the University of Wisconsin Oshkosh Foundation, Inc. (“Foundation”) and three banks to pursue innovative projects that would benefit the University. The Foundation and others obliged and helped accomplish the University’s goals. But, although the University continues to enjoy the benefits of the projects, it refuses to uphold its side of the bargain. Chaos has ensued. That chaos has engendered three state court cases, a voluntary chapter 11 case, an involuntary chapter 7 case, and three adversary proceedings. All because the University will not honor its promises.
The suit alleges the school promised to back up loans for a series of projects including: a hotel and convention center, two bio-digesters and an alumni welcome center. Because former Chancellor Richard Wells conducted the deals while employed by the UW System, the System should be liable for his actions, said Paul Swanson, attorney for the foundation. The claim requests UW System stay true to the original deal Wells agreed to.
The situation has caused the foundation to file for both chapters 11 and 7 bankruptcy, and has led to criminal charges against Wells and former Vice Chancellor Thomas Sonnleitner alleging misconduct in office.
About $18 million of the claim focuses on holding the UW System responsible for the foundation’s involvement in the two bio-digesters and the alumni center that have proven financially unviable.
The foundation is also seeking reimbursement for more than $400,000 in legal fees incurred to date, with the option to seek more.
The suit was filed in the U.S. Bankruptcy Court for the Eastern District of Wisconsin. It outlines the case with affidavits from the UW-Oshkosh Foundation Board of Directors, its chief financial officer and two bank executives.
The brief outlines dealings that go back to 2010. It said, “at the time, this seemed like a great idea,” but budget cuts in 2012 and a subsequent tuition freeze complicated the situation along with the UW System Board of Regents encouraging campuses to become more “entrepreneurial in financing expansions.”
The UW System has not commented on this case.
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