MONTGOMERY — Board members of the scandal-plagued Mabel Amos Trust Fund, Regions Bank and the Alabama Attorney's General Office are nearing a legal settlement after months of negotiations.
Regions Bank is the trustee of the Mabel Amos Memorial Fund. The fund's board members are John Bell, Rick Clifton and Alabama Ethics Commission executive director Tom Albritton.
Amos was Alabama Secretary of State from 1967 to 1975. She died in 1999. Her trust was established to give scholarships to financially needy students in Alabama.
Alabama Attorney General Steve Marshall said in a filing in April in a lawsuit against the trust he intervened in that Regions and the board members "engaged in acts of self-dealing, or breached their fiduciary and other duties to the trust by failing to prevent or prohibit self-dealing, or by permitting and acquiescing in self-dealing, and engaging in other acts and omissions in violation of statutory and common law duties owed to the Trust."
"The Trustee and the Board, jointly and severally, impermissibly awarded scholarships or grants to Albritton's children and paid or caused to be paid scholarships or grant money from the Mabel Amos Fund totaling $135,000 for his children to attend college at the University of Texas at Austin," Marshall said in the filing.
Attorneys with the Attorney General's Office, Regions Bank, and Mabel Amos board members said in Montgomery County Circuit Court on Thursday they're close to settling the case.
"We're close to reaching a settlement. It's going to take a little bit more work to draft and a few more terms…just all the tiny details that you have to have when you reach a complicated settlement like this and then we'll present it to (Montgomery County Circuit Judge Greg Griffin) for your approval," Allen Dodd, an appointed Deputy Alabama Attorney General, said in court on Thursday. "The trust is very important. It needs to be publicized statewide. Schoolchildren need to know that it's available for them to seek scholarships. It's for the benefit of the children of the state of Alabama. It's important. It's in South Alabama. It's an important trust."
Byron Mathews, an attorney representing Tyra Lindsey, a 10th-grade student at Hillcrest High School in Evergreen, and her mother, Denese Rankin, asked the court on Thursday to appoint a special master independent of the Attorney General's Office due to Marshall receiving campaign contributions from Regions Bank and Maynard Nexsen, the law firm representing Regions in the case.
"This attorney general can not be trusted to represent the best interest of the fiduciaries who are financially needy children in the state of Alabama," Mathews said. "This is going to be the sweetest settlement you ever saw."
Attorneys for the Attorney General's Office, Regions Bank, and the trust's board members argued Mathews doesn't have standing to be in the case because his clients aren't recipients of any scholarship money from the trust, only possible recipients in the future when Lindsey applies for a scholarship from the trust.
Dodd, an outside counsel appointed as deputy attorney general, said he doesn't have a conflict of interest in the case, and every person who has ever run for office in Alabama has accepted campaign contributions.
"I was appointed I'm sure because I'm in North Alabama and have nothing to do with anything in Montgomery," Dodd said. "We were appointed so that there wouldn't be any contention that there's a conflict of interest even though I don't think that there is one. I have sued Regions and with the harshest language possible. I accuse them of abuse of fiduciary duty. I've sought compensatory damages. I've sought punitive damages. I've asked the court to remove them as the trustee. I pulled no punches. I said everything that I thought was material to this lawsuit. I don't know what is more antithetical to a claim of conflict of interest than for me to sue Regions as the deputy attorney general and to seek all the relief available from law."
Dodd said, "(Mathews) will be shocked if he knew the extensive investigation that's gone on day after day, week after week, month after month."
"We have had (a) vigorous adversarial investigation since January. We have been in fights. I've accused them wrongly of lying to me about discovery issues. We've gotten to the point that we've had to have people listen in when we're talking to each other. I don't know how much more adversarial I can be than to fight Ashby (Pate, an attorney representing Clifton and Albritton) which I can't because he's so much bigger and will kill me. Short of a fistfight, I've done everything and been as adversarial as anyone that has ever appeared before you because that's my job," Dodd said.
The Mabel Amos Trust Fund is currently worth about $8.2 million, mostly due to oil and gas wells being on its property in South Alabama, according to Dodd.
"They have long productive lives. The money is going to continue to come into the trust as long as those wells are productive. It looks like there's going to be ample production for a long time. As the price of oil goes up, the trust is going to get richer," Dodd said.
The fund's purpose is "to fund or to provide scholarships for deserving young men and women of this State [Alabama]…to assist them in attending any educational institution."
Amos' will defined "deserving" as based on the character, intelligence, scholastic record, and financial need of the student.
Mathews said the self-dealing of board members giving scholarships to their kids, employees' kids, and clients' kids instead of financially needy students began after oil was discovered on the trust fund's property in 2010.
"Prior to 2011, the trust had meager resources and assets to award its scholarships, but in 2010 oil was discovered on the property owned by the trust. The largest oil pond east of the Mississippi River. The trust got wealthy, and the trustees got greedy. Regions jacked up its fees from a few thousand dollars to well over $100,000 dollars," Mathews said. "The board members of the trust awarded scholarships not to financially needy Alabama students but to their own children and to the children of employees of their law firm and to the children of the wealthy clients of their law firm, and to the children of a former partner of their law firm who is now a judge before whom they practice. Although the trust provided that the net income of the trust had to be awarded to scholarships, the trustees diverted millions of dollars into an investment account from which Regions Bank could collect in perpetuity its excess of fees. The trustees even gave money to the University of Alabama athletic program so that they could get priority football tickets. These are not just allegations, these are facts. Those facts appear in the trust's tax filings with the IRS."
Mathews said a special master needed to be appointed by the court so more facts could be discovered about the trust fund's expenses before Griffin decided on approving a settlement.
Griffin said in court he was inclined to appoint a special master to investigate the trust fund, but he did listen to the terms of a possible settlement between the Attorney General's Office, Regions Banks, and the trust's board members during a private meeting with attorneys from those groups and Griffin during a twenty-minute recess in court proceedings. Griffin also said he didn't necessarily want to repeat work already done by the Attorney General's Office with a special master that would be paid for by the trust fund.
"The facts of this case, all the things that they're accused of. The scholarships going to the trustees' kids. That's been brought to the attention of the court. I sit here aware of the fact that I have the authority to appoint a special master to investigate and find out what's going on. I can do that because it stinks. You know, it smells now. It smells," Griffin said in court before privately hearing the terms of the proposed settlement. "I'm inclined to appoint a special master to look into this matter and see what's going on and then look into the matter and review your settlement. I do think that this needs to be looked into. It smells to high heaven. Something just doesn't seem right."
Griffin said he'd rule on pending motions in the case by Monday.
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