Thursday June 13, 2013

KEITH WHITCOMB JR.

Staff Writer

BENNINGTON -- Three New York companies are suing Southern Vermont College for $3.8 million, alleging that a deceased former administrator intentionally scrapped a dorm project when the companies would not hire local contractors he had pushed for.

The suit was filed earlier this week in U.S. District Court in Syracuse, N.Y., by attorney James T. Towne Jr. of Towne, Ryan, and Partners P.C., on behalf of York Street Management LLC, Cerone Development LLC, and SVC Housing Partners I LLC. The suit names the college and James Young as defendants.

Young is the executor of the estate of former acting president James Beckwith. Beckwith took his own life on Feb. 20, the same day federal authorities accused him of embezzling $440,000 from the college. He had resigned from the college earlier that month, and had been acting as president in President Karen Gross’ absence. Beckwith had been the college’s chief financial officer since 2007.

According to the affidavit filed by the Office of the United States Attorney for the District of Vermont, Beckwith claimed the $440,000 had been used to settle lawsuits stemming from the failed dormitory project, which the college announced was delayed. Prosecutors, who filed a civil forfeiture complaint against Beckwith’s estate, said the money instead went to his personal bank account.

The suit claims that on March 23, 2012, Beckwith and the three plaintiffs met to discuss a revised financial model for the planned three-story, 147-bed residential hall. Beckwith approved the model with some minor changes. Towne wrote that Beckwith also requested bids be sought from local architects and engineering firms.

Towne wrote that Cerone then began seeking bids, incurring cost in doing so. "The bids submitted by the architects, engineers and other service providers recommended by Beckwith were substantially higher than the independent bids solicited by Cerone," Towne wrote.

"After threatening to cancel the project multiple times when York refused to use some of Beckwith’s service providers, on Aug. 6, 2012, Beckwith, on behalf of and with the authority of SVC, signed an Amended and Restated Term Sheet, which provided the size of the building to be delivered, the number of bedrooms, the monthly rent payments, and terms to be included in a final lease agreement," Towne wrote, adding this also incurred costs to the plaintiffs.

On Aug. 7, Beckwith co-signed an Act 250 permit on behalf of the college along with Cerone, which signed as the owner of the permit. The application fee of $32,000 was submitted by Cerone in the name of SVC Housing Partners (SVCHP).

"Notwithstanding his commitment on behalf of SVC, Beckwith continued to stall the project, and repeatedly failed and refused to provide Plaintiffs with SVC’s existing loan documents which, upon information and belief, contained covenants which would need to be amended in the intercreditor agreement with SVCHP’s lender," Towne wrote.

According to Towne, his clients met with SVC Trustee Wallace W. Altes, who assured them the college was committed to the dorm project after they expressed their concerns over Beckwith.

Towne wrote that on Oct. 3, unbeknownst to his clients, Beckwith asked the Vermont Environmental Commission to the put the Act 250 permit in the college’s name only, but the commission refused.

On Oct. 15, according to the complaint, Beckwith sent an email to the contractors saying SVC was terminating the term sheet. "SVC is not obligated for any expense incurred by any party to the agreement, save for its own," read part of the email, according to Towne.

The complaint references the federal affidavit and the alleged embezzlement of $440,000. "To date, and despite having full knowledge of Beckwith’s actions as set forth herein, SVC has failed and refused to pay Plaintiffs the funds they are owed," Towne wrote.

The suit claims the plaintiffs suffered damages in the amount of $3,870,945.

A response has not yet been filed on behalf of SVC; however, its attorney did release a statement to the media.

"The lawsuit requests an absurd financial figure as damages for a project that was never built or agreed to be built and I plan to vigorously defend the College against the baseless allegations," wrote attorney Salvatore D. Ferlazzo, of Albany, N.Y., who represents the college.

Contact Keith Whitcomb Jr. at kwhitcomb@benningtonbanner.com or follow him on Twitter @KWhitcombjr.