Tom Monaghan uses several techniques to run his educational entities de facto as sole proprietorships while de jure they are not.  One example is the secret private salary contract that Bernard Dobranski has with Monaghan.  Dobranski is paid by the Law School Board to be its Dean; but Monaghan appears to use that salary toward the fulfillment of an employment contract that he holds privately with Dobranski, independent of the Law School.

Another technique involves the creative shuffling of money between entities.  The central hub of the cycle is the Ave Maria Foundation, the non-profit tax-haven into which Monaghan put a large portion of his proceeds from the sale of Domino’s Pizza.  This Foundation money is then “donated” back to Monaghan in the form of “grants” that he spends in his capacity as the board chairman or chief officer of a another non-profit entity (i.e. Ave Maria School of Law).  Since Tom Monaghan is “the Foundation”, he faces no scrutiny in “giving” back to himself.  From the 2008 deposition testimony of the Foundation’s CFO (”PR”):

Q.   Does the foundation meet more than once a year?
PR.   No.
Q.   Does the foundation meet once a year?
PR.   I don’t think so.
Q.   Who’s on the foundation board?
PR.   Mr. Monaghan.
Q.   Is there anybody else that’s on the board?
PR.   No.
Q.   So it’s you and Mr. Monaghan at the meetings if there are meetings?
PR.   Uh-huh.
Q.   That’s a yes?
PR.   Yes.
Q.   And is there somebody there to take the minutes.
PR.   I don’t know.

This rogue philanthropy allows Monaghan to exert enormous organizational leverage that goes well beyond what a typical benefactor or non-profit board chairman can exert.  By committing an entire organization to grand expensive projects (at the Board level), and then trickling the now-necessary money to the organization on an “as needed” basis from the Ave Maria Foundation (at the benefactor level), Monaghan guarantees his perpetual control over daily and long-term matters.

The “commit-then-trickle” strategy – which regulates the sending and use of money between two organizations – also ensures that Monaghan can control multiple non-profit entities for the benefit of his central Foundation.  For the individual non-profits stuck in this cycle, organizational independence and autonomy can be supplanted with whatever Monaghan, at the Foundation, solely defines as everyone’s “best interests”.  For example, Monaghan put Michigan’s Ave Maria School of Law (where he is Board Chairman and primary benefactor) in a crisis situation by giving it a choice between  (a) staying in Michigan and facing financial decimation by having its Foundation support withdrawn, or (b) keeping Foundation support if the School uproots from Ann Arbor to Monaghan’s private south Florida real estate venture, Ave Maria, Florida… a completely new town where he holds extensive for-profit business interests and stands to put millions into a Monaghan Trust.

  None of this organizational coercion would be possible without Paul Roney, the CPA who fancies work for Monaghan as a “ministry” and the Foundation as a “church organization” (see Acton Institute).  Roney is able to use the multiple positions that he holds in all of Tom Monaghan’s non-profit and for-profit entities to subordinate the autonomous interests of individual organizations to those of Monaghan’s central planning and benefit.  This is evident when Monaghan said of his non-profits “.. what’s good for one is good for the other..” (see testimony).  Paul Roney’s deposition from July 11, 2008 offers some insight on his participation in these conflicts-of-interest.

Click below for more…

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THE HOW-TO:

Paul Roney has destroyed the autonomy of several organizations in many ways. Example: In a wrongful termination suit filed by an employee of Ave Maria College, Tom Monaghan testified that he instructed Roney – apart from any direct authorization by the College Board – to override the institution’s bylaws and negate the faculty contracts that College President Ronald Muller chose to extend as part of his designated responsibilities (see Monaghan on Board Bylaws: “I don’t know, I’m not a lawyer“).  This was able to happen because of the multiple roles that Roney holds across the Monaghan empire:

for Monaghan’s non-profit entities:

• Executive Director, Ave Maria Foundation
• Chief Financial Officer, Ave Maria University
• member, Executive Committee, Ave Maria University (one of five)
• member, University Council, Ave Maria University (one of four)

for Monaghan’s for-profit entities:

• President, Domino’s Farms Corporation
• Chairman, Shamrock Bank (more)
• advisory board, Ave Maria Mutual Funds
• Co-manager, Nua Baile, LLC; subsequently, a partner in Ave Maria Development, LLC (developing over 4,000 acres of the Town for residential and commercial use)

for Monaghan’s person:

• files personal tax returns

in Monaghan government interests:

• Member, Ave Maria Stewardship Community District (Florida)

Questions have been raised about whether Roney violated Florida Sunshine Laws in the pursuit of these conflicting roles for Monaghan (see Naples Daily News).  Roney, with his house and family in Michigan, was at the center of controversy when he assumed a position on Florida’s Ave Maria Stewardship Community District less than 24 hours after declaring himself a Florida resident (more).  The Stewardship Committee is the five-member board that governs Ave Maria Town for the state.

The breadth of influence is so great that even Roney appears unable to keep it straight sometimes.  In deposition testimony from July 2008, Roney claimed to be unaware that he was a formal partner in Ave Maria Development, LLC – the Monaghan/Collier entity that owns and runs the Ave Maria Town real estate development (explanation here).  Excerpts:

Q.   That’s it.  You have no other employment relationships of any kind with Mr. Monaghan?
PR.   Not that I can think of.
Q.   Do you have any involvement in Nua Baile?
PR.   I may, but it’s not a position where I’m compensated.
Q.   Okay, are you a partner in Nua Baile?
PR.   I’m not sure.
Q.   Why aren’t you sure?  Have you been at some earlier time?
PR.   I’m not sure what Nua Baile is.
Q.   Okay.  Well, it’s an LLC that Mr. Monaghan has ownership interest in.  Have you ever heard of it?
PR.   I’ve heard of it, yes.
Q.   Okay.  And you don’t know if you’re a partner or have an ownership interest yourself?
PR.   I don’t believe I do.
Q.   Have you ever?
PR.   I don’t believe I have.
Q.   So, I mean, are you saying for sure or it’s possible the paperwork does reflect that?
PR.   I don’t believe I do, no.

Q.   Now, with regard to the Ave Maria Town property and the board that you sit on, the development board, the Ave Maria Development, what happens as of today’s date with the profits from that entity?
PR.   I don’t sit on the board of Ave Maria Development.
Q.   You don’t?
PR.   No.
Q.   Do you — I’m sorry, you said you had a function. What is your function with the development company?
PR.   I work with it in the sense of Mr. Monaghan’s a partner in it, Barron Collier organization is a managing partner.
Q.   But you have no official role or unofficial role?
PR.   I don’t believe so anymore.  At one time I believe I was an officer but I don’t think I am — well –
Q.   You’re not sure.  I thought you were an officer?
PR.   No, I am an officer of that one.
Q.   That’s what I thought.
PR.   Yes, I am an officer of that.
Q.   So what is your officer role?
PR.   My officer role is to represent Mr. Monaghan primarily in terms of the — in terms of our dealing with the Collier Companies as the managing partner.

Each year, from 2003 to the most recent filing in April 2009, Paul Roney and Tom Monaghan have been listed with the Florida Department of State as the only two managers of the business “Nua Baile” (Gaelic for “New Town”).

Nua Baile and Barron Collier Company are the two partners who own/manage the Town via Ave Maria Development, LLC.  Ave Maria Town is the largest construction site in America… and Paul Roney has trouble recalling that he is registered with the state as a managing partner of it?!  It is no wonder that Roney was content to remain on the Town’s government board even after questions about the Sunshine Law were raised, prompting a law ethics professor (unaffiliated with Ave Maria) to comment to the local newspaper:

“It should trouble your readers that this [Town] board was set up this way.  Whoever thought this was a good idea should be fired or removed from office.”

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AVE MARIA SCHOOL OF LAW:

Roney’s 2008 deposition contains several problematic practices involving Ave Maria School of Law:

(1) Financial data presented to the Board is not located anywhere in the meeting minutes -

Q.   And, I mean, is there a reason why none of the minutes of the board reflect any presentation by you on the financial status of Ave Maria School of Law?
PR.   I didn’t prepare the minutes so I don’t know.
Q.   But you know you presented and you know your presentations sometimes took a half an hour or longer; correct?
PR.   That’s correct.
Q.   And you did this to give the board members I assume an overview of the financial situation obviously; right?
PR.   Correct.
Q.   And it should have been a part of the minutes; shouldn’t it?
MR. MILLER:  I’m going to lodge a foundational objection here, Deb.  If your argument is that nowhere in any of the minutes of Ave Maria School of Law reflect any presentations by Mr. Roney, if that’s your suggestion, I think it’s erroneous.
Q.   I’ll take an answer to my question.  Your reports should be part of the minutes as you understand it; am I correct on that?
PR.   I don’t know.
Q.   You don’t know?
PR.   I don’t know.
Q.   Well, you are yourself the executive director of Ave Maria Foundation; right?
PR.   Uh-huh.
Q.   That’s a yes?
PR.   Yes.
Q.   And there’s board meetings there; correct?
PR.   Yes.
Q.   And there’s a financial presentation with regard to the financial status of the foundation; correct?
PR.   There could be.
Q.   All right.  And is that typically in the minutes of the foundation?
PR.   I don’t know.
Q.   Do you read the minutes of the foundation?
PR.   I have.
Q.   Don’t you read them every time there’s a meeting?
PR.   I just don’t recall at this time.
Q.   But don’t you read the minutes?  Don’t you have to vote to approve the minutes of the previous meetings?
PR.   I’m not on the board of the foundation.
Q.   You attend the meetings because you’re the executive director?
PR.   If there’s a meeting, yes.
Q.   Of course.  And you’re there when the minutes are voted on; correct?
PR.   If there’s a meeting, yes.
Q.   I’m assuming your office probably prepares the minutes?
PR.   I don’t know.
Q.   You don’t know?
PR.   I don’t know.
Q.   Well, who would know who prepares the minutes for the foundation if you don’t?  You’re — you run the foundation; don’t you, Mr. Roney?
PR.   Yes.
Q.   So who would know if you don’t know who prepares the minutes?  Who would I ask on that one?
PR.   Probably the secretary of the foundation.
Q.   Who does she report to?
PR.   I’m not sure who the secretary is, I don’t remember at this time.
Q.   Well, you’re at the — who runs the meetings, the foundation board meetings?
PR.   Mr. Monaghan would.
Q.   And minutes are approved at the meetings?
PR.   I don’t recall.
Q.   You don’t ever recall.  How many foundation meetings do you think you’ve attended in 11 years?
PR.   I don’t know.  I don’t know how to answer that question.
Q.   Just take a stab at it.  Two, 25?
PR.   I’m just not sure.  I don’t know.

(2) AMSL does not have an autonomous CFO. After being open for ten years, does the Law School even have its own long-term financial investments apart from the Foundation? -

Q.   Does the law school have a chief financial officer?
PR.   No.

Q.   So you say the [Foundation] grant request [from AMSL] typically comes in when?  What time of year?
PR.   After the March board meeting so anytime between March and August.
Q.   And then what occurs after the grant request comes in and let’s say it’s approved?  How does the money flow to the law school at that point?
PR.   On an as needed basis during the course of a year.
Q.   So who decides that?
PR.   When the law school submits requests to the foundation, it could be in writing or it could be a verbal request.

Q.  So why is the money not given to the law school at the time the grant request is approved? Why is it handled in the way you just described?
PR.   That’s just been the practice.
Q.   Why?
PR.   Because it’s a situation — or a vehicle that both parties were comfortable with.  That’s just the way we’ve done it.
Q.   Well, the law school doesn’t really have much say in it, do they, in that they are the ones making the request of the foundation, the foundation is the entity that decides how the money will be given to the law school; correct?  The law school can’t really say, well, we don’t like that; agreed?
PR.   I agree.
Q.   Okay.  So why — I’m going to ask you again, as executive director of the foundation, why when the budget is approved does the foundation not just cut a check?
PR.   Because the foundation would rather hold the money and invest the money during the course of the year and get the return on the money within the foundation.

Q.   Who is Mr. Rozek, R-O-Z-E-K?
PR.   He used to work for Ave Maria College.
Q.   What did he do?
PR.   He was the chief financial officer during the time he was there.
Q.   How long was he there?
PR.   About a year.
Q.   What happened with him?
PR.   He was terminated.
Q.   Why?
PR.   I don’t remember the specifics, but I think he didn’t get along with the president.  I think that was part of it.
Q.   Were you involved in the decision to let him go?
PR.   I’m sure I had some involvement, because I was the one who was going to step into the role.
Q.   Okay.  Why was he never given authority to direct asset allocation or investments for the college?
PR.   Because at that point in time that was a decision that was made elsewhere.
Q.   At the foundation level; am I correct on that?
PR.   It may have been, I would have to look back, but that sounds right.
Q.   Didn’t Rozek have a concern that that was what was happening, was that the entire portfolio’s investments for all the foundation’s entities were being looked at jointly as compared to the individual needs of the college and its assets?
PR.   I don’t recall that specifically.
Q.   You’re not denying that that was something he would have said or taken a position with regard to?
PR.   He may have.
Q.   And I’m correct, am I not, that the foundation does not view assets in terms of individual benefits for either the law school or the college, rather the foundation manages its assets for the good of the foundation?
PR.   I would think it would be the same.
Q.   Fair statement?
PR.   I think it would be the same, but the answer is they’re managed for the good of the foundation.  [emphasis added]

William Rozek’s March 2005 deposition testimony is quite damning of Roney’s financial management, including how Roney and Monaghan controlled institutions through the Foundation.  Rozek, a CPA, was hired to be the Ave Maria College CFO:

“At the time I started, I didn’t have even signatory authority over the investment bank accounts for the College. Paul Roney from the Foundation did. And I was only ever granted the ability to move the money from money market account to the checking account to fund daily operations. I was never given authority to direct the asset allocation or investments for the College – when I tried to get that, Paul indicated to me that the investment for the College were basically he looked at the entire portfolio’s investments for all the Foundation’s entities and did his asset allocation based upon that whole, not the individual needs of the College.”

“Someone, if they wanted to bring a legal claim against any one of the organizations, could sort of go right to the Foundation. It also was very troubling to me in the fact that we were supposed to be an independent, non-profit organization and that also caused – also caused me to call into question things like we’re going to have problems with our tax status and things along these lines because essentially, you know, if you’re not a non-profit organization, you are a for-profit organization and things start getting called into question related to that.” 

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