July 15--STILLWATER, Okla. -- Oklahoma State University has come up empty in federal and state courts to recoup $33 million in premiums from its failed Gift of a Lifetime fundraising program.
The program dates back to 2005 when representatives from the nonprofit charity Cowboy Athletics, Inc., OSU alumnus and mega-donor T. Boone Pickens and Lincoln National Life Insurance Co. hatched a plan to raise money by taking out life insurance policies on 27 OSU alumni donors who were over age 65. The Gift of a Lifetime program purportedly was going to raise $350 million for OSU athletics, according to court documents.
The annual $16 million premium payment for the policies was to have been covered by a premium finance loan that would be repaid from the death benefits from the policies. Cowboy Athletics, Inc. would receive whatever was left from the death benefits after the premiums were deducted.
The Gift of a Lifetime program was a groundbreaking way to raise money for athletics departments and facility upgrades. After the program was announced, Athletic Director Mike Holder said he believed other universities would follow OSU's lead.
At one point, the University of Missouri and Texas A&M contemplated similar programs, but they were scraped after OSU's problems arose.
According to court documents, Oklahoma State University President Burns Hargis asked an alumnus in the insurance industry to review the policies in January 2009. Cowboy Athletics received the policies on March 24, 2009, after making several requests to Lincoln National Life Insurance Co. brokers.
The charity asked to cancel coverage on April 3, 2009 under the 10-day, free-look provision. It requested the return of $33.3 million in premiums.
Federal judge Jorge A. Solis ruled March 9 that the life insurance company could keep the premiums, and dismissed a slate of claims, including a claim of negligent misrepresentation against the agents and Lincoln, made by Cowboy Athletics in the suit.
"Contrary to Cowboy's assertion, however, there is evidence that the program was created by Mr. Pickens, Cowboy and the brokers," Solis wrote. He added there was proof that officials at the athletics fund had done their own analysis.
The charity and Pickens filed a similar suit in Payne County District Court. Last month, Associate District Judge Stephen Kistler issued a summary judgment in favor of Lincoln National Life Insurance Co.
Kistler cited the federal court's decision in his order to sustain Lincoln National Life's request for a summary judgment.
Oklahoma State University spokesman Gary Shutt indicated OSU planned to appeal the rulings.
Shutt said Oklahoma State University hasn't used any of its money to support Pickens' fund-raising activities for OSU.
"In the 'Gift of a Lifetime' program, he covered the entire premiums to the tune of $33 million."
The liabilities sections of the 2008 and 2009 Internal Revenue Service Form 990 -- a return filed by organizations exempt from income tax -- doesn't show any life insurance premium payments by Cowboy Athletics, Inc. to Lincoln National Life.
Federal court documents indicated Cowboy Athletics, Inc. had paid the premiums.
The federal and district judges ordered Cowboy Athletics, Inc., and Pickens to pay Lincoln National's costs.
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