Attorney General Martha Coakley sued the former president of a tiny Falmouth college on Tuesday, seeking to force him to repay the school millions that he allegedly squandered on excessive compensation, Mercedes automobiles, and a quarter-million-dollar timeshare in the Caribbean.
In the lawsuit, filed in Suffolk Superior Court, Coakley also charged that President Robert J. Gee gave himself a $152,175 bonus in 2009, and then created false documents to make it appear that the school’s board members held a meeting to award Gee the money for his “superior job performance.’’ No such meeting ever occurred, according to the lawsuit.
During Gee’s tenure, the college he headed, the National Graduate School of Quality Management, bought an ocean-view compound with four houses that included a presidential home for Gee. Last year, the school sold those properties at a loss of at least $1.5 million.
“Dr. Gee diverted and squandered funds that should have been spent to help the students and improve the quality of the school as opposed to running the school into the ground,’’ Coakley said in an interview on Tuesday.
Gee did not return a phone call Tuesday. His lawyer, J. William Codinha, said Gee will defend his actions. “All of the conduct he was accused of was sanctioned by the board,” Codinha said.
Gee, who founded the school in 1997, was removed as president and then fired in 2012 after a Globe review of the school’s annual tax returns and audit reports found that Gee had long been dipping into the school’s coffers to fund a lavish lifestyle. His salary, which exceeded $700,000 in 2008, matched or exceeded that of presidents of some major universities.
In a separate court ruling Tuesday, Coakley’s office reached an accord with the school’s current board and executives, warning that unless a new board that will soon be appointed moves quickly to improve the school’s finances, the college could face dissolution. The agreement sets out rigorous financial goals the school must meet to avoid closing.
Small college in Falmouth
Gee’s free-spending ways came to light when Northeastern University investigative reporting students sorted a database of thousands of Massachusetts nonprofits by executive compensation. Gee’s, at $732,891, equaled that of the president of Tufts University, which had 10,800 students and 5,500 employees.
By contrast, only about 200 students are now enrolled at the National Graduate School, which offers master’s degrees in quality systems management.
Much of the fiscal hangover from Gee’s presidency involves his 2009 decision to buy the waterfront compound on Oyster Pond in Falmouth with breathtaking views of Vineyard Sound, even though almost all of the school’s students take courses off-site in other states.
By far the most commanding view of Martha’s Vineyard was from the six-bedroom home atop a hill in the compound that was to have been Gee’s official residence.
In the lawsuit, Coakley noted that Gee decided to purchase three Onawa Lane properties for $3.36 million and, a year later, an adjoining Quonset Road home for $1.25 million. At the time, the school’s assets were just $3.2 million.Gee committed $1 million of the school’s funds toward the acquisitions, took on mortgages of $3.6 million, and committed the school to renovations of $1.5 million.
When the college bought the Onawa Lane properties, the lawsuit says, “the only known use for the properties was to serve as a residence for Dr. Gee, resulting in personal benefit to him.”
After Gee’s firing, the school sold the Quonset Road home for a small loss. Last September, however, it sold the three Onawa Lane properties at auction for $1,793,000. The school had paid $3.36 million and had made substantial renovations.
The small Falmouth office building that houses the college’s offices is for sale, with a listing price of $1.6 million.
Coakley’s lawsuit does not specify the amount she would seek to have Gee reimburse the nonprofit. But it estimated his excessive compensation to be $2 million, and said other unjustifiable expenditures included $195,000 for the four Mercedes cars, $253,000 for the timeshare, and $152,175 for the 2009 bonus.
Coakley’s lawsuit pays special attention to the 19-year employment agreement Gee, now 69, negotiated when he was 61.
The agreement provided an annual incentive payment of at least 15 percent of his salary; the use of the timeshare in the US Virgin Islands that Gee had purchased the year before without seeking board approval; and numerous other perks including 30 sick days a year for which Gee would be paid for unused days.
Gee’s wife, Aileen Waters Gee, from whom he is now estranged, was also on the school’s payroll for about $100,000 a year since 2003. Her employment, like his, ended in 2012.
In 2009, according to the lawsuit, Gee decided to give himself a $100,000 after-tax bonus, so he had a check issued to himself for $152,175. Then Gee prepared minutes of a June 26, 2009, meeting of the executive committee of the school’s Board of Trustees, indicating that the bonus was discussed and unanimously granted even though such a meeting was never held, according to the lawsuit.
Gee, Coakley said in the interview, “probably had some idea the board would not have approved the bonus.’’
Asked whether Gee’s actions might violate criminal law, Coakley replied: “Our focus here is on his civil responsibility, although we will never rule out other things that may come to light.’’
In the separate court filing, called an “Assurance of Discontinuance,’’ Coakley’s office reached an agreement with the board and the school.
It declares that, between 2003 and 2012, those board members “breached their fiduciary duty” to prevent the alleged abuses by Gee, though it notes that the current leadership neither admits nor denies the allegations.
The agreement requires school officials to report budgetary and enrollment information to Coakley’s office. And starting last week, it required the school to begin valuing its assets and seeking possible recipients of its charitable assets “in anticipation of a possible dissolution.’’
Gee has not given up on education. According to Florida corporate records, Gee formed Delta Point Education LLC on Dec. 24, 2012. Delta Point is the corporate entity for his new school, American Meridian University, on Biscayne Boulevard in Miami.
Unlike the Falmouth school, Gee’s new venture is a for-profit venture. But its phone number is the same mobile phone that Gee had in Falmouth.Walter V. Robinson can be reached at firstname.lastname@example.org.
Correction: An earlier version of this story incorrectly stated the number of students and employees at Tufts University.