A charitable gift, a divorce, an angry ex-wife: WPI faces lawsuit over donation
Before his ex-wife discovered his offshore account in Switzerland, Bob Foisie was Worcester Polytechnic Institute’s dream donor.
He graduated in 1956 and went on to become a prosperous businessman who shared his wealth generously with his alma mater: to date, Foisie, 82, has given the school $63 million, making him its single largest benefactor.
Reflecting that munificence, his name is everywhere on campus: the Robert A. Foisie Business School, the Foisie Scholars Program, and, currently under construction, the Foisie Innovation Studio.
Now there is also the Foisie lawsuit.
This month, Foisie’s 81-year-old former wife, Janet, sued Worcester Polytech, alleging that his donations include assets he hid from her during their divorce and gave to the school after their breakup was final in 2011. Comparing his actions to criminal money laundering, she has asked a judge to stop the college from using any money it has received from him since then.
Bob Foisie has acknowledged that during his divorce he failed to disclose a $4.5 million Swiss trust, which he later transferred to Worcester Polytech. It is unclear from the lawsuit whether he intentionally concealed that money.
Whatever the case, the school has been dragged into an ugly postmarital dispute involving its biggest donor and must navigate the public relations fallout. Meanwhile, other nonprofits are wondering if Worcester Polytech’s misfortune is a cautionary tale in charitable giving, or an unforeseeable turn of events that ensnared an innocent victim.
In the opinion of Rick Cohen, a spokesman for the National Council of Nonprofits in Washington, D.C., “there’s very little a nonprofit could do to avoid being in such a situation.”
When negotiating a gift, “it can’t ask a donor, ‘Are you going through a divorce or anything that might potentially lock up these assets?’ ” he said, “because it’s very much about decorum and what’s appropriate to ask, and you don’t want to offend a potential donor or an ongoing donor.”
As a consequence, Cohen added, the Foisie lawsuit may “come down to lawyers needing to look at what’s been put in writing to know how vulnerable the school will be in this situation” and whether it must return any of the donation.
Most charitable contributions are accompanied by a so-called gift agreement that spells out its conditions, such as how the money will be used and over what time period it will be paid.
The Foisie case is “a reminder to make sure those gift agreements are airtight,” said Stacy Palmer, editor of the Chronicle of Philanthropy, “because if they’re not ironclad, there could be an issue of someone trying to claw back the money.”
Colleges occasionally have unhappy donors who want refunds, although those cases typically involve donors who feel their gifts were misused.
Princeton, for example, was sued by heirs to the A&P grocery fortune, Charles and Marie Robertson, who claimed it misspent their $35 million donation. They wanted the money used to educate students for government careers, but complained it was spent on a wider array of training. Princeton settled the case and was able to keep the bulk of the money.
Yale took the unusual step of returning a $20 million gift from Texas financier Lee Bass after he criticized the school for not using the money as directed: on a Western civilization curriculum.
But several nonprofit executives contacted by the Globe said they have never heard of a case involving a gift challenged by an ex-spouse.
Complicating matters for Worcester Polytech is the fact that the school broke ground last May on a $49 million academic facility heavily funded by Foisie and scheduled to open next year. A college spokeswoman told the Globe that construction will continue despite the lawsuit.
Worcester Polytech declined to comment on the Foisie lawsuit, filed in US District Court in Worcester, but issued a statement saying: “The Foisies have been generous donors to WPI, and hundreds of students have benefited from their philanthropy over the years. We have no knowledge of any of the improper conduct alleged in the lawsuit. We hope the Foisies are able to work out their differences.”
Janet Foisie, who lives in Long Boat Key, Fla., and also has property in Connecticut, did not return calls. Her Hartford lawyer, Megan Youngling Carannante, said she and Foisie decline to comment.
When asked about the lawsuit, a woman answering a phone number for Bob Foisie, who lives in Carson City, Nev., and also has property in Florida, said, “I’m sorry, he’s not taking any calls or making any public announcements about that.”
A first-generation college student, Foisie earned a master’s degree at Cornell after graduating from Worcester Polytech, then worked as an engineer at aerospace manufacturers Hamilton Standard Co. and Pratt & Whitney. He later became president of Hartford-based Matik North America, a distributor for European manufacturers, and owned a Swiss packaging company.
As part of their divorce, the Foisies, who were married for about 50 years, equally divided their assets. That entailed divvying up numerous properties and getting $20 million apiece in various investments.
Legal filings do not explain how Janet Foisie learned about Bob Foisie’s $4.5 million Swiss trust, which he acknowledged in an August 2016 legal proceeding. But in her suit, Janet Foisie said his “lies and omitted disclosures” resulted in her accepting a smaller settlement “than she would have agreed to had she known the truth.”
Bob Foisie transferred the trust to Worcester Polytech — which enrolls about 6,000 students and has a $480 million endowment — as part of a $40 million gift he gave to the school in 2014, its largest one-time contribution.
In her lawsuit, his ex-wife alleges that “like one laundering the proceeds of a criminal enterprise, Robert sought to dispose of the funds for a purpose of his personal preference and choosing, rather than giving it to his legitimate creditor Janet.”
Janet Foisie has asked the court to prevent Worcester Polytech from spending any of that $40 million donation until the litigation is resolved. Her lawsuit does not say whether she made that request because she believes her former husband failed to disclose additional assets as well.
Robert Waldman, a partner at the Washington, D.C., law firm Venable who leads the firm’s representation of tax-exempt organizations, called the Foisie case “really tricky.”
Most states, he said, have laws aimed at preventing people from hiding money by transferring assets. That’s intended to avoid a situation in which “someone gets divorced or goes bankrupt, creditors come knocking on his door, and he says, ‘Sorry, I gave it to charity,’ ” or, as in this case, donated it to his alma mater, Waldman explained.
If that were to happen, a judge could order the nonprofit to return the money.
But “if courts start holding innocent charities responsible for something that happens to the donor down the road, or something they didn’t know about the donor,” Waldman said, “then charities would be afraid to take the gift in the first place out of fear that it might be taken back later.”