A Texas millionaire has sued Georgetown University Law Center, his alma mater, in an attempt to recover $7.5 million in donations after the school balked at naming a fitness center after him after he was found civilly liable for insider trading.
Scott K. Ginsburg filed suit on March 4 in U.S. District Court for the Northern District of Texas, alleging that the law school reneged on a naming rights agreement reached in 2000.
A Georgetown spokeswoman, Rachel Pugh, declines to respond to his allegation, saying the university would not comment on pending litigation.
Trey Cox, a partner in Dallas’ Lynn Tillotson Pinker & Cox, represents Ginsburg. In an email response to a request for comment, Cox writes that the suit is a step Ginsburg "took only after Georgetown left him no alternative."
In February, Cox notes, Ginsburg and his wife Gina "met in person in D.C. with president [John J.] DeGioia of Georgetown." At that meeting, Cox writes, DeGioia said "he could not recall anything" about the issue of the school’s commitment to name a building the Scott K. Ginsburg Recreation Center.
"Since the meeting where President DeGioia professed to recall no details, neither president DeGioia nor Georgetown has followed up with Mr. Ginsburg — either directly or through counsel," Cox writes. "Mr. Ginsburg’s position is simple: Georgetown should honor the terms of the written donation agreement signed by the parties or return the money. Georgetown needs to make this right."
Ginsburg made his fortune in the radio business during the 1990s and since has owned a variety of businesses in the Dallas area, including a car dealership and a restaurant. He originally pledged $5 million to build the athletic facility, and the law school publicized the gift, according to the suit. He later pledged an additional $11 million to the school, at least $2.5 million of which he says he paid.
As Georgetown officials were traveling to Texas to woo Ginsburg, the U.S. Securities and Exchange Commission had opened an insider-trading investigation against him. Ginsburg was found civilly liable in 2004 and ordered to pay a $1 million civil penalty for telling his family members that a Virginia radio operation was up for sale (his company was a bidder). His brother and father profited by purchasing shares in the soon-to-be sold company.
Georgetown officials expressed no qualms about the investigation while discussing the donation, the suit claims. "Indeed, Georgetown never expressed any concern about Ginsburg’s issue with the SEC during their initial pursuit of him and during the preparation of the Agreement," the complaint reads.
In 2002, after a jury found against Ginsburg (he lost his appeal in 2004), then-Georgetown law dean Judith Areen asked him to relinquish the naming rights with the understanding that the fitness center would be named for him should the verdict be overturned, according to the suit. She allegedly cited the potential for bad publicity. Ginsburg did not agree, and Georgetown officials continued to visit him in Texas to solicit donations, the suit claims. Ginsburg alleges that Georgetown continued to lead him to believe the fitness center would be named after him.
"The possibility of Georgetown finally honoring its obligations was hinted at, implied, suggested, and postponed by its representatives’ comments, but always kept alive," the compliant reads.
The project opened in 2004 and is called the Georgetown University Law Center Sports & Fitness Facility. Ginsburg claims breach of contract and fraudulent inducement.
Ginsburg has made publicly recognized contributions to a number of Dallas institutions, including the Dallas Symphony Orchestra and the Dallas Arboretum & Botanical Gardens. He or his wife served on the DSO board of governors from 1999 through 2011, according to dates confirmed by DSO spokesman Chris Shull. A 2010 press release by the DSO credited Ginsburg’s car dealership in Plano, Boardwalk Audi, as a co-sponsor of the season and stated that Audi drivers would get complimentary parking for the season. At the Dallas Arboretum, visitors can find a plaque in the garden’s main entryway describing it as the Scott K. Ginsburg Family Plaza. Wendy Rentz, a spokeswoman from the Arboretum, did not return a call seeking comment.
Cox writes in a follow-up email that Ginsburg "has been very generous to the arts and educational institutions. He has made numerous other charitable contributions, including the Dallas Symphony and a recent $1.5m gift to name the Ginsburg Family Great Lawn for the new Clyde Warren Park in the Arts District. Never before has he been treated like this or had an experience like this."
Georgetown is not the first law school to get tripped up by accepting money from donors who ran afoul of the law. The University of California at Los Angeles School of Law suffered some backlash in 2011 when it accepted $10 million from Lowell Milken to establish an institute for business law and policy. Milken and his brother, Michael, came under investigation during the 1980s for their role in the junk bond market when they worked for now-defunct investment bank Drexel Burnham Lambert. In 1989, Michael Milken took a plea bargain and served time in prison for securities and reporting violations. As part of that deal, prosecutors dropped numerous charges against Lowell Milken.
Editor’s note: Texas Lawyer reporter Miriam Rozen contributed to this article.