close
close

Here's what you should know about a stalled $237 million donation to Florida A&M

Lee Hall stands on the hill on the campus of Florida A&M University in Tallahassee, Fla., on Thursday, June 6, 2024. Gregory Gerami, a 30-year-old who described himself as “the youngest African-American hemp producer in Texas,” had promised a $237 million donation to FAMU, but not everything was as it seemed, and the donation is now in limbo. Gerami claims everything will work out, but FAMU is not the only small university that has jumped on his big-donation proposals only to find they have made no difference. (AP Photo/Mark Wallheiser)

NEW YORK (AP) — In early May, Florida A&M University announced a stunning $237 million donation. The 30-year-old donor described himself as the “youngest African-American hemp producer in Texas.” The donation, which would have been the largest private donation to a historically black college or university, was announced at graduation to great applause.

Days later, everything started to fall apart.

Following public backlash over the apparent inadequacy of the audit of Gregory Gerami's donation, FAMU has suspended the donation. The university's trustees approved an outside investigation into the six-month process, a grants officer resigned from her senior post, and state officials are now overseeing the independent investigation.

Gerami said the questions about his donation were an unnecessary “game of whack-a-mole” and stressed that everything would be fine in the end.

Here’s what is known and what to expect next:

What went wrong?

University officials said they began meeting with Gerami virtually after he contacted Florida A&M's development office about a donation last fall.

After months of talks, it was agreed that his donation would be in the form of 14 million shares of his young industrial hemp company, Batterson Farms Corp.

Despite a “comprehensive review” of Gerami's background that raised doubts about his legitimacy, university officials moved forward after involving FAMU President Larry Robinson. The university's Board of Trustees and Board of Trustees were excluded from the talks.

At the end of April, the then Vice President of the School for University Support signed a confidentiality agreement on behalf of the Foundation’s Board of Directors.

However, the subsequent announcement in May came before an independent assessment of the value of the private shares had been completed.

Typically, companies obtain what's known as a 409A valuation from an independent third party before issuing shares, but Gerami didn't do that. While it's not illegal, a failure to do so is a red flag, corporate finance experts say.

FAMU representatives later admitted that the financial services company they hired could return with a significantly lower valuation.

It is also questionable whether the share transfer between Gerami and FAMU ever took place.

A spokesperson for Carta, the exchange management company that allegedly conducted the exchange, only confirmed that the platform informed Gerami on May 14 that his contract had been terminated. The spokesperson declined to comment on FAMU's claim that it had a Carta account and Gerami's claim that the company had sent documentation confirming the transfer.

A donor with an unknown company

Donations of securities to colleges and universities are not uncommon, but higher education fundraisers say these gifts typically come from wealthy shareholders of prestigious public companies.

Gerami founded Batterson Farms in 2021 with the goal of becoming a leading hemp plastics manufacturer.

Texas agricultural records show that the company has a license to grow hemp, but there is little evidence that this is happening.

The company's website is sparsely featured, and affiliate links to purchase HempWood products were broken when an Associated Press reporter visited the site in late May and early June. A former board member told the AP that the company doesn't grow hemp anywhere.

Gerami denied those claims, calling the information outdated. He declined to provide AP with details about the company's contracts, revenue and staffing levels, and would not confirm whether Batterson Farms itself produces hemp.

Other schools were also approached

Florida A&M is not the first school to receive an offer from Gerami.

In 2023, W. Anthony Neal, then senior vice president for institutional advancement at Wiley University in Texas, said he had spoken to Gerami at least seven times about donating $1 million to $2 million for new campus facilities. Neal told the AP that communication broke off after he began the “normal vetting process” and sought an in-person meeting to verify Gerami's legitimacy. Neal added that “donors sometimes just back out” and that “doesn't mean anything bad.”

Coastal Carolina University in 2020 withdrew from an anonymous $95 million donation that The Sun News said was made by Gerami. The university said the donor “failed to meet an initial expectation of the agreement.”

Gerami told AP that in recent years he has “considered” up to 15 colleges and universities to provide funding to his company as part of his strategy to establish research partnerships.

What's next?

Florida A&M is awaiting the results of an independent investigation into the debacle by an outside law firm. Trustees approved the independent investigation last month, which has now included the inspector general of the Florida State University System.

Both Gerami and the university are also awaiting a separate evaluation of his planned stock donation. Gerami told AP he expects his findings to be presented within the month.

However, the delay – whether temporary or otherwise – may already have had an impact on FAMU’s plans.

Days after the donation was announced, the university withdrew a request to a local economic development board for $15 million to improve FAMU's football stadium, according to documents obtained by AP and first reported by The Tallahassee Democrat.

While the university declined to comment on the withdrawal, the gift agreement includes a one-time allocation of $24 million from Gerami's donation for athletic facilities.

Over the next decade, millions of euros will also be spent annually to finance scholarships, the nursing school and a student incubator.

___

Associated Press coverage of philanthropy and nonprofits is supported by AP's collaboration with The Conversation US, which is funded by the Lilly Endowment Inc. This content is solely the responsibility of AP. For all of AP's philanthropy coverage, visit

Anna Harden

Learn More →

Leave a Reply

Your email address will not be published. Required fields are marked *