September 9, 2019; Politico and Slate
Lately, an abundance of stories has surfaced about bad behavior linked to Jerry Falwell Jr., president of Liberty University. Some involve his wife Becki and racy photos; others involve nightclub parties, sexual remarks to staff, and a payoff to a pool attendant. However, putting aside most of the apparent moral failings of the president of a Christian college, it is the piece that involves the University and conflicts of interest that has NPQ’s attention.
Liberty University was founded in the early 1970s by Falwell’s father, Jerry Sr., a conservative televangelist and Southern Baptist preacher. The elder Falwell also founded Thomas Road Baptist, a Virginia megachurch. The University went steadily along financially for decades, revenue keeping up with expenses, right through 2007, the year Falwell Sr. died at his desk of a heart attack in May. The school has grown exponentially since then, even as other colleges struggled. Revenue went from $363 million for the fiscal year ending June 2008 to $1.1 billion for the year ending June 2017.
Growth is generally good, and an institution with over a billion in revenue and 110,000 students (with almost 90 percent online) should be regarded—by those metrics anyway—positively by its stakeholders. However, with the privilege of the nonprofit designation, a tax-exempt public charity, come the duties of transparency and tractability.
It has been reported Falwell has orchestrated business deals by Liberty University that benefit his friends, such as his personal trainer, Benjamin Crosswhite. Eight years after beginning training sessions with Falwell and his wife, Crosswhite, a Liberty alum, now owns an 18-acre sport and fitness facility on property formerly owned by the school. Falwell hired his own son Trey’s company to manage a piece of real estate, and the shopping center on it, which is owned by the University. It is reported that Falwell pushes for loans by the university to his friends. He is also said to award contracts for university work to the businesses of his friends.
A private college may not have the documented bid process that public institutions are required to have, but it is clear that individuals employed or associated in various ways with a nonprofit organization may not personally benefit from contracts executed by the organization.
It should be noted that Falwell is a lawyer, but his training is not evident in the complaints about him, which are coming from insiders at the school. There is nothing transparent about the campus-wide nondisclosure statements that even board members must sign, which— according to a message from the university’s counselor—persist after they leave the board. Politico reports that after reporters began to make more inquiries of the school, the University’s attorney emailed board members to say, “All trustees sign a confidentiality agreement that does not expire at the close of Board service.”
Sign up for our free newsletters
Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.
Falwell has responded to the Politico article, which was written by Liberty University alumnus Brandon Ambrosino, with a statement to Hill.TV on Tuesday that he has asked the FBI to investigate. He sees the article as part of a “‘criminal’ smear campaign orchestrated against him by several disgruntled former board members and employees” as part of a politically motivated “attempted coup.”
It is apparent that administrators of the University have had enough of Falwell’s leadership style and the way the school is managed. Over eight months, more than two dozen current and former officials and associates of the school president, including staff, board of trustees members, have volunteered to be interviewed regarding the way University resources are focused on real estate and projects that provide possible gains for family and friends of Falwell.
“We’re not a school; we’re a real estate hedge fund,” said a senior university official with inside knowledge of Liberty’s finances. “We’re not educating; we’re buying real estate every year and taking students’ money to do it.”
A nonprofit may not lobby or campaign, but the Wall Street Journal has reported that Donald Trump’s former attorney, Michael Cohen—a resident of federal prison in New York since May—hired an employee from the University, John Gauger, who also has a private consulting firm, to manipulate online polls to favor Trump. That may not be a strong enough tie to prove the school itself was involved in campaigning (legitimate or illegitimate), except that the Politico interviews revealed Trey Falwell joined Gauger on the trip to New York to collect payment. Trey Falwell, when not managing the shopping center for the University, is the Vice President for Support Services at the school. An Instagram post of Trey’s, which has been removed, showed $12,000 in cash spread out on a hotel bed.
There is a culture of fear at the University that any misstep will get an employee fired. There are no tenured professors, except in the law school. No one can speak to the media without Falwell’s approval, including board members. That media policy is not unique in the college world, to control what statements are made to represent an institution, but it is unusual for fear to permeate the community the way it does around the Lynchburg campus. People that live in the community, without any ties to the school, would not agree to be interviewed; they were afraid that Falwell would retaliate. A current staff member would only speak on a “burner phone,” believing their regular phone was monitored.
“Fear is probably his most powerful weapon,” a former senior university official said.
NPQ has looked at how much Liberty looks like a for-profit. Now, a forensic audit is in order to peel away the layers of contracts to friends and family. The required nonprofit transparency isn’t there, which means the trust that comes with tax-exempt privilege is absent. Liberty University’s nonprofit status should be on the block.—Marian Conway