Mega-donors who pledged $100 million to University of Chicago sue to get money back

Aamer Madhani | USA TODAY

CHICAGO — Philanthropist brothers who less than three years ago pledged $100 million to the University of Chicago to create an institute on the study of global conflict are now waging a legal battle with the university to get their money back.

Thomas and Timothy Pearson want to recoup the nearly $23 million they’ve already given the university through their family foundation, alleging the school has shown poor stewardship in its budgetary and hiring decisions, according to a federal lawsuit filed last month in the U.S. District Court of Northern Oklahoma.

The mega-donor brothers are upset the institute didn't invite their family to many of the institute’s events since they announced their donation in 2015.

“The U of C failed to deliver on the most fundamental of its obligations,” the Pearson Family Foundation alleges in the lawsuit.

The brothers, who were born in Iowa and did not attend the university, announced in 2015 that they picked the University of Chicago over at least dozen academic institutions to establish the Pearson Institute for the Study and Resolution of Global Conflicts within the university’s Harris School of Public Policy.

Thomas Pearson said at the time of the announcement that the family's choice "underscores our recognition of the university’s history of fostering an environment where rigorous inquiry is successfully applied to society’s toughest problems."

Thomas was an executive and general counsel for Alliance Holdings, a Tulsa outfit that produces and markets coal to U.S. utilities and industrial users. He's also served as executive council of Cohesive Capital Partners, a New York-based, direct private equity firm. Timothy Pearson heads an Atlanta-based marketing management consulting firm that serves Fortune 1000 clients and previously was an executive at KPMG.

The donation, at the time, was equal to the second biggest donation in the university's history. The Maroon, the university’s student-run newspaper, on Monday was the first to report that the lawsuit was filed in a federal court in Tulsa, where the brothers live.

In the philanthropic world prior to the creation of the global conflicts institution, the Pearsons perhaps had been best known for underwriting the Nobel Peace Prize Concert in Oslo.

The family foundation alleges the university “secretly” elevated to faculty director James Robinson, a political scientist and economist hired away from Harvard University, to serve as the institute’s director just days before the school faced a contractual obligation to name a director. The lawsuit also alleges Robinson “is not suited for, the 'day-to-day operations' and management role required” of the position.

They also questioned the university’s decision to hire “two junior, non-tenured professors from academic institutions that are ranked below the U of C in national academic standings” for positions funded by the family foundation grant. The two scholars came from Columbia University and New York University.

The lawsuit also alleges the U of C is in breach of the grant agreement, because the dean of the Harris School, which houses the institute, has failed to meet with the Pearson family semi-annually and keep the family apprised on the institute’s activities.

The institute held at least 24 events in 2016-17 school year, but failed to “apprise the Pearson Family” or “invite them” to at least 22 of the events, the lawsuit claims.

In a statement, the university said the lawsuit was without merit and suggested the Pearsons were violating the tradition of academic freedom with their complaints about hiring decisions.

“The university honors its grant agreements with its donors, and it did so with the Pearsons,” university spokesman Jeremy Manier said in a statement. “Further, all academic and hiring decisions are the sole purview of the university and its faculty, guided by the principle of academic freedom. The Pearsons’ complaint is without merit, and the university will vigorously defend itself against the baseless allegations.”

Thomas Pearson sued the Evanston, Ill.-based Garrett-Evangelical Theological Seminary in 2011, after becoming dissatisfied with that institution’s administration of a $1.2 million scholarship he created in honor of his parents.

A U.S. District judge in Illinois later dismissed that suit.