New Mexico Military Institute sued its ousted Alumni Association this week seeking a Chaves County District Court judge to secure the group’s $5.2 million in assets.
“This case is about an unfortunate series of events arising as a result of an absolute and longstanding failure of the NMMI Alumni Association Inc. … to properly account, or account in any fashion whatsoever, for financial transactions and comply with contractual provisions to prepare, submit, and obtain approval for annual budgets that has caused (NMMI) … to terminate its relationship with the Alumni Association,” wrote Richard Olson and Parker Folse, attorneys with Hinkle, Hensley, Shanor & Martin, representing NMMI.
Association president John Phinizy announced intentions to defend against the lawsuit Thursday.
“(Superintendent Major General Jerry) Grizzle’s intentions are now very clear and very public,” wrote Phinizy in a press release. “We believed all along that (Grizzle’s) damaging, baseless claims toward the Association and his unwillingness to work with us to resolve very minor issues were rooted in a strong desire to have complete control over the $5.2 million in assets.”
NMMI’s suit asks the court to freeze all accounts held by the Alumni Association, ban the Association from representing the Institute in the future and order the transfer of the Association’s assets to an entity to manage and distribute the funds for the benefit of the Institute or its cadets.
NMMI argued in its filing that since 2009, the Association’s financial operations have been in question. Most recently, the group has failed to create or provide the most basic monthly accounting statement to show the status of its financial affairs, according to the suit.
The Association plans to defend against these and other allegations in the lawsuit, Phinizy said, and “we will make sure that the alumni and the Association membership have a fair say on what becomes of the Association in the future.”
NMMI Board of Regents ended its nearly 50-year relationship with the Association in April after giving its board 30 days to fix financial issues – a time limit the group failed to meet.
Per a memorandum of agreement between the two and after failed negotiation, NMMI locked the Association’s on-campus office shortly after.
The Association then moved forward with its plans to open an off-campus office and continued to solicit funds from alumni, Phinizy said earlier this month.
NMMI’s lawsuit asks the court to immediately freeze all Association accounts until a receiver is appointed; issue an order requiring the Association to stop using the Institute’s images, logos, name or likeness for promotion; and order the group to account to the Institute for any funds received while acting as an agent of NMMI. Once the Institute severed ties with the group as per their agreement, the group lost its ability to use the Institute’s trademarks, logos and name in connection with activities in support of NMMI, the suit claims.
According to court documents, filed Monday, NMMI officials have suspected since 2009 that the Association was not able to pay for its own expenses through membership dues and sought to fix this problem by getting an independent review called the Tardy Report.
The report, initiated that year, concluded based on statements made by board members and reviews of financial documents, proper fiscal management of the association had been lacking.
“These findings proved very troubling for the Institute as the Association was the Institute’s alumni resource and had used the Institute’s good name and offices in soliciting funds intended to benefit the Institute,” according to the lawsuit.
Most alarming was the finding that with continued losing in investment account, it became apparent that the Association may have been operating on cash transferred from an endowment fund that was chipping away at the fund’s principal monies, according to the court filing.
The $5.2 million in remaining assets are meant to be allocated to cadet scholarship, NMMI programs specific to donor requests, specific purposes like annual events, or for selling placards, flagpoles, benches or other projects.