Plenty of money was generated at Gerry Spence’s Trial Lawyers College last weekend at an auction of Spence memorabilia. A used leather jacket of Spence’s, replete with a hole in the pocket, went for more than $10,000. A roll-top desk went for $3,000.There were photos, books and art work. I left midway through the auction and already for $38,000 had been generated. All proceeds went to the college, we are told.
But what does that mean?
The Trial Lawyer’s College is a 501c(3) tax-exempt organization. Its mission is the education of trial lawyers. The facility sits on the land of what was once a former cattle ranch owned by Spence. The vast bulk of the land is now a wildlife preserve. But the buildings and the grounds surrounding it belong to someone. Who?
The land and buildings are apparently owned by the Spence Foundation. IRS records reflect that the land had a so-called book value of $2.7 million in 2007; the buildings and improvements had a book value of almost $1.5 million. Gerry Spence and his son are co-trustees; so is the brand new president of the Trial Lawyers College.
In 2007, the most recent year for which reports are available, the Spence Foundation received rents of $242,580. During that same year, the foundation paid out about $233,000 in contributions made to the Trial Lawyers College. Query: Did the college pay the foundation rent and then receive the funds back as contributions? It is hard to tell from the IRS Form 990s submitted by both entities: The college does not carry a line item reflecting the $233,000 contribution; neither does the college carry a line item reflecting rent paid.
The Trial Lawyers College leases the ranch from the Spence Foundation. Under the terms of the lease, the college pays for all of the ranch’s upkeep costs. Any improvements done to the ranch become property of the foundation when and if the lease is not renewed. During the past 18 months, more than $200,000 of improvements have apparently been done at the facility, all paid for by the college, but belonging to the foundation. Were indpendent contractors hired to do the work? If the foundation does not renew the lease, it enjoys a windfall. Isn’t that self-dealing?
The boards of the college and the foundation are interlocking. Several years ago Senator Chuck Grassley of Iowa raised questions about shenanigans engaged in by the wealthy. Grassley cited Spence and the college as an example. Nothing came of Grassley’s fulminations, but, at about that time, Spence named one of the Trial Lawyers College’s star students to the board of the family foundation. This past weekend that same student, Jude Basile, was named president of the college. Recently, Spence’s wife, Imaging, a non-lawyer, was named to the board of the Trial Lawyers College. Incest anyone?
There has been a quiet blood-letting on the board of the Trial Lawyers College for the past several years. Garvin Isaacs and Charles Abourezk, two lawyers with national reputations long before they stepped foot on the ranch, are no longer present. John Nolte, one of the nation’s leading psychodramatists, has also departed. There are rumblings that all these departures were due in part to disagreements with how the various boards managing the property counted beans. Earlier this year, the college’s executive director of nine years, Joanne Garcia Colson left, reportedly with a fat severance package.
The current board of the Trial Lawyers College is chock full of people who’ve drank the Kool Aid, and decided it is good, very good. One lawyer boasts that his firm is comprised of nothing but graduates of the college. It almost seems as if folks are required to draft a testimonial pledge before taking a seat at the council table. There’s a secret oath, too: "Lemme be a lemming" repeated three times in rapid succession.
The college is hoping to build a library in Spence’s honor at the ranch at an estimated cost of some $2 million. The library will apparently be property of the foundation. Do donors know this? Do they care? Why not a library at a public institution, such as the University of Wyoming's School of Law?
Both the Spence Foundation and the Trial Lawyers College are well managed. In 2007, the foundation listed assets and a fund balance of $4.2 million, but cash on hand of just $15,000; the college ended the year with savings and temporary cash investments of $1.8 million. It looks suspicious, like one entity spread across two sets of books.
These numbers and the relationship between the foundation and college startled me. Interlocking boards. The same accounting firm handling both sets of books. The new president of the college serving on the board of the family foundation. Independent voices driven from the board. This combined with the fact that Spence and his wife maintain a private dwelling on the ranch create the suspicion that the corporate veils separating these entities are transparent; sitting behind these veils is one very satisfied man.
Imagine holding a garage sale of castaways and using the money generated to put a roof over your head. Imagine further that’s all tax free. Imagine, if you will, that it was all legal. The Wizard of Oz should be Lilliputian green with envy.
Spence is a great lawyer. He can cast stones at corporations and big government with the best of them. But wealth and power corrupt individuals, too. The ancients knew this, and warned against plutocracy. It saddens me to think of Spence as a plutocrat. I hope I have misread these tax documents and their meaning.