As trustees of shuttered Dowling College move to settle a $50 million lawsuit alleging they mismanaged the school, an alumni group that’s been working to restart the institution said it had been unaware of the agreement and plans to raise objections.
Lawyers for trustees and creditors were in federal bankruptcy court in Central Islip on Monday to alert Bankruptcy Judge Robert Grossman they had agreed to settle the suit, which alleged trustees and officials of the college breached their fiduciary duty by mismanaging the college and its finances. Dowling, swimming in $57 million in debt, lost its accreditation and in 2016 filed for bankruptcy protection before closing its doors. Outside investment groups since have purchased the Oakdale and Brookhaven campuses.
Frank Corso Jr., president of the Alumni Association of Dowling Inc., said he was surprised to discover in recent weeks that the case against the college's trustees was moving to a settlement, particularly because Dowling College Alumni Association is listed in the suit as a former business entity of the school.
“We did not receive proper notice from any party dealing with this matter,” he said. “To list us as a party to the action — how are they doing that when we are not represented by them? Something’s not right here.”
Corso said he was consulting with other members of the association and its attorneys to prepare a letter to the court and the bankruptcy trustee.
"We’re the Alumni Association and we know nothing about what they’re doing,” he said of the lawsuit's pending settlement. “We were kept in the dark.” He said he spoke with the bankruptcy court trustee Wednesday, but didn't resolve the matter.
“We will do whatever we have do to protect the association,” Corso said.
A representative for the firm Silverman Acampora, of Jericho, which is representing creditors, confirmed the settlement was moving forward, but declined to comment on it. Creditors are expected to receive notice in coming weeks of a pool of funds, including the pending settlement, to pay off a portion of long-standing debts owed by the college, a person with knowledge of the case said. The Alumni Association isn’t a plaintiff in the case, this person said.
Howard Kleinberg, a lawyer for trustees at the Meyer Suozzi law firm in Garden City, declined to discuss financial terms of the settlement, other than to say it will absolve defendants of any liability tied to the school’s collapse. He said he was unaware of objections being raised by the alumni group.
“An economic settlement was agreed upon without any admission of liability for anything alleged in the complaint,” Kleinberg said.
Corso said the association remains convinced that “total mismanagement” by the college's board of trustees is what brought down the college. He said the group is focused on raising enough money to “reopen the college,” either at its former locations or a new one. It also has discussed using the Dowling name, though it isn’t essential, Corso said. He and other directors of the association have met with new owners of the college’s former real estate to discuss using the land, though no agreement has been reached.
The alumni group consists of former Dowling College deans, Corso said, with the support of numerous other former college graduates, sports groups, business leaders and local school superintendents. The group has been working for nearly two years to reopen the school, and Corso said he is determined to see that happen, “one way or another.”