Tennessee Board of Regents will pay $570,000 for MTSU to settle a bankruptcy case with the late Robert W. McLean, the trustee reported Thursday.
McLean, 59, of Murfreesboro pledged $1.5 million to MTSU to purchase 54 Steinway pianos and $1 million for athletics and academics. The money came from an illegal Ponzi scheme where McLean spent $49 million of investors’ funds. He took his own life Sept. 25, the day he was supposed to meet with investors.
Bankruptcy trustee Robert Waldschmidt, who was appointed to handle the involuntary bankruptcy, and attorneys for the Regents and MTSU are expected to present their proposed settlement July 22 to the Bankruptcy Court for approval. Attorneys negotiated six months.
Waldschmidt filed a lawsuit in May against MTSU and 54 other investors to recoup some of the money they received from investing with McLean.
He filed a motion in Bankruptcy Court Thursday seeking to settle McLean’s bankruptcy with the $570,000 in behalf of MTSU, the MTSU Foundation and the Tennessee Board of Regents.
“The trustee claimed that MTSU received $943,000 in gifts from McLean during the four years before the filing of the petition in bankruptcy,” Waldschmidt reported. “This proposed settlement not only resolves the trustee’s claims against MTSU for McLean’s donation of funds for the music and athletic department, but also allows the trustee to retain the proceeds from one life insurance policy (where MTSU was the listed beneficiary), while MTSU retains the proceeds from another policy.”
Under the settlement, MTSU will not have to pay to recoup more losses and Waldschmidt will not hold MTSU liable for any payments made by McLean for the tuition or expenses of students who attended MTSU. MTSU will withdraw its claim for a $30,000 life insurance claim but will be allowed to keep another life insurance undisclosed benefit paid to MTSU Foundation by MetLife.
“Representatives of MTSU and the state, while formally denying liability in the matter, expressed a deep concern about the adverse effects that McLean’s activities have had on the residents of Murfreesboro, many of whom are alumni of MTSU,” Waldschmidt stated.
Joe Bales, MTSU's vice president for development and univeristy relations, said in a prepared statement MTSU officials were pleased to reach the settlement.
"Through the years, Mr. McLean made numerous donations for the benefit of the university, including the music and athletic departments," Bales stated. "Unfortunately, many people, including MTSU alumni, friends of the university and members of our community were hurt in this situation so we have worked diligently to arrive at a satisfactory resolution of the issues raised by the trustee. All parties have agreed that this compromise is fair for all concerned and will eliminate the need for costly legal proceedings."
In a motion, Waldschmidt stated MTSU disputes liability for McLean.
The trustee approved the settlement because a lawsuit would add considerable expenses to creditors and would be in the creditors’ best interest.