By Dan McCue
Staff Writer

Litigation and damage awards that could have threatened to close Charleston Southern University led to a proposed $3.9 million settlement between the 43-year-old educational institution and the receiver overseeing the Al Parish case.

CSU has agreed to pay the money to settle claims that it effectively aided the disgraced economist and professor in an investment scheme that defrauded more than 500 investors of more than $90 million.

The proposed settlement agreement, which was filed in federal court Tuesday in Charleston, also requires CSU to waive its right to collect any of the $8.4 million it lost through Parish’s handling of its money until all other investors recoup at least 18% of their losses.

“Basically, what we’ve agreed to is that they won’t be entitled to any repayment of their losses until other investors get theirs — up to the agreed-upon 18 percent,” said attorney J. David Dantzler, who is working with the receiver and helped negotiate the settlement.

Dantzler put the potential value of that waived repayment at $1.5 million.

In return, Judge David C. Norton has been asked to permanently enjoin the future filing or continued prosecution of any third-party lawsuits lodged against CSU in relation to Al Parish’s investment-related activities or his employment by the university. Aggrieved investors have already filed at least two civil actions against CSU in the S.C. Court of Common Pleas related to the matter.

Norton will consider the proposed settlement during a hearing set for 2 p.m. Feb. 25 at the federal courthouse on Meeting Street.

Although the university itself, members of its administration and professors are among those who lost money in Parish’s investment schemes, the receiver contends that CSU and members of its administration had “access to information not generally available to others who invested” with the one-time economist.

As a result, the receiver said the university could have faced damage awards far beyond its ability to pay.

Such a closure would result in a discontinuance of the education of 2,300 students and the loss of 400 faculty, staff and coaching jobs, the court documents said.

Even if the settlement is approved, the school may be struggling with the legacy of the Parish case for some time. Court documents said that in addition to the $8.4 million Charleston Southern lost with Parish, the case has caused certain donors and prospective donors to withdraw or reduce critical financial support to the university.

Dantzler emphasized that the receiver views the administrators of CSU as “true believers” who thought Parish had their best interests at heart when he accepted their investment dollars.

“The problem for them is that because there was an employment relationship between Parish and CSU, claims could be asserted against them based on how they supervised him,” Dantzler said.

“The other key concern from Charleston Southern’s standpoint is that it could be claimed that its public embrace of Parish as an expert economist gave investors comfort and assurance about his abilities and his integrity,” Dantzler said. “Certainly, some investors could claim that their role in that regard was important to many of their decisions.”

Dantzler said there was no reason to think CSU actually played an active role in Parish’s wrongdoing.

According to court documents, the $3.9 million payment will be comprised of $3.75 million from the university’s insurance policy — a sum representing 93% of its current insurance coverage — and $160,000 directly from the university itself, representing 10% of its cash reserves.

In addition, the university must provide the receiver with an executed and stamped “filed” dismissal of its lawsuit against Parish after his arrest last April.

Dantzler said the $3.9 million from CSU, money that will ultimately be paid to other investors, is a significant addition to the receivership. At present, he said, the receiver is holding about $2 million in cash stemming from sales of Parish’s assets.

“There are still a lot of assets and real property to sell and other avenues for recovery still out there,” Dantzler said. “That said, it’s unlikely any investor is ever going to see a substantial amount of money returned when all is said and done.”