T. Boone Pickens, Okla. State strike out again

For a second time, Oklahoma State University and T. Boone Pickens find themselves on the losing end of a court battle to recoup $33 million in a failed fundraising plan that involved insurance policies covering the lives of donors.
A decision last Monday by Associate District Judge Stephen R. Kistler in the District Court of Payne County in Stillwater, Okla., ends more than two years of litigation in state court. The former corporate raider, along with OSU’s Cowboy Athletics Inc., had sued Lincoln National Life Insurance Co. and insurance agents James Glenn Turner Jr., John Ridings Lee and Larry Keith Anders.
This suit mirrors a federal court fight Mr. Pickens and OSU’s athletic fund had against the same parties in the U.S. District Court for the Northern District of Texas in Dallas.
The March 9 judgment in that case had a similar outcome, allowing Lincoln National to keep $33 million in premiums and requiring Cowboy Athletics to cover costs incurred by the carrier and the other defendants.
Cowboy Athletics and Mr. Pickens filed an appeal against the federal court’s decision in April.
“The judge’s ruling speaks for itself, and we look forward to putting this matter behind us,” said Michael Arcaro, a spokesman for Lincoln.
The state and federal tussle centers on a program called The Gift of a Lifetime, which was developed in 2005 by Mr. Pickens, representatives of Cowboy Athletics and the three agents. The program purported to create as much as $350 million in future income through the purchase of life insurance policies on 27 OSU alumni donors ages 65 to 85.
OSU funded the annual $16 million premium payment using a premium finance loan. That loan was to be repaid using death benefits from the policies, with any excess going toward building Cowboy Athletics’ income stream.
In 2007, the program ran into problems when the coverage on the 27 donors started. Then, Mr. Lee had faxed the policy delivery receipts to J. Mike Holder, president of the athletic fund, to confirm that Cowboy Athletics had received the policies. Though Mr. Holder signed and returned the receipts, he never read them.
Indeed, the fund didn’t have the policies in 2007 and didn’t receive them until 2009, after university president Burns Hargis asked an OSU alumnus in the insurance industry to analyze the contracts. By then, the fund had paid $33.3 million in premiums.
After several requests to the brokers, Cowboy Athletics received the policies on March 24, 2009, and asked on April 3 to cancel the coverage under the 10-day-free look period and to have its money returned.
In the federal courts, Judge Jorge A. Solis ruled in favor of the brokers and Lincoln, knocking down claims by Cowboy Athletics that the agents had misrepresented the information on the policies’ net return. He also found that even though the fund didn’t have the physical life insurance policies, the charity and Lincoln had treated the contracts as being valid from the time they were issued in 2007.
In state court, Mr. Kistler noted that the federal judgment dismissed with prejudice identical claims asserted by Mr. Pickens and Cowboy Athletics, which bars the plaintiffs from filing suit on the same claim.
Attorney Joel W. Reese, representing Mr. Lee, said the outcome was a “very significant and positive development” in the case. “We’re pleased with the result,” said Roy Stacy, who represents Mr. Turner. “We always believed the claims were without merit.”
“Our clients view the Oklahoma state court’s order of dismissal, on the heels of the Dallas federal court’s recent entry of judgment in their favor, as conclusive proof of the lack of merit in Cowboy Athletics’ and T. Boone Pickens’ claims against them,” added William A. Brewer III, partner at Bickel & Brewer and lead counsel for Mr. Anders and his insurance agency, Summit Alliance Financial. “Our clients believe those claims never should have been asserted.
A call to Gary Shutt, spokesman for OSU, was not immediately returned. Attorney Willie Baker, who represents OSU and Mr. Pickens, had no comment.