A South Carolina businessman who had invested $1-million in the Florida College of Osteopathic Medicine has sued the school for money he says it owes him.
Businessman Frank Swygert wants the school to pay him at least $650,000 to cover five years of remaining interest payments that were agreed to when he made his $1-million loan almost two years ago, said Swygert's attorney, Justin Joseph of Tarpon Springs.
John Perrin, the college's president, did not have much to say Wednesday about this latest blow to the beleaguered organization he took over in March. It has no students or classrooms and no financing to generate them.
"He's filed the suit, and we'll reply, and it'll run its course," he said.
This latest setback can be added to a list of troubles for the college, which has struggled to hold on to its national accreditation.
Joseph, who filed the lawsuit June 14, said Swygert had been willing to avoid a lawsuit and settle for less with the college and Dr. Constantine Chambers, a Clearwater hair transplant expert who also was named in the suit.
Since Swygert has gotten back about $960,000 of his original investment, he had been willing to settle the remaining $40,000 debt and forgo future interest payments if the college paid him $140,000 by March 1, Joseph said.
That $1-million initially had been needed by the college to satisfy a requirement by the Chicago-based American Osteopathic Association, a national group that accredits osteopathic medical colleges.
"They needed a million dollars for the accreditation, and they couldn't find anyone," Joseph said. "He (Swygert) said he would do it."
Joseph said the college later told Swygert that it wanted to settle his note because it was hindering the school's chances of a finding a bigger lender.
But Swygert's March deadline came and went, and in April, he tacked on a 15 percent interest rate and agreed to give the struggling school until June 1 to settle up.
"Come June 1, we don't hear from them, they don't pay us, and they don't call us," Joseph said.
That is why Joseph filed Swygert's lawsuit, which contends there was a breach of contract and fraud and asks for the interest payments spelled out in the initial deal.
"I'd like to sue for the whole thing," Joseph said.
Chambers, who entered into the agreements along with the college, could not be reached Wednesday for comment.
In his lawsuit, Swygert says college officials knew they could not pay him the money but said they would.
"The misrepresentation of the defendants was intentional, fraudulent, or so grossly negligent as to be tantamount to fraud," the lawsuit reads.
The school once boasted it would have students starting classes this fall and build a campus on land leased from the city, just east of Helen Ellis Memorial Hospital.
But other than its rented offices on Huey Avenue, nothing has materialized because the school has been unable to find a lender.
Perrin has said the school needs between $13-million and $16.5-million to build its campus, operate the first two years and pay off about $2-million in debt.
About a week ago, Perrin said he was hopeful a lender could be found this summer so classes could start in the fall of next year.