Wright State Campus | Photograph by Soham Parikh | The Wright State Guardian
Wright State University (WSU) filed a civil lawsuit against the Wright State Applied Research Corporation (WSARC) in an attempt to require the corporation to return state property and funds.
“We are deeply disappointed and confused by this attempt to harm Wright State Applied Research Corporation, our employees, and the work we do for our customers,” said Gayle Rominger, chair of the WSARC Board of Directors.
Property, capital assets and funds
The university claims that WSARC may have university capital assets and has also refused the university’s demands for returning the funds invested by WSU to support the corporation.
“Through discussions that have taken place over the past several months, it has become clear that the corporation wants to walk away from responsibilities and obligations associated with Wright State,” said the university. “The university believes that the corporation may be in possession of capital assets that must be returned before the university could support the proposed separation. WSARC has also refused the university’s demands for the return of the funds invested by Wright State to support the corporation.”
In the complaint made with the Greene County Court of Common Pleas, the university says that on Dec. 15, 2019, WSARC CEO Dennis Andersh sent an email canceling the Dec. 17, 2019 board meeting. The university claims that the board met illegitimately and passed three illegitimate actions.
These actions include:
- “A Motion is made for WSARC to take the actions to modify its existing affiliation agreement with WSU and become affiliated with other universities. Such actions include, but are not limited to, transferring the current WSRI staff from being WSU employees to being WSARC employees effective 1 March 2020.”
- “With the understanding that the WSARC Board must approve all affiliation agreements, I move for the Board to authorize the WSARC CEO, in conjunction with WSARC’s Legal Counsel, to take the actions necessary to prepare WSARC to enter into Affiliation Agreements with other Ohio universities as well as other universities throughout the U.S., over the next 60 days.”
- “I move for the Board to authorize the WSARC CEO and WSARC Treasurer to establish an accounts receivable line of credit by 31 December 2019 in an amount not to exceed 90-day accounts payable or $3.5 million, whichever is smaller.”
As collateral for the loan, WSARC granted First Financial Bank a mortgage on the property. The mortgage was recorded with the Greene County Recorder on Feb. 10. A lien was also given on all assets.
“Beginning January 2020, Dennis Andersh, WSARC CEO, and I proactively met with University officials, proposed a new agreement to replace the Affiliation Agreement that was set to expire on October 23, 2020. We proposed a collaboration agreement that kept most of the language of the Affiliation Agreement but gave WSARC some modest flexibility in order to meet client and new business needs,” said Rominger.
According to Rominger, WSARC reached out to the university to begin discussions on the new agreement, but these discussions never happened.
The lawsuit
In the complaint, the university claims that these actions coming from this meeting are invalid and that WSARC deliberately excluded WSU members from the December meeting. The university also claims that it retains holding the property’s deed and $3.4 million in equipment.
Currently, the deed is in the name of WSARC. The university has asked the court to make WSU the titleholder.
WSU created WSARC as a separate but closely affiliated corporation to support the university’s research endeavors.
WSARC has been the subject of public scrutiny from its early beginnings, including when the corporation illegally paid a former consultant $1.3 million, a report by the Ohio Auditor of State shows.
The corporation has also found itself in numerous lawsuits and federal and state investigations over the past few years. Some of those investigations have resulted in the announcement of findings for recovery of state funds, and according to the university, remain outstanding even today.
“All of the issues cited by the University took place 10 years ago and were, in fact, created by the University’s own actions. And, none of the current WSARC executives or Board Directors were associated with WSARC at that time,” said Rominger.
“This legal challenge against the Wright State Applied Research Corporation — soon to be Parallax Advanced Research Corporation — is an important matter, and the university intends to vigorously advocate for and protect the interests of the university, its research partners, and taxpayers,” said the university in a press release.
WSARC says that they will “vigorously defend” their organization, decisions, employees and clients. They also say that the allegations by WSU are false.
The suit also comes after WSARC asked the Greene County Court of the Common Pleas to block records sought by the Dayton Daily News. The records include 2,757 pages of emails to and from Andersh, a WSU employee and executive director of WSRI.
The Affiliation Agreement
The relationship agreement between WSU and WSARC is set to expire on Oct. 23. The university intends to keep the Wright State Research Institute (WSRI) as a department.
In a June 19 press release, WSU announced that the institution would participate in “strategic spending reductions” while letting the WSARC agreement expire.
“We anticipate presenting a new relationship with WSARC that will have no direct financial support from the university nor will it have any of the indirect support that it currently has,” said Greg Sample, WSU executive vice president and chief operating officer at a WSU Board of Trustees meeting.
“In June, the University issued a press release confirming that the Affiliation Agreement would end on Oct. 23, 2020. To our surprise, almost four months later and only 10 days before the expiration of the agreement, the university requested that the Affiliation Agreement be extended until the end of the year,” said Rominger. “We were given the choice of mediation or threatened with a lawsuit. We, of course, agreed to mediation to resolve any outstanding issues between WSARC and the University. Extension of the agreement is not required to engage in mediation to resolve these issues or to work on a new agreement.”
The corporation says that they have always abided by the university administration’s requests but decided it was in their best interest to allow the agreement to expire on Oct. 23.
“Going forward, WSARC will remain a non-profit corporation, serving as a research and development engine for the region, Ohio, and the nation,” said the corporation. “WSARC will collaborate with academia and industry to accelerate the advancement and transition of new technologies and new products to benefit the nation, strengthen national defense to help solve some of our nation’s toughest challenges.”
