How Florida A&M University Got Scammed in a Likely $237 Million Tax Fraud Scheme

By: Donald V. Watkins

Copyrighted and Published on May 12, 2024

IMAGE: Florida A&M University official were duped by an apparent $237 million tax fraud scheme.

An Editorial Opinion

Florida A&M University (FAMU) thought it had hit the jackpot when The Isaac Batterson Family 7th Trust donated $237 million in Batterson Farms Corp. shares of private stock to the university last month.  The “Gift Agreement” between FAMU and the Trust was publicly announced at the university’s commencement ceremony a week ago.

A copy of the Agreement may be viewed here.

FAMU President Larry Robinson signed the Agreement for the FAMU Foundation (for the benefit of FAMU). Gregory Gerami signed the Agreement for the “Gregory Gerami Family Foundation,” which is not a named party to the Agreement.  It appears that nobody signed the Agreement for The Isaac Batterson Family 7th Trust, even though the Agreement says Gerami represents the Trust.

The entire transaction is likely a tax fraud scam (in progress) that works as follows:

1. The scammer targets a financially unsophisticated university that unwittingly aids and abets his/her tax fraud scam.

2. The scammer makes a donation of millions of shares of stock in a private company to the targeted university. 

3. The university is required to provide the donor with a completed IRS Form 8283 for “Noncash Charitable Contributions” that acknowledges its receipt of the "gift" and complies with the applicable instructions for this tax form.

4. Section B of the Form 8283 requires the donor to provide detailed information on the donated property, including: (a) the date it was acquired by the donor, (b) how it was acquired by the donor, (c) the donor’s cost or adjusted basis in the property conveyed, (d) the amount claimed for this charitable deduction, and (e) other relevant information.

5. The scammer is required to get a qualified and capable appraiser to sign the "Declaration of Appraiser" section of the Form 8283.  This declaration states as follows:

"I understand that a false or fraudulent overstatement of the property value as described in the qualified appraisal . . . . may subject me to the penalty under section 6701(a) (aiding and abetting the understatement of tax liability) . . . .".

6. Once the "Declaration of Appraisal" has been signed, the university must formally acknowledge and attest to its receipt of the noncash charitable contribution.

It is not known whether The Isaac Batterson Family 7th Trust, Gregory Gerami, and FAMU completed an IRS Form 8283 for this $237 million "gift" or whether FAMU even submitted a completed and properly signed Form to the Trust. Likewise, it is not known who, if anyone, appraised the fair market value of the "gifted" stock in Batterson Farms at $237 million for the purpose of completing the required Form 8283.

If The Isaac Batterson Family 7th Trust and/or Gregory Gerami obtained actual possession of a completed and properly signed Form 8283 from FAMU, then this tax document could provide the Trust with ostensible evidence that 14 million shares of Batterson Farms Corp. stock held by the Trust had $237 million in phantom value. 

Armed with a completed Form 8283 that is signed by FAMU, The Isaac Batterson Family 7th Trust, Batterson Farms Corp., and/or Gregory Gerami could use this IRS "gifting" document to generate, derive, facilitate, and extract tangible economic value for themselves from their ownership of the remaining shares in Batterson Farms by engaging in a variety of multimillion dollar transactions.

It is not clear who concocted this suspicious tax scheme for The Isaac Batterson Family 7th Trust, Batterson Farms Corp., and Gregory Gerami, but it almost succeeded. FAMU's gross negligence aided and abetted the scheme. Only intense media scrutiny stopped the scheme from succeeding.

It is clear that FAMU's due diligence on this $237 million "gifting" transaction was woefully inadequate. Furthermore, whoever signed the "Declaration of Appraiser" section of the Form 8283 (if it was signed) is in big trouble. It is highly unlikely that Batterson Farms Corp., could have generated anything close to $237 million in legitimate shareholder value by the time the "gift" was made to FAMU in April. After all, Batterson Farms is a small business that began farming operations in 2020 during the onset of the two-year-long COVID-19 pandemic.

Sources close to this situation expect a federal criminal tax fraud probe into this $237 million "gifting" transaction.

Finally, on September 18, 2023, the U.S. Departments of Education and Agriculture declared that FAMU was owed more than $1.9 billion by the state of Florida because of systemic underfunding over the last 30 years.  The FAMU officials who facilitated Gregory Gerami’s highly suspicious "gifting" scheme have made no effort to collect payment from the state on this legitimate $1.9 billion debt.