DSU Foundation – Dustin Monke

BUILDING PROBLEMS: DSU Housing Complex Sits Empty as Neighbors Voice Concerns About Parking, Future Use

A four-story building meant to provide off-campus housing to Dickinson State University students is sitting empty this semester, and neighborhood residents are trying to keep it that way.

Blue Hawk Square, located two blocks south of the university on West Villard Street, became another casualty of the DSU Foundation’s dissolution in June when Dacotah Bank acquired the property from a deed in lieu of foreclosure.

Now, the bank is working with DSU and the city to get students back in the 44-unit apartment building as early as the spring semester.

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First International Bank Takes Ownership of Hawks Point

Kelly Peterson assured residents of Hawks Point on Tuesday that “the cloud is off” the assisted living facility on Dickinson State University’s campus as First International Bank and Trust officially took ownership of the property.

Peterson, the bank’s president of the western North Dakota region, told around 50 residents and staff that its foreclosure on the property closed at midnight Tuesday, ending a 60-day redemption period without payment from past ownership group Dickinson Investments LLC.

“There’s no more foreclosure. There’s no more worries about judgements or liens. There’s no more worry about getting kicked out,” he said. “The bank is taking care of it and going to continue to take care of it.”

Peterson assured residents that rents will not increase and that most of Hawks Point’s management in staying in place — save for one person, Jim Ozbun, who’s stepping down as Hawks Point’s interim executive director.

The bank will take over executive management of the facility as it begins searching for a full-time executive director. Day-to-day operations will stay in the hands of current managers and directors.

“I hope to be able to step down as of the first of September and go back into retirement,” said Ozbun, who lives in one of Hawks Point’s cottages.

Ozbun, who was the interim president at DSU before taking over at Hawks Point, has been a key player at DSU as it continues to recover from its foundation being forced into receivership by North Dakota Attorney General Wayne Stenehjem in October 2014.

Though Dickinson Investments owned and operated Hawks Point, all its loans were guaranteed by the DSU Foundation. In September 2015, Stenehjem called for the foundation to be dissolved, calling it insolvent.

First International holds nearly $5 million in debt on Hawks Point and secured its second mortgage position in late June during a sheriff’s sale of the facility. The bank submitted a winning bid of $4.5 million and was credited up to the amount it held in debt.

Dacotah Bank, the initial lender to the property, is the holder of the first mortgage position and is owed around $11 million. First International CEO Steve Stenehjem told The Press in June that the bank wants to sell Hawks Point “free and clear” of any liens, and said it didn’t have a timetable set for the acquisition of Dacotah Bank’s mortgage.

Peterson said Tuesday that First International has received no offers to buy Hawks Point but it’s going to listen to anyone who comes forward, as the bank has no long-term intentions of owning the facility.

“We have been contacted by a couple of groups, but at this point, I think they’re just being nosy and trying to figure out what’s going on,” Peterson said.

Peterson said the bank also wants DSU to continue its affiliation with Hawks Point by holding classes at the facility and having its students continue to work there.

Jenn Quigley, the environmental services director at Hawks Point, said the atmosphere at the assisted living facility was positive Tuesday and that there was a “sigh of relief” among residents “that this chapter of Hawks Point is over.”

“I’m personally pretty excited about it,” she said. “We’ve had some bigger meetings like this, where we’ve been able to address things.”

‘Critical’ Witness in DSU Foundation Case to Plead Fifth Amendment

A key witness in the state’s case against the Dickinson State University Foundation is invoking his Fifth Amendment right by refusing to testify. Parrell Grossman, attorney with the North Dakota Attorney General’s Office told Southwest District Judge William Herauf.

Grossman, representing the state Thursday during a request for summary judgement hearing, said the “very critical” witness “has a lot of key information” and could incriminate himself through testimony. However, he did not name him.

The announcement caught Judge Herauf off guard, and he expressed surprise at the news.

“He knows more about anything that went on here than anyone else,” Grossman added. “He’s certainly entitled to do that to the extent that what he might say could result in criminal charges.”

Grossman added there are other witnesses beyond the man invoking the Fifth Amendment who have also given the state “some resistance” in request for testimony.

The announcement came after Herauf denied a motion for summary judgement requested by First International Bank and Trust of Watford City, an intervener in the case, regarding the validity and priority of debts owed to it by the DSU Foundation.

Herauf’s denial pushed all further arguments in the case to a scheduled two-day hearing Oct. 31 and Nov. 1, though Jon Brakke — the attorney for First International Bank and Trust — expressed concern. Grossman agreed that it wouldn’t be enough time for Herauf to sufficiently hear the entire case and that it could require more than a week.

The judge agreed and said the hearings will stretch out as long as they need to.

Herauf said he has found the case against the DSU Foundation to be entirely unique in North Dakota case law, as there are no true precedents.

“I’ve spent some sleepless nights on this and I’ve spent many hours reading the statutes,” Herauf said.

Herauf said while he wants the case to have an amicable conclusion in which both the defendants, plaintiffs and intervening parties can all reach reasonable outcomes, he’s doubtful that’ll happen.

“One side or the other is not going to be happy with how this comes out. That’s a concern I have,” he said.

He also expressed concern for the DSU Foundation donors, many of whose money cannot be accounted for by either the state-appointed receiver or Brady Martz accountants, saying they trusted their money to the foundation without any real ability to protect themselves.

“Then the DSU Foundation did a whole bunch of stuff that didn’t work out … and now we have this problem.”

The $3.8 million question: As the DSU Foundation heads toward dissolution, how will the remainder of the Biesiot Activities Center’s loan be paid?

Fans sit in the stands during Dickinson Trinity’s football game against Kindred on Friday afternoon at the Henry Biesiot Activities Center in Dickinson. The DSU Foundation, which had been paying the loans on the stadium, is headed toward dissolution after being in fi nancial receivership for nine months. Soon, Southwest District Judge William Herauf will likley be the one to decide how the remaining loan of $3.8 million on the stadium will be paid if the foundation cannot.

A Dickinson judge will decide who takes control of the Henry Biesiot Activities Center’s outstanding loan payments when the Dickinson State University Foundation enters dissolution proceedings in Southwest District Court.

The foundation has more than $3.8 million left to pay on the stadium and events center on DSU’s campus and recently defaulted on its most recent semi-annual loan obligation by paying just 38 percent of the required amount.

Sean Smith, the attorney appointed last December as the foundation’s financial receiver, said he can’t say how or if the foundation has the funds to pay off the BAC’s outstanding loans.

“That’ll all be up to the judge to decide,” Smith said. “There are statutory priorities, and I don’t know what’s going to happen so I can’t comment on those. But ultimately it’ll be up to the judge, the facts and circumstances that are in front of him.”

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Editorial: DSU Foundation paying for mess it created

When rumors began to circulate about financial problems at the Dickinson State University Foundation, our reporting on the subject was unpopular with many university and foundation supporters.

We were asked by readers why we didn’t support the university and were told to stop picking on the foundation.

But, the more we reported, the more the foundation’s issues began to peel away and the quieter our critics became.

Now, we’re at the point where there seems to be little left to save.

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