HATTIESBURG — The decision of a University of Southern Mississippi (USM) Research Foundation-owned company to purchase $860,000 of another company’s stock in 2008 was hardly ordinary, according to USM officials.
“It is not usual and had not been done before,” USM spokeswoman Jana Bryant told the Hattiesburg American.
The company — Pinion Properties, LLC, formed by the foundation to manage the old Garden Park Hospital in Gulfport — ended up losing more than $800,000 in the transaction.
Now Pinion Properties wants its money back. And State Auditor Stacey Pickering is investigating the transaction.
A complaint, brought by Pinion Properties April 22 in Forrest County Chancery Court, alleges that the company’s managing agent, Dr. Richard Hadden, a former USM Miss employee, purchased $860,000 in stock — 245,500 shares — from a company called Saone Corp. — owned by him and his wife, Helene, in May 2008.
That purchase violated the Mississippi Limited Liability Company Act, the complaint alleges, and that “there was no authority to purchase Saone stock.”
Former provost Jay Grimes, serving as Pinion chairman of the board at the time, signed a subscription agreement for Pinion to purchase the stock. The purchase occurred just three days after the Haddens formed Saone.
Grimes said he had not seen the litigation and could not comment.
Grimes also served on the USM Research Foundation six-member board. President Martha Saunders appointed an entirely new board in December to comply with new state College Board policy.
Three months after the purchase, Pinion sold its shares back to Saone for $38,671 — a 96 percent loss. The lawsuit alleges that funds from the purchase were used for the exclusive benefit of the Haddens.
The lawsuit also alleges that Richard Hadden executed a service agreement in Nov. 2008 that obligated Pinion to pay him $260,000 annually for consulting services that were “nearly identical” to ones for which Hadden was already receiving a salary from USM.
Richard Hadden’s annual USM salary was $150,000, according to Bryant. His employment ended in January.
Pinion Properties is the only limited liability company owned by the USM Foundation. It is seeking damages resulting from both the $860,000 payment and the $260,000 service agreement, along with accounting fees and tax liabilities and penalties.
Richard Hadden, 56, was hired in 2003 as a director of strategic venture development, working under Angie Dvorak, then-vice president of research and economic development.
Helene Hadden, a pediatric pulmonary transplant specialist, was hired as a visiting research associate in July 2008. Her annual salary was $44,000 and her employment ended in March.
Attempts to contact the Haddens were unsuccessful.
According to a USM press release at the time, one of Richard Hadden’s primary jobs was to improve health services for veterans along the Gulf Coast.
His background before being at USM featured a mix of university and entrepreneurial experience. He was a senior research scientist at the University of Mississippi where he also gained his medical degree. His private sector experience includes founding or co-founding several startup companies ranging the fields of speech recognition to genetic food testing.
USM began an inquiry into the previous board’s actions in December, which include possible state College Board violations. Officials have briefed the state College Board, the state auditor’s office, the state attorney general’s office and the Mississippi Ethics Commission over the last two months. College board spokeswoman Leah Rupp Smith said the board could not discuss the matter because of potential litigation by the state auditor.