Banbury Fund

How are plaintiffs funding this lawsuit against Princeton?

The Robertson descendants are funding their lawsuit and a related publicity campaign through the Banbury Fund, a private charitable foundation controlled by the Robertson family.

The Banbury Fund’s 990-PF information returns show that, through calendar year 2006 (the most recent publicly available return), the Fund had disbursed nearly $23 million for this litigation, including expenditures for “legal services,” “accounting” and “public relations.” These expenditures were in addition to salary payments to plaintiff William Robertson and stipends for spouses of certain Robertson family members. If plaintiffs have continued their pace of expenditure, the total amount of Banbury Fund resources spent on the litigation to date may exceed $28 million.

Between the end of 2001 and the end of 2006, Banbury Fund assets fell from almost $49 million to approximately $20 million. By drawing down the private foundation assets of the Banbury Fund, the Robertson family members have been able to finance a “scorched earth” approach to evidence gathering in this case, which has dramatically escalated the cost to Princeton of defending the lawsuit and dramatically reduced the amount of money that otherwise could have been expended for charitable grants by the Banbury Fund.

For an overview of a number of the key issues in this dispute, see Robertson v. Princeton -- Perspective and Context, prepared by Victoria B. Bjorklund. Ms. Bjorklund is a member of the law firm Simpson Thacher & Bartlett LLP, which, together with Lowenstein Sandler PC, serves as litigation counsel to Princeton University and the individual defendants in the Robertson litigation.

Is funding the litigation through a private charitable foundation appropriate?

Since the Banbury Fund’s resources are supposed to be supporting charitable purposes, the Robertson family’s use of the Banbury Fund to support their legal and public relations expenses associated with this litigation, including their personal claims, raises serious questions about what might happen to Robertson Foundation assets if, as plaintiffs demand in this litigation, the Robertson Foundation were converted into a private foundation under the Robertson family’s control.

The use of the Fund in this manner highlights issues in self-dealing that have become leading policy concerns for the IRS and for the congressional tax-writing committees. IRS regulations state that “if a private foundation makes a grant or other payment which satisfies the legal obligation of a disqualified person, such grant or payment shall ordinarily constitute an act of self-dealing.”  In this situation, William Robertson and other members of the Robertson family are disqualified persons because they are descendants of Mrs. Robertson, the donor and, therefore, the Banbury Fund may not fund their litigation expenses. (The only exception that might apply is one for “incidental or tenuous benefits,” which could not reasonably apply to expenditures that likely will extend well past $25 million.)