Liberty University is suing former president Jerry Falwell Jr. for millions of dollars, accusing him of withholding damaging personal information from school officials while negotiating a lucrative employment agreement for himself, among other allegations.
The civil suit was filed Thursday in the Lynchburg Circuit Court in Virginia, and alleges breach of contract and fiduciary duty as well as statutory conspiracy. It is seeking $10 million in compensatory damages, which could potentially be tripled under state law, in addition to punitive damages and the return of phones, computers and other property belonging to the school.
In a 74-page complaint, Liberty offered three motivations behind the lawsuit: to recover university property, redress breaches of various fiduciary duties during Falwell's tenure and recover damages for violations of Virginia's conspiracy statute.
In a statement to NPR, Falwell denounced the lawsuit as "yet another attempt to defame me and discredit my record."
"Throughout all my years at the University, where we built a multi-billion-dollar enterprise that reaches Christian's worldwide, I always abided by the requirements that applied to everyone on the University staff," he added. "This lawsuit is full of lies and half truths, and I assure you that I will defend myself against it with conviction."
A Liberty spokesperson said, "The University's only word on the subject is the lawsuit itself."
It is the latest chapter in a scandal-fueled saga that saw Falwell resign from his post last August over allegations of sexual behavior that violated the school's honor code.
Falwell, 58, had taken an indefinite leave of absence after facing widespread criticism for posting, then deleting, a racy photo on Instagram. Reports then emerged that a family friend — since identified as Giancarlo Granda — had an affair with Falwell's wife Becki and for years extorted the family for money.
Lawyers wrote in the complaint that many of their allegations were backed up by statements Falwell made to the Washington Examiner in August and in the short-lived defamation suit he filed against the university in October.
In 2012, according to those statements, Becki Falwell and Granda — then a 20-year-old hotel employee in Miami — began an affair that Falwell knew about and which lasted on-and-off for two years.
When Becki Falwell broke things off, Granda reportedly threatened to use their conduct to embarrass both the Falwells and the university, with the complaint noting that "there is little doubt" he maintains "a cache of material harmful to the Falwells" such as intimate photographs and recorded communications.
"Falwell Jr. and Granda both knew that matters of infidelity, immodesty and acceptance of a loose lifestyle would stand in stark contrast to the conduct expected of leaders at Liberty," the complaint reads. "Granda had amassed considerable leverage over the Falwells, and, accordingly, they worked to keep Granda pacified and quiet."
The Falwells reportedly spent five years working to appease Granda, such as by bringing him on family trips to Florida and Washington, D.C. The university alleges that Falwell "chose personal protection" over his duties to the university by withholding the extortion from Liberty leaders.
Also during this time, Falwell was attracting controversy for his initial endorsement and continued support of former President Donald Trump, a move that many deemed inappropriate for the leader of a conservative evangelical Christian university.
Falwell's employment contract at Liberty was due to expire in 2019, at which point the complaint says he was wracked with "constant anxiety" and planning to cut Granda off completely at great personal risk. Seeking financial protection from any potential fallout, the university said he "began to fashion a well-resourced exit strategy."
"To be sure, Falwell Jr. knew that family photos taken in nice places would not contain Granda forever," it added.
According to the complaint, Falwell allegedly saw negotiations as an opportunity to increase his personal profit while also relaxing severance policies that would make it easier for him to part with the university for non-material actions — he reportedly planned to emphasize the attacks he had faced over his engagement with presidential politics as justification.
In doing so, the university said he knowingly withheld information that would have altered the nature of those negotiations.
"Had Liberty's Executive Committee known in 2018 or 2019 that Granda was attempting to extort Falwell Jr., and thus planning to damage Liberty, and had it known the full circumstances of Granda's extortion of Falwell Jr., then the Executive Committee would have refrained from entering into the [2019 agreement]," the complaint reads.
Ultimately, the university said Falwell had negotiated for himself a significant annual raise, arranged for severance of two years' pay if he resigned for "Good Reason" or was terminated without cause and established a plan for retirement benefits that spanned his entire career but had not been part of any previous agreement.
The complaint goes on to detail how, after he cut Granda off in June 2019, Falwell began drinking to manage his stress.
Over the course of the next year, he repeatedly found himself in the spotlight and under scrutiny — such as when he briefly posted the racy social media photo and then called into a local radio station to offer an explanation with noticeably slurred speech — which precipitated his leave of absence and eventual resignation.
The complaint also alleges that Falwell's failure to disclose and address his issues with alcohol led him to "actions and courses of conduct detrimental to the spiritual mission of Liberty."
All of this falls under the allegation of breach of fiduciary duty, which the university says hurt its enrollment, donor base, faculty and reputation. It is seeking $10 million in damages, plus pre- and post-judgment interest, and punitive damages at the statutory limit of $350,000.
Liberty is also alleging breach of contract, saying Falwell consistently refused to use his university-provided email address for business communications but did require the university to provide him with devices such as computers and phones.
Falwell has allegedly failed to return this property — both the devices and the confidential university information they contain — and the university estimates damages at $250,000.
The third count, statutory conspiracy, involves a Virginia code that prohibits two or more people from "agreeing to injure another in their trade or business."
As the complaint explains, Liberty's business is providing higher education through a Christian perspective, with high moral standards being a part of the educational experience.
Falwell, Becki Falwell and Granda "acted in concert under a preconceived plan" to conceal the allegations and extortion from Liberty trustees, the complaint says, alleging they acted purposefully and without legal justification.
For this charge, it seeks $10 million in damages, which could be tripled under state law, and the statutory limit of $350,000 in punitive damages "plus any other damages provable at trial."
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