Lawsuit filed over handling of Amos Trust Scholarships
Published 7:30 am Monday, August 8, 2022
A lawsuit filed in Montgomery County on July 9 alleges that Regions Bank and a former chief trust officer have improperly charged the Mabel Amos Memorial Trust exorbitant fees after oil was discovered on land in the trust and that scholarship money was provided to children of Trust board members.
The trust was established by former Alabama Secretary of State and Conecuh County native Mabel (Sanders) Amos. The trust was established when Amos filed her will with Union Bank, which has since merged with Regions Bank. Part of its intent was to provide students with scholarships to attend state colleges and universities.
The lawsuit against Regions was brought by family members of Amos. The lawsuit also names John Bell, a former Senior Trust Officer at Regions Montgomery who handled the Mable Amos Memorial Fund, and also includes as defendants, “Parties X, Y and Z, that will be made party defendants when additional facts are discovered.”
According to the documents filed in the Montgomery Circuit Court, Amos filed her will and the Trust was prepared by an Andalusia legal firm. Two members of that firm were appointed as trustees, along with a third who was a trust officer at Union Bank in Montgomery. “During this time,” the lawsuit states, “Union Bank and the trustees fulfilled their fiduciary duties and properly handled the trust.”
Even after Union Bank was acquired by Regions, the bank charged a “reasonable amount” for managing the trust. But, the plaintiffs claim that changed when oil was discovered on the Amos property.
“(Regions) charged a reasonable amount when there were only gas wells on the property. However, when oil was discovered … Regions started charging the Trust outrageous fees for basically the same amount of work involved. In addition, these large fees were allowed by the trustees in order for Regions to allow the two outside attorneys to illegally ‘self-deal’ in an illegal quid pro quo arrangement,” the suit states.
The suit claims the Trust’s board allowed Regions to charge large fees and in return Regions allowed the board to utilize the trust for personal gain.
Among the board member benefits cited in the lawsuit were providing funds to “educate their own children at out-of-state expensive colleges and were not in financial need.”
The discovery of oil on the Amos property took the Trust to a new level in terms of the amount of funds available. The lawsuit states that in 2002 the fund was about $500,000. In 2010, the fund assets increased to $519,000 and four scholarships were awarded totaling $16,302. Regions was paid $7,000 for the administration of the fund that year.
In 2011, when oil was discovered on the Amos property in Conecuh County, the value of assets totaled over $4.1 million.
The lawsuit claims that with the newfound wealth, scholarship distributions swelled from $21,794 the first year after oil was discovered to $145,834 distributed in 2012. That amount included funds for eight scholarships and three $25,000 payouts to Lurleen B. Wallace Community College, the University of Alabama and the Troy University Foundation.
The amount provided through scholarships continued to increase in 2013 when 17 individuals received a total of $214,000. Contributions were also made to the University of Alabama and Auburn University foundations, which the family said was not the intent of Amos.
“It was the intent of Amos to give money and scholarships to needy colleges and students and the small colleges were left out of the distributions. Among those 17 individual distributions in 2013 was thousands of dollars of scholarships for children of two attorney trustees, who did not attend colleges in Alabama. Also, a former partner in the law firm that prepared the trust, who is now a Circuit Court Judge in Conecuh County, also received scholarship funds for one of his children to attend an out-of-state college,” according to the lawsuit.
The suit states that one of the plaintiffs’ children received from the trust about $72,000 in scholarship money over an 11-year period from elementary school through. In comparison, the plaintiffs claim children of trustees received three times that amount in only one year.
Beginning in 2014, the trustees no longer listed individual scholarship recipients by name on the 990 tax form, rather documenting the school the recipient would attend. “That makes it difficult to determine who received scholarships,” the plaintiffs claim in the suit.
The lawsuit aims to remove Regions as the Trustee Bank; require Regions to replace all distributions to the Trustees’ children and any other disqualified recipients; and appoint one of the plaintiff family members as one of the three Trustees.
Regions Bank said in a statement that its fees related to the Trust are justified.
“Regions’ fee is less than one percent of the market value of the assets under management, and that is consistent with our standard rates and competitive with industry rates,” stated Jennifer Elmore, vice president of corporate media and public relations.
The lawsuit was filed by Megan Carmack and Leigh Gulley Manning on behalf of their children. The plaintiffs are represented by Thomas T. Gallion III of the firm Gallion and Gallion in Montgomery.
Mabel Amos served as Alabama’s Secretary of State from 1967 to 1975.