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Delaware AG Takes Aim at Squandered Funds

Delaware's attorney general sued the Nemours Foundation claiming that it is squandering money intended to benefit needy children and the elderly in his state.

JACKSONVILLE, Fla. (CN) - Delaware's attorney general sued the Nemours Foundation claiming that it is squandering money intended to benefit needy children and the elderly in his state.

The foundation is a charitable organization established in the will of Alfred I. duPont to provide health care services to children and vulnerable older adults, with a focus on Delaware residents.

But in a complaint filed in the federal court in Jacksonville, Fla. on Jan. 13, Delaware Attorney General Matt Deen says the foundation is not carrying out the dying wish of the multi-millionaire industrialist and philanthropist.

Dupont died in 1935, and his will established the Alfred I. DuPont Testamentary Trust, whose sole charitable beneficiary is the defendant foundation, the owner and operator of medical facilities in Delaware, Florida, New Jersey, Maryland, and Pennsylvania.

According to the trust's website, it is currently valued at over $5 billion and over the past eight decades it has distributed over $2.7 billion to Nemours.

In his complaint, Deen argues that much of that money has been pumped into Nemours' flailing operations in Florida and elsewhere, and that even the money still earmarked for Delaware is being spread thin by the foundation's interpreting "Delaware" to mean the Delaware Valley, therefore making its operations in New Jersey and Pennsylvania possible.

Deen says he believes the foundation has spent more than the 50 percent of its trust distributions over the past decade on healthcare facilities outside of Delaware, which breaches a 1980 settlement agreement in the decades-long dispute between the state and the foundation's board of trustees.

“Importantly, Mr. duPont directed in his will that the needs of Delaware residents be the focus of Nemours," the complaint says. "He directed that Nemours be maintained 'as a charitable institution for the care and treatment of crippled children, but not of incurables, or the care of old men or old women, and particularly old couples, first consideration, in each instance, being given to beneficiaries who are residents of Delaware'"

According to the complaint, duPont also directed that "the people of Delaware needing the care of such institutions shall be properly provided for before contributions are made to institution of any other state or states."

The complaint also says Nemours provided inaccurate and inconsistent financial information to his office.

“As one example, financial reports provided to the Delaware Attorney General purport to state the percentage of Trust Distributions spent on 'Delaware Operations,' however, in the past those amounts have included expenditures in the States of Pennsylvania, New Jersey, and Maryland in addition to the State of Delaware,” the complaint says.

Denn claims that based on 2015 data, the foundation spent at least $35 million less in the Delaware than it was required to under the terms of duPont's will and the later settlement.

Deen's lawsuit is the 13th a Delaware attorney general has filed against the foundation since 1971.

In 2014, a Florida judge rejected then-Delaware Attorney General Beau Biden’s effort to set aside a 2004 trust reorganization.

Deen is seeking a court order that the foundation comply with the terms of the 1980 settlement. In addition to his own office, he is represented by Akerman LLP, of Jacksonville, and  Ross Aronstam & Moritz LLP, of Wilmington, Delaware.

"Nemours just received a copy of the filings and is reviewing them now. We look forward to responding through the appropriate channels very soon," said Josh Wilson, a spokesman for Nemours' Children's Health System, in an e-mail to Courthouse News.

Categories / Government, Health

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