IDT sues college over deal
Friday, December 28, 2007
By HUGH R. MORLEY
STAFF WRITER
The Record
IDT Corp. has accused Touro University, the nation's largest Jewish university, of failing to pay the Newark-based telecommunications company $38 million from the sale of a joint venture.
A suit filed by IDT in U.S. District Court in Newark claims the company is owed 20 percent of the $190 million the university's parent received in the sale of its Internet-based venture, TUI, in October.
Touro University said last month that by the end of 2009, it plans to open a private medical school that will be affiliated with Hackensack University Medical Center. The university is looking to put the college at one of two Bergen County locations: a Hasbrouck Heights building or the home of now-bankrupt Pascack Valley Hospital in Westwood.
The suit, which was filed Dec. 21, claims IDT helped put the online venture together for Touro College, the university's parent company, at the suggestion of founder Bernard Lander.
The suit says Lander outlined the project to Howard Jonas, the telecom company's founder, and suggested that "given IDT's success in emerging technical fields and markets, IDT would be able to provide the necessary assistance in establishing the online university."
Jonas agreed, in return for 20 percent of the venture, and Lander accepted the deal, the suit says. It claims Jonas sought no distribution of the profits of the venture so that they could be reinvested in the online university.
And when Touro College established the venture -- known as Touro University International -- in 1998, "much of the hardware and equipment was purchased by IDT," the suit says.
Around that time, Jonas joined the boards of Touro University and Touro College, which he left in 2004, the suit says.
The online venture was sold in November to the Boston-based venture-capital firm Summit Partners for $190 million, the suit says.
Yet Touro College has refused to pay IDT any proceeds from the sale, the suit says. It says that since 2004 the institution has "contended" that IDT did not own a stake in the venture and was entitled to none of the profits if it was sold. Officials of Touro College could not be reached for comment.
The suit accuses Touro College, Touro University, TUI and Summit Partners of breach of contract and demands that Summit pay IDT 20 percent of the amount Summit paid for TUI.
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