Cal Poly can't cover up Al Moriarty’s name on scoreboard, judge rules

The scoreboard at Alex G. Spanos Stadium sports a Moriarty Enterprises advertisement at the top.
The scoreboard at Alex G. Spanos Stadium sports a Moriarty Enterprises advertisement at the top. jjohnston@thetribunenews.com

Cal Poly cannot cover or remove convicted felon Al Moriarty’s name from the scoreboard at its football stadium, a bankruptcy judge ruled Friday.

As a result, “Moriarty Enterprises” will remain prominently displayed atop the scoreboard for Saturday’s home opener against Portland State.

Moriarty, an 81-year-old Cal Poly hall of famer, was sentenced to five years in jail earlier this week for defrauding 170 investors of millions of dollars. In 2009 — as he was running an illegal Ponzi scheme, according to prosecutors — Moriarty paid $625,000 for naming rights to the scoreboard. While Moriarty’s 53-foot-long “Moriarty Enterprises” sign was guaranteed through the lifetime of the scoreboard, Cal Poly said Moriarty’s crimes breached an implied agreement with the university.

Claiming it was “imperative that Cal Poly be able to take action immediately,” the university filed a motion requesting permission to cover the sign before the Mustangs’ home opener. But a judge for the U.S. Bankruptcy Court agreed with the trustee handling Moriarty’s bankruptcy, ruling that Cal Poly could not alter the sign without the trustee’s approval.

In a statement issued to The Tribune afterward, Cal Poly expressed disappointment in the ruling.

“We feel for those who were harmed by Mr. Moriarty’s actions,” the statement read. “We know that seeing his business’s name on our scoreboard is a fresh reminder of their pain, and we had hoped to remove the sign in time for our opening home football game Saturday. Unfortunately, the legal process prohibits the university from acting unilaterally to remove the sign.”

At issue: The value of the naming rights

After Moriarty declared bankruptcy in 2012, the naming rights were transferred to the trustee in charge of paying Moriarty’s creditors. The trustee has argued that since Moriarty used investor money to pay for the scoreboard, those investors are entitled to get that money back.

“Under bankruptcy code, when people who ultimately file bankruptcy use a creditor’s money to make donations, the donations are recovered,” said attorney James Rigby, who is representing trustee Michael P. Klein.

In July, Klein filed suit in San Luis Obispo Superior Court, seeking that money, plus 7 percent interest. Meanwhile, Cal Poly argued in legal motions that it has attempted to settle the matter. It had hoped a bankruptcy judge would allow the university to cover Moriarty’s name as settlement talks continued. But if Moriarty’s name were covered, the trustee argued, Cal Poly would be less inclined to work out a deal.

“As it stands, there is a very strong incentive for Cal Poly, its other sponsors, and alumni to purchase whatever interest the estate has in the naming rights,” Rigby’s firm wrote in a motion. “If Cal Poly is allowed to remove, cover and replace the name as they wish — that incentive is likewise removed, and the estate’s contractual rights and position have been inextricably altered.”

In its own motions, Cal Poly fired back that the trustee has not been trying enough to settle, ignoring emails from Cal Poly attorneys, effectively holding Cal Poly hostage as its home opener approached.

“Over a year has gone by, and the trustee has not been able to extort money from Cal Poly — and he never will,” read the motion, written by attorney Christopher Alston.

At the same time, Alston wrote, Cal Poly wants the association with Moriarty to be over. “Cal Poly is suffering and will continue to suffer injury if ‘Moriarty Enterprises’ remains on the scoreboard.”

On Friday, Rigby dismissed the suggestion that the trustee was trying to extort money from Cal Poly.

“Lawyers like to characterize things for judges,” he said. “The bankruptcy trustee’s job is to collect as much money as he can for the creditors.”

With the trustee now owning the name, Cal Poly can either pay the trustee an agreed amount, in which case Cal Poly would then be free to sell the naming rights to someone else. Or the university can allow the trustee to sell naming rights, though Cal Poly has a say in who can advertise on its scoreboard.

“Cal Poly will continue to pursue options for removing the sign as quickly as possible,” Cal Poly’s statement continued. “The university will also continue to work through the legal process in good faith, in an attempt to reach an agreement with Mr. Moriarty’s bankruptcy trustee regarding the scoreboard naming rights.”

But Rigby said it’s unclear what the naming rights are worth because the trustee doesn’t know the full scope of the contract.

“Anybody that’s going to put up serious money for that scoreboard has got to know what their contractual rights are,” he said. “And we’re not sure of those because of the way the deal was structured.”

In a 2008 proposal created by the Cal Poly Foundation, Moriarty’s money would not only purchase naming rights to the scoreboard but also a host of other benefits, including hundreds of tickets to Cal Poly sporting events; commercials aired during games; ads on Cal Poly sports websites; use of the president’s suite at Spanos Stadium; a feature on Moriarty in Cal Poly’s alumni magazine; and a Moriarty Enterprises courtside table at men’s and women’s basketball games.

However, it’s not clear to the trustee if that proposal, included in the court records, was the actual deal signed by the parties. A signed copy of the actual deal is not included in bankruptcy or court records.

Many of Moriarty’s investors had Cal Poly connections, and the list of those who lost money included former Cal Poly athletes and past and current professors.

What investors say about the scoreboard

Keeping a convicted financier’s name on the Cal Poly scoreboard adds insult to injury, some of Al Moriarty’s investors told The Tribune earlier this month.

“I’ve been stewing about that,” said J.M. Phillips, a Morro Bay man, who lost $225,000 investing with Moriarty. “That’s embarrassing.”

Cayucos resident Sasha Del Giorgio, who lost $50,000, said Moriarty’s name is a disgrace to the university.

“This guy stole money from Cal Poly teachers and used the Cal Poly professors’ names to get someone like me to give money to him,” she said. “The whole thing is a scam, and you’re going to keep his name up there? Come on, Cal Poly — take that down.”

Dick Mannini, a Cal Poly hall of famer like Moriarty, said Moriarty has contributed much to the university so he has no problem with the name on the scoreboard, even though he lost $25,000 investing with his one-time teammate.

“I know he hurt individuals,” Mannini said. “Those folks have a right to be angry.”

Jerald Greene, who lost $146,000, wrote a letter to the bankruptcy court, supporting Moriarty. Cal Poly has had the use of an “impressive and highly functional scoreboard for 5 years,” he wrote, adding the university could pay the trustee and find a new advertiser.

Nipomo investor Sehon Powers, who lost around $800,000, said investors won’t likely see any of the $625,000 from the scoreboard after legal fees are paid, and having Moriarty’s name on the scoreboard pales in comparison to the monetary damage he suffered.

“I don’t give a (expletive) where his name is,” Powers said.

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