As director of the Alabama Ethics Commission, Tom Albritton is the state’s policeman for conflicts of interest and ethical breaches that can arise throughout all levels of government, but having a private charitable trust he helps oversee pay more than $100,000 for his kids’ college tuition is raising questions about his own principles.
Albritton is one of three trustees who run the Mabel Amos Memorial Fund — a trust created within the will of its namesake, who was Alabama’s first female secretary of state and also served as recording secretary for six governors. When she died in 1999 — at the age of 99 — her last will and testament decreed the formation of a trust designed to hand out scholarships to students of “above average” intelligence, among other criteria.
Her will and the formation of the trust was handled by Albritton’s father’s Andalusia law firm, Albrittons, Givhan, Clifton & Alverson in 1992, and it stipulated that two members of the firm would serve as board members for the trust, along with a representative from Union Bank, which merged with Regions Bank in 1995. Albritton and his law partner Rick Clifton were chosen from the firm, and John Bell was Regions’ representative selected to sit on the board.
The Mabel Amos Memorial Fund didn’t come out of the blocks with much momentum. According to its 2002 990 — the earliest IRS filing available for the nonprofit trust — the fund had less than $500,000 total and could only distribute a maximum of $19,111. The board handed out even less, offering three scholarships that together totaled just $8,336. The board members did not receive any compensation, and Regions’ Bank Trust Department was paid $4,354 for administering the trust.
Things drifted along in much the same way for the next eight years. By 2010, the total fair market value of all fund assets was $519,430 and it handed out four scholarships worth $16,302. Regions was paid $7,426 for spending five hours a week on the administration of the fund — a rate of $28.56 an hour — according to that year’s 990. To that point, from 2002 to 2010, the fund had doled out $181,519 in scholarships and paid Regions $51,628, averaging $5,736 a year at $22.06 per hour.
By 2011, though, the value of all assets of the Mabel Amos Memorial Fund totaled more than $4.1 million. Oil was discovered on land Mabel Amos had owned in Conecuh County and suddenly the trust bearing her name was awash in cash.
Rick Fletcher is a Canadian who flew down to Conecuh County after meeting a man in Toronto who convinced him of the unrealized oil and gas potential in a flyspeck on the map called Little Cedar Creek. Fletcher visited, liked what he saw and rolled the dice, using cash he’d scraped together working in the Canadian petroleum industry.
“I didn’t have much money at the time,” he said of his first well drilled in 2010. “We drilled to 12,600 feet and were supposed to hit it and went past it and — nothing. I was sick to my stomach. I thought I’d wasted all the money I’d just made.”
Fletcher said an hour later, though, he got the call that would change his life.
“When we completed it, it shot oil to the surface, literally shot oil to the surface. It was like ‘The Beverly Hillbillies.’ It was unbelievable, probably some of the best crude in the whole USA,” he said.
That well — known as Amos 36-3 — was on land leased from the Mabel Amos Memorial Fund. To date, Fletcher says it has produced $70 million to $80 million worth of oil and gas, and has the potential for another $20 million. Even after 10 years, it still produces 100 barrels a day, he said, along with millions of cubic feet of natural gas.
The Amos 36-3 well certainly isn’t alone in terms of oil production in Conecuh County. The area saw a spike in petroleum production in the early 2000s, but Fletcher said by the time he came to Alabama in 2010, many people thought things were played out. He recalled a phone conversation where other oilmen on the line didn’t realize he was listening and started ridiculing the Canadian’s decision to drill on the Amos property, which was a few miles from where the county’s most productive wells had flourished.
Fletcher said he has no real connection to the Mabel Amos Memorial Fund other than leasing its land through Regions Bank. He did say it was a shame Amos had no heirs because the family missed out on getting rich from the oil strike, but added that only having to deal with the bank was one of the things that made that particular lease appealing. Some land in that area is very difficult to obtain rights to because numerous people own it, making negotiations tough.
“The problem with that land is that it’s fragmented off. We had 160 heirs on one of those pieces of land,” he said.
Fletcher Petroleum is now based in Fairhope, and Fletcher credits his success with that first well — Amos 36-3 — as providing the underpinnings for the company to expand into several states. Fletcher couldn’t recall the exact percentage the trust is paid in royalties, but said it’s fairly standard across the industry. He did estimate that at one point the trust was probably getting more than $150,000 a month, and believes there’s more to come.
“That well is probably still going to get another 15 to 20 years of checks. It’s now being flooded with water pushing more oil up from down below. We estimate another 15 to 20 years of life in that well. It’s actually been getting better since we’ve been flooding it. The unit is getting more oil,” he said.
Flush with cash
As the gusher came in, funds began to flow into the Mabel Amos Memorial Fund in ways its board members never expected. And that immediately changed one way money had been spent in the past.
The 2011 990 filing shows Regions Bank was the most immediate beneficiary of the trust’s new wealth. The bank went from being paid $7,426 for five hours of work per week the year before, to $92,736 for the same 260 hours of work on behalf of the trust. Based upon those numbers, Regions’ per-hour rate skyrocketed to $356.68 an hour in 2011, from $28.56 an hour in 2010.
Scholarship distributions didn’t follow suit that first year after oil was discovered, though, with just $21,794 handed out for five scholarships. The trust’s newfound wealth started being reflected more in its scholarship distributions in 2012, though, with $145,834 handed out. That was made up of eight scholarships to individuals and three $25,000 payouts to Lurleen B. Wallace Community College, the University of Alabama and Troy University Foundation, listed as “general support.”
The payments to Regions also went up dramatically that year, to $178,049, still for that same five hours a week work. That drove the hourly management rate up to $684.
In 2013, as the trust grew even larger, scholarship distributions hit $214,000 to 17 individuals, as well as the University of Alabama and the Auburn University Foundation. Among those 17 individual distributions was a $15,000 scholarship for Martha H. Albritton, Tom’s daughter.
The trust began reporting things very differently in 2014, no longer listing individual scholarship recipients’ names on the 990, just their schools. That makes it difficult to determine who received scholarships or how long some recipients continued getting them, but the $15,000 distribution to the University of Texas carried beside it a notation that said “Scholarship for Board Member Daughter.”
Albritton was confirmed by the State Senate as executive director of the Alabama Ethics Commission in March 2015, and that same year, two of his children received $15,000 scholarships to the University of Texas from the trust, according to 990 records. Overall, scholarships to Albritton’s children totaled $105,000 between 2014 and 2018, which is the last year for which the trust’s 990s are available, so it is possible there was more scholarship money distributed to them.
While the parts of Mabel Amos’s will that established the trust appear to give great latitude to its three trustees in terms of making expenditures and selecting scholarship recipients, it does contain very strict language against “self-dealing” by trustees.
“The trustee shall not engage in any act of self-dealing as defined in section 4941(d), and shall not make any taxable expenditures as defined in section 5489,” it reads.
The Internal Revenue Service Section 4941(d) description of self-dealing would appear to prohibit a trust from paying tuition or other expenses for a trustee’s child or children, as that would directly benefit the trustee, referred to in the will as a “disqualified person.” It reads as follows:
“(1) In general for purposes of this section, the term “self-dealing” means any direct or indirect — (A) sale or exchange, or leasing, of property between a private foundation and a disqualified person; (B) lending of money or other extension of credit between a private foundation and a disqualified person; (C) furnishing of goods, services or facilities between a private foundation and a disqualified person; (D) payment of compensation (or payment or reimbursement of expenses) by a private foundation to a disqualified person; (E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a private foundation; and (F) agreement by a private foundation to make any payment of money or other property to a government official (as defined in section 4946(c)), other than an agreement to employ such individual for any period after the termination of his government service if such individual is terminating his government service within a 90-day period.”
However, Albritton says the prohibitions against self-dealing weren’t broken because he didn’t actually cast a vote for his children’s school to be paid for by the trust. He says his decision not to vote for his kids’ scholarships essentially insulates him from any wrongdoing.
“Regarding my kids’ scholarships, there’s no restriction within the trust for who can get it. Where my kids are concerned, I didn’t participate in that decision. It was made by one of the other trustees and a Regions representative, who at the time was John Bell,” Albritton explained.
He also said the vote to distribute scholarship money for his children’s education was made before he was appointed to the Ethics Commission.
“There’s nothing wrong with it. And certainly, any decision that was made to benefit my kids was before I got hired to do this job,” he said.
Albritton also said it is his belief the self-dealing prohibition was specifically about the trustees being paid a fee for being on the board, not about scholarships. Asked why he bothered to abstain from the vote at all then, Albritton explained that he didn’t want to create an “issue.”
“Don’t forget that at the time the decision was made about my kids, I was still in private practice. At that time, however, I just didn’t see the point in creating an issue where there wasn’t one by putting myself out there with a vote,” he said. “I still tell people in similar circumstances, if they don’t have to vote then don’t because you can never control what someone’s inference will be from your vote, and most people are not going to take the time to investigate whether it’s allowed or not [as it is here]. They’ll just presume you can’t vote on matters like that, so I didn’t.”
Asked if any other family members of his or the other trustees were granted scholarships, Albritton said he didn’t know, but also claimed he had been involved with the trust for seven years before Mabel Amos’s death would have created it.
“I can’t answer that question. My kids did. We’ve been doing that, again, since ’92. I can’t hazard a guess,” he said.
Clifton, who in the past has been a law partner of Albritton’s and who currently serves as president and CEO of the Covington County Economic Development Commission, said based upon their academic accomplishments, Albritton’s children were certainly qualified to receive scholarships from the trust and by not voting, Albritton avoided any potential conflicts of interest. He also said any complaints about the situation were probably from someone with “an axe to grind.”
Asked what he envisions as the long-term destiny of the Mabel Amos Memorial Fund, though, Clifton seemed to suggest the trust’s main focus is helping the underprivileged.
“We want to grow the fund as big as we can so we can help poor kids as long as we can. When we started, we did hardly any. We weren’t even sure we could continue for four years. We tried to build the fund up. You scramble the eggs, don’t kill the goose,” he said.
Like so many institutions of higher education, the University of Alabama is looking at its history and the backgrounds of people who are memorialized by having buildings and scholarships named in their honor. That’s how Richard Fording stumbled upon the Mabel Amos Scholarship that was being awarded each year in the Department of Political Science.
Fording, who is the Marilyn Williams Elmore and John Durr Elmore Endowed Professor in that department, said a colleague told him the department had a scholarship named after Amos. Well, sort of.
“We had it on our website as Amos Mabel Sanders, so we had it backwards — it’s supposed to be Mabel Sanders Amos, and she was the first female secretary of state in Alabama,” Fording said.
He looked her up and noted that she had been the first female secretary of state, and the personal secretary to six governors, but also that her time as secretary of state coincided with Gov. George Wallace’s attempts to thwart integration.
“I looked her up and I noticed that the time period when she was elected and served coincided with a period of Alabama history that is not one that we can be real proud of when it comes to voting rights, and, of course, the secretary of state is in charge of the implementation of election laws in this state and would have been in charge of making sure that the state followed federal laws,” he said.
In fact, Fording found Amos had actually been named in and lost a voting rights case that went to the U.S. Supreme Court and found her guilty of violating the 14th and 15th Amendments to the U.S. Constitution in regards to her refusal to certify more than 100 candidates for the National Democratic Party of Alabama in 1968. He began to question whether it is a good practice to offer a scholarship in her name.
“In some ways, I thought it’s almost like having a scholarship named after George Wallace,” Fording said.
Fording decided to do more research — particularly into the Mabel Amos Memorial Fund, the entity that had provided funds for the scholarship at UA. He had hoped perhaps the work of the fund would provide a counterbalance to Amos’s time in office. But after looking at the 990 statements, Fording was left with more apprehension.
First, he found no evidence the trust was doing anything to target and help the African American community in Alabama, having donated just $500 to a Historically Black College or University — Tuskegee University. He also noticed Regions Bank had received what he considered an inordinately large amount of money for managing the fund — more than $1 million since its inception. But the third strike was the scholarships for Albritton’s children.
“The last thing, the one that’s most surprising and troubling to me, was the fact that in the tax returns they list not only the names of the scholarship awardees, but also if they have some relationship with the board members,” Fording said. “So it turns out one of the board members, I discovered, their two children had received a total of $105,000 through 2018 to attend the University of Texas. That board member was Tom Albritton, the director of our State Ethics Commission.”
Fording said the department is still in the process of trying to decide whether to continue awarding the scholarship. They gave it out this year, but have suspended the annual $1,000 award until they can decide how to proceed.
As a political science professor, Fording says Albritton’s claim that not voting to award his children scholarships absolves him from an ethical breach doesn’t pass the “smell test.” Particularly as an official charged with enforcing ethical standards across the state, Fording believes it undermines his credibility.
“I know how it looks to me. I just assumed that has to be some type of ethics violation, and I can tell you I’ve shared this information with probably about 10 or 15 different people, many of them faculty at UA, and the reaction is always the same. People are stunned, and they are disgusted by it. Those are the two reactions everyone has had that I’ve shared this information with,” he said.
Fording also said that from a political and ethical standpoint, he would have expected Albritton to at least discontinue taking the scholarships once he was appointed to run the Ethics Commission.
“In my opinion, I would have to assume it doesn’t matter what your job is. It’s not ethical, in my opinion, for a board member to be profiting from the foundation that they’re serving. I think that’s pretty clear,” Fording said. “I think the fact that he continued to do this while he was running the State Ethics Commission just further makes it kind of sleazy looking, to be perfectly honest. You would think somebody, even if they could rationalize it, taking on the top leadership role in the state on ethics, would see fit to stop that practice just to set a good example.”
Raley Wiggins is a partner with Red Oak Legal PC and an active member and past chair of the Elder Law Section of the Alabama State Bar and is also a member of the National Academy of Elder Law Attorneys (NAELA). He was recommended by the Alabama State Bar to speak about the legal requirements that come with running a public trust. Lagniappe spoke to him in generalities without revealing the specific people or trust involved in this story.
“The general guiding rule of any trustee is that they are a fiduciary and a fiduciary is a special relationship in the law that requires people to treat the trust property with kid gloves. I usually summarize it by telling people you should treat the trust property better than you would treat your own money,” he explained. “Most of the issues regarding trustees is whether the trustee has breached that fiduciary duty. On the one hand, if you stole from the trust that’s clearly a breach of the fiduciary duty. And then whether something is a breach of fiduciary duty depends on the facts of the case and how the trust is drafted and what the evidence would show. It’s not impossible that a trust could be drafted to explicitly allow this.”
Wiggins said if a trustee had voted to award his children scholarships it would be a clear violation of self-dealing laws, but even abstaining from such a vote doesn’t make it OK.
“I would say his excuse that he abstained from the vote does not really pass the sniff test. Whether or not there’s an express provision in the trust or an express provision in the Alabama uniform trust code that addresses it, probably not, but if he were my client and asked me should he do this, based on what you told me, I’d probably say, ‘No, of course, you shouldn’t do this because it smacks of self-dealing and breeching your fiduciary duties,’” Wiggins said.
While the fact the trustees are attorneys doesn’t necessarily mean they should be held to a higher standard, Wiggins said, the “special skills” an accountant or attorney possesses would play into any evaluation of whether a breach of fiduciary duties has occurred.
“Yes, if you’ve got three lawyers on there, I would say, unless they’re total knuckleheads, then probably they felt that a fair reading of the document that they felt was defensible was to say, ‘Well, you know this permits me to abstain and by abstaining I’ve not engaged in the approval or denial.’ A strict reading of the instrument might support that argument, but on the one hand, there’s an argument you can drum up, but you tend to need to imagine yourself explaining your argument to the judge and decide whether or not that sounds like a good idea. I wouldn’t want to have to explain that,” Wiggins said.
Between 2002 and 2018, the Mabel Amos Memorial Fund distributed $2,185,639 in individual scholarships and donations to universities and colleges. Nearly 5 percent of that went to pay for Albritton’s children’s tuition.
Since the reporting changed in 2014, it is impossible to determine who the trust is supporting, but prior to those changes, the trust also gave out $72,878 to Megan Carmak — described as Mabel Amos’s great-grandniece — over 11 years. Clifton wasn’t sure all of that was for school, but said she was awarded the money because they thought it’s what Mabel would want.
During that same 16 years, Regions Bank was paid $1,022,448, an amount equal to 47 percent of the scholarships it has distributed. Working for the trust 260 hours a year means Regions averaged $245.78 per hour during that time. Neither Albritton nor Clifton could say what the current value of the Mabel Amos Memorial Fund is, but it’s 2018 990 listed total value at just over $9 million.
John Bell retired a few years ago and Regions’ new representative on the trust is Drew McNeese. McNeese did not return multiple attempts to reach him for this story.
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