Ohio Attorney General Dave Yost filed suit in Cuyahoga County Common Pleas Court against the former board and leaders of Notre Dame College for allegedly misusing the college’s endowment funds.
The college’s leadership voted to close Notre Dame College last year after years of declining enrollment and struggles navigating the debt it owed. The college’s last official day of operation was May 2, and the 48-acre campus in South Euclid was listed for sale not long after.
Yost’s office alleged in the suit filed Thursday that the college used approximately $2.1 million in restricted funds from its endowment “outside of the purposes designated by the respective donors.” The college owed $16 million to Bank of America, the suit reads, which is also named in the lawsuit.
“The College continues to hold restricted Endowment Funds in its financial accounts,” the suit reads. “However, those restricted funds improperly used by the College’s trustees and/or officers have not been repaid or replaced.”
Money from a “restricted” endowment fund can typically only be used for charitable purposes as outlined by donors, however, that can change if an institution notifies the Ohio AG’s office or gets a court order, Yost’s office wrote in the suit.
The suit lists all former members of the college’s board of trustees as defendants, along with several former employees, including Presidents John Smetanka and Michael Pressimone. Attempts to contact those individuals were unsuccessful Tuesday.
The suit outlines how the board of trustees’ executive committee approved a motion to use endowment funds for “institutional aid” during a December 2023 meeting, despite Smetanka informing the board in October 2023 that the college had used $2.8 million from the endowment improperly to “meet financial obligations outside of the donor restrictions,” money which would need to be returned to the endowment.
There’s never been a detailed accounting of how the restricted endowment funds were actually used by the trustees, Yost’s office alleged in the suit which argued the money that remains is at risk of being “misused.” According to the suit, the former college only has one active remaining board member.
“In consideration of potential creditor claims against the College and its assets, Plaintiff Attorney General has reason to believe that the College’s restricted Endowment Funds will be further dissipated and misused to satisfy remaining debts owed to creditors,” the suit reads. “Further, the Attorney General is concerned that remaining assets of the College which could be used toward replacing the wrongly taken Endowment Funds will be used to satisfy other claims against the College.”
The suit seeks a third-party receiver to be appointed to take control of Notre Dame's College's assets, and for all other restricted endowment funds to be returned to the attorney general's office to "redistribute for charitable purposes in a manner the Attorney General deems to be most consistent with the restricted endowment terms." In an unrelated action, Bank of America also filed suit Friday in federal court seeking for a receiver to be appointed for the property.
Two former Notre Dame employees and a South Euclid council member filed a suit last year against Notre Dame College’s former board members, seeking permission to negotiate with the bank directly to try to pay down the debt and save the college. That case was dismissed in December 2024, but the plaintiffs filed an appeal soon after. The plaintiffs also filed another lawsuit in Geuaga County Common Pleas Court later in December 2024, accusing the college's former leaders of profiting from the closure of the college, moving to close the college and sell off its assets without reasonably first trying to save it.
Michael Love, planning and development director for the city of South Euclid, said the Notre Dame College property was still on the market and available prior to the lawsuit being filed.
"We are uncertain of its ramifications as it pertains to any marketing or sale of the property," Love said in an email Tuesday.
Love said the property remains legally owned by the college, which has an agreement with a property maintenance company. He also shared a statement from the South Euclid Mayor Georgine Welo in response to the lawsuit.
"We are deeply concerned by these developments and are conducting a thorough review of the lawsuit to understand their full implications," Welo wrote. "For more than a century, Notre Dame College’s nearly 50-acre campus has been a defining landmark that helped shape the identity of our community. Our foremost goal is to see this historic property returned to productive use in a way that honors its legacy and enhances South Euclid’s long-term well-being."
