A Closer Look at Our School’s Largest Donor
By Connor Murphy & Nick Muscavage
Purple and gold balloons sailed into the sky Oct. 8, 2015 after the University at Albany announced the largest donation ever received by the school — $10 million for the naming rights to the school’s $18 million football stadium, courtesy of the Bernard and Millie Children’s Foundation (BMCF).
With the money committed to UAlbany’s Athletics Department through the private, not-for-profit University Foundation, President Robert J. Jones took to the press conference podium with excitement, as he announced the size of the donation twice.
“That sounds good rolling off my tongue,” Jones said, according to Mark Singelais’ report in the Albany Times Union.
What Jones didn’t mention at the press conference was that UAlbany graduate and BMCF co-creator William Duker went to prison and was disbarred in the late ’90s for defrauding the Federal Deposit Insurance Corporation (FDIC) and the Resolution Trust Corporation (RTC), two financial regulatory agencies. This was all while serving as attorney for the federal government.
Jones also didn’t mention that Duker, along with nationally known lawyer David Boies, have been on the defense of a decade-long lawsuit over alleged intellectual property theft, among other charges.
The plaintiff in the case is former Rensselaer Polytechnic Institute Professor John Deep of Cohoes. He went to Albany County Court in 2005, alleging that Boies’ law firm and Duker used his computer software to illegally enrich themselves for hundreds of millions in the early 2000s, according to court documents that the Albany Student Press reviewed.
Deep has refused multiple times to comment on the allegations for this story beyond what is in court papers.
Deep invented a peer-to-peer music sharing service called Aimster that turned into a source of constant legal problems for him. He was brought to court on multiple charges, including copyright infringement in a suit brought by the Recording Industry Association of America (RIAA) in 2000.
The law firm Boies, Schiller, & Flexner, LLP (BSF) had experiences in these sorts of cases, defending high profile companies in cases such as the Napster legal battle. BSF’s Albany office eventually went on to represent Deep and his company BuddyUSA, which was created to oversee the Aimster software. BSF lawyers George Carpinello and Adam Shaw took defensive leads in the RIAA case.
Things become less clear at that point. One of Deep’s vital allegations in his 2005 lawsuit was that Duker acted as additional legal aid with BSF, and as a line of communication between him and Boies through several alleged conference calls. The problem, Deep wrote in the original complaint, was that “although [he] knew that William Duker was a lawyer, defendants did not tell [him] that Duker had been suspended or disbarred and served time in prison as a convicted felon in connection with a scheme to overcharge the federal government.”
Vincent Bonventre, an Albany Law School professor specializing in Appeals Court cases and legal ethics, said that legal fraud is the practice of giving dishonest advice to someone that harms them as a result.
“Nobody has an obligation to disabuse everybody of every irrational thing they may think, but if there’s good reason to think that somebody is a lawyer and you know that person is relying on advice you’re giving because they believe you’re a lawyer, you’ve got an obligation to tell them, ‘No, I’m not,’” Bonventre said.
Shaw, representing the Albany BSF office, denied most of what Deep has alleged in court since 2005.
“Boies, Schiller moved to withdraw from representing [Deep] and [his] companies,” Shaw said in a phone interview, “because he was lying about his activities with the companies.”
Along with many lawyers from BSF’s defensive team in Deep’s lawsuit, Shaw makes the distinction that Deep and BuddyUSA are different entities, with the company rather than the person in actual ownership of the Aimster software. Stock records from 2001 show Deep owning a majority of shares in BuddyUSA. This points to Deep having the potential final say in most corporate transactions, although Deep alleges there were protections and offsets written into the contract to protect the interests of Boies and Duker. Shaw and BSF argue against most of Deep’s 2005 allegations, citing the statute of limitations, which states in these types of cases that the crime and the lawsuit can’t be separated by more than three years. The defendants also maintain in testimony that Deep is lying.
“The cases were built upon falsehoods,” Shaw said.
Bonventre said, “It is very, very, very difficult for me to believe that someone like David Boies would not make it clear if he was advising somebody to get advice from Duker, I would imagine —I’m confident that David Boies would have made clear that Duker is not a lawyer.”
He went on, “David Boies is not a hack. David Boies is an eminent lawyer. He’s one of the great lawyers; he’s not going to pull crap like that. No, not from anything I know about him. Everything I know about him is about as good as a lawyer as you can be. The other people who I know in that firm — the same thing.”
Boies himself made four appearances in court over the case in 2012. In these appearances, Deep and Boies cross-examine each other, arguing over nearly every fact in the case.
In one exchange with Boies cross-examining Deep, the alleged conference calls are examined exhaustively. Deep concedes that he and Boies rarely talked on these calls. One thing he does claim happened nearly every day during the RIAA case, however, was a meeting with Duker. Deep claims that Duker made conference calls once a week for two years to Boies on his behalf.
Duker himself never appeared in court, according to records. Deep said in a 2009 court appearance, “Now I have not to my knowledge conceded that Mr. Duker was not served… obviously, he’s not responding to anything, but I have not conceded that he was not served.”
A Tale of Two Lawyers
In 1987, Duker co-founded the Duker & Barrett law firm and garnered a reputation for being a penny-pincher, according to sources quoted in a 1997 Wall Street Journal article.
The New York City-based firm picked up an assignment Boies passed along in 1990 to represent the FDIC and the RTC. The legal team sought damages for those scammed by Michael Milken. The so-called “Junk Bond King” agreed to a settlement of more than $1 billion with the government. Duker’s firm then investigated the failure of CenTrust Bank in Miami, with the primary target being CenTrust’s law firm at the time, Paul, Weiss, Rifkind, Wharton & Garrison (Paul Weiss).
According to Paul M. Barrett’s article in the WSJ, Duker recommended that the FDIC sue the firm for millions in damages. Boies at the time was quoted as saying, “We all would have been happier if nobody associated with us was adverse to Paul Weiss.”
While Duker attempted to hold Paul Weiss accountable, he simultaneously engaged in fraudulent practices himself, amassing a fortune in the process. According to the FDIC, Duker defrauded it and the RTC of about $1.4 billion.
In 1993, with persistence from Duker’s firm, Paul Weiss agreed to pay $45 million to the government, while never admitting any wrongdoing, according to the article. Duker’s targeting of high-profile law firms had paid off.
According to an FDIC press release from 1997, Duker’s firm was earning up to $5 million annually during the scheme and he received up to 80 percent of the payments.
The FBI found that Duker & Barrett was overbilling the banking agencies for his services by cooking the work hour books. The FBI’s accusation alleged that Duker had been “making handwritten notations on draft bills that directed the firm’s office manager to increase the hours reported for individual attorneys, generally by one to four hours per day.”
Duker pled guilty and was sentenced in 1997 to a 33-month prison term, of which he only served 16 months. He was fined $7,500 to enter programs administered by the U.S. Probation Office, and he paid the federal government $2.58 million under a settlement agreement in criminal restitution and civil damages, according to the case docket.
Duker was also disbarred and forbidden to practice law in any form. According to sworn testimony from Boies, the lawyer and the disbarred remain good friends to this day.
A Second Chance
UAlbany officials took Duker’s past into account before they accepted the $10 million donation, according to Fardin Sanai, vice president for University Development and executive director since 2007 of the University at Albany Foundation — the private arm tasked with handling the university’s donations.
“We are well aware of his past,” he said. He said the Foundation applauded Duker when he gave the $25 million to Albany Medical Center “because one of our alums doing it — it was wonderful.”
Sanai was also listed as a senior vice president for development at Albany Medical Center in 2006, and Duker’s wife Sharon was appointed to the hospital’s Board of Directors in 2014.
Sanai gave a personal analogy related to Duker’s conviction: “I’m from Iran. I was born and raised there—and you guys are seeing all the pictures of ISIS and everything—if you do something wrong there, you steal something, they cut your arms off.”
He continued, “You know why they do that? So that you’d be ashamed for you for the rest of your life that no one will talk to you, you will be disassociated; you’d be an outcast. I think that one of the things that makes us different in this country is about people giving people second chances. It’s about redemption.”
“He’s trying to do something good,” Sanai said.
John Deep disagrees in his court claims.
His allegation is that while Duker and Boies aided him during his RIAA case, they simultaneously deprived him of his beneficial ownership in the software and shares of BuddyUSA by spreading his interests thin. They did this through investments, without his knowledge, into a plethora of small companies and LLCs that Duker, Boies and others close to the pair were involved with.
When confronted with questions of Duker’s history of litigation, Sanai said, “You go to the School of Business, we have Goldman Sachs’s name on it, Deloitte, you know how many litigations they’re a part of every day? So it’s a fact of life when you are dealing with that kind of business…other than the federal case, he hasn’t been convicted of anything else.”
Paul Miesing, Ph.D and professor at UAlbany specializing in business ethics, talked about the potential motivation behind the donation, “I don’t know why [Duker’s] donating to a state university. Those kind of big bucks you would expect to go to Harvard…We’re a worthy cause and we do well, but these are huge amounts for us.”
Miesing sees the donation as an example of utilitarianism (greatest good for the greatest number) rather than Machiavellian.
“The ends I’ll say won’t justify the means, but he’s using it for a good cause,” Miesing said. “If it was not for him, we wouldn’t really be able to beef up what’s important and valuable to the state of New York.”
A Donor Examined
UAlbany is not the only thing Duker has spent his money on. Duker purchased a $30 million penthouse in New York City as “an investment and not as a personal residence,” according to real estate reports. According to various boating news outlets, Duker is also designing his latest yacht: a 230-foot vessel named Sybaris, for the ancient Greek city that amassed riches and became famous for its hedonism.
The only found court record containing Duker in his own words was in a two-sentence e-mail to John Deep. Deep wrote a letter to Boies on upcoming lawsuits, with a carbon copy attached for Duker.
“I wish you would not,” Duker’s response reads. “He did a big favor for you and me.”
Apart from the $10 million donation to name the stadium and the $25 million donation to Albany Medical Center in its history, BMCF’s latest tax records from 2013 indicate the not-for-profit’s assets at just over $30,000.
BMCF did not respond to multiple phone calls. Duker and members of his family likewise did not respond to phone calls and requests for interviews.