Rep. Cambensy asks AG to look into old hospital site sale to NMU Foundation

MARQUETTE, Mich. (WLUC) - UPDATE: On Friday, Rep. Cambensy wrote Michigan AG Dana Nessel to clarify incorrect information in a letter she sent Thursday regarding the sale of the old Marquette hospital site.

Cambensy’s original letter (see bottom of article) included 14 questions that her constituents would like addressed. She addressed an error in Question 14 in the below follow-up letter to the AG.

Dear Honorable Attorney General Dana Nessel,

It has come to my attention that there is an error in question 14 of the letter that was submitted to your office yesterday. There appears to be two people with the same first and last name in the Marquette area with only one having donated to a State Representative candidate. That donation came from a person unrelated to the immediate family of the Veridea CEO. We regret that we did not have more details differentiating the two people with the same name at the time the letter was submitted to your office. We believe that the donation previously mentioned in question 14 no longer appears to represent a conflict of interest and wish to exclude that question from your review. Attached is a revised copy of the letter without the question. Thank you for your continued attention to this matter.

Last published: Jul 28, 2022 7:49:06 PM

On Thursday, Representative Sara Cambensy sent a letter to Attorney General (AG) Dana Nessel expressing concerns over a possible conflict of interest and misuse of state and local funds regarding the sale of the old hospital site to the NMU Foundation.

In her letter, Cambensy says many constituents expressed concern about “what appears to be a scheme developed between the NMU Foundation CEO, an NMU Board Member and owner of the private real estate development company, the Veridea Group, and Lifepoint as the owner of the property, with the assistance of other individuals, including the former MEDC Director.”

Cambensy is requesting the AG’s office make an opinion on whether the NMU Foundation is considered a public body.

If they are considered a public body, according to Cambensy, it would open up the NMU Foundation to the Freedom of Information Act and the Open Meetings Act surrounding the gift of the old hospital site by Lifepoint and the sale to Veridea Group.

“Everyone wants to see the property redeveloped, that is not the issue,” Rep. Cambensy said. “The issue really revolves around the transparency and just having the public try to understand why the NMU Foundation is needed to be that third-party between two private entities. To make a land deal happen on a piece of property that is not within the university footprint.”

Cambensy also asked if the information regarding the appraisals and taxable evaluations of the property could be made public to assure the taxpayers that the private real estate sale that fell through between Lifepoint and Veridea in 2019 did not seek to devalue the property in any way by now involving the NMU Foundation, and selling the property first to the non-profit for $1.

“Any time you utilize a public entity to do business, especially when there is Michigan case law for University Foundations that rules that they are still subject to FOIA and OMA even though they receive gifts, the public deserves to know about those public transactions. We are asking the AG to tell us what documents can be released surrounding this project and property sale, and to make those documents available to the public,” Cambensy said in a press release.

Rep. Cambensy also questioned the conflict-of-interest clause that was recently changed at NMU to exclude board members who have a financial interest in projects if there is only one bid received, as well as whether or not NMU Board of Trustee members were in violation of private benefit or inurement, especially as they were an ex-officio to the NMU Foundation at the time the project was announced.

“There are many valid concerns that community members brought to me that I feel need to be addressed surrounding this project and the people who are either publicly appointed to serve on these boards or who work for a public institution at NMU that are giving the appearance of an insider deal,” Cambensy said. “My office has the ability to collect those concerns and ask for an opinion from the AG when we cannot get all the answers from the individuals or organizations involved.”

Cambensy continued, “If the inquiry produces nothing alarming, illegal or that needs further investigation, great. There will be greater transparency. But when the taxpayers want their elected officials to look into whether or not their tax dollars are being used appropriately and whether the public institutions that their tax dollars support are operating above board, I take that very seriously. I’m going to ask the questions as their state representative. I hope every elected official would use the tools they have to do their due diligence to protect the taxpayer’s money, too.”

Rep. Cambensy alleged that NMU Foundation CEO Brad Canale discussed buying the property for $1 in the Summer of 2021 with former NMU President Fritz Erickson, with the plan of transferring it to Veridea Group.

Former NMU President Fritz Erickson was terminated in Fall of 2021. Erickson questioned his termination, adding that it was not long after he raised questions about a potential conflict of interest. Erickson cited that Veridea Group CEO Robert Mahaney also served on the NMU Board of Trustees at the time of the proposed $1 sale. Erickson added that former Lifepoint Hospital Board Member Tami Seavoy was also on the NMU Board of Trustees at the time.

“I do find it, at the very best, unusual that right after I finally received a letter from the attorney -- because I requested a letter on whether or not there was a conflict of interest on the part of any board member -- that my termination followed so closely after that,” Erickson explained.

You can read Rep. Cambensy’s full letter to AG Nessel here:

Below is the full statement made by NMU Foundation’s CEO, Brad Canale as of 4 p.m. Thursday.

This afternoon we were made aware of a letter from Rep. Cambensy to the Attorney General.

Throughout this nearly 10-month initiative, we have been transparent in the overall process. Our commitment to transparency remains. The letter to the Attorney General by Rep. Cambensy issued today needs to be evaluated in depth.

The NMU Foundation will cooperate fully with any investigation the Attorney General may pursue. We have nothing to hide, including our motivation to facilitate the alignment of resources and partners needed for the transformation of the critical site directly next to campus.

Taking action for the betterment of our campus community and our larger community is something we are proud to be doing. We have taken great care to do so through appropriate measures at each step.

We stand by the work done to date which has gotten the project to this point. One of the largest community development opportunities in the Upper Peninsula is supported by the state, as well as the City of Marquette, the Marquette Brownfield Redevelopment Authority, the Michigan Economic Development Corporation, and members of the Marquette community as evidenced by public forums held earlier this year.

Below is a statement from Veridea Group as of 5:15 p.m. Thursday.

This afternoon we learned that State Representative Sara Cambensy issued a letter to the Attorney General calling for an investigation of the proposed redevelopment of the former Marquette General Hospital campus. We have not yet had an opportunity to fully read this document and its charges and so will comment on its specific claims as they relate to Veridea Group once we have done so.

However, we do not need to read Representative Cambensy’s letter to state the following. Throughout this process to redevelop the hospital campus, the people of Veridea Group and its owner, Robert Mahaney, have conducted ourselves at all times with complete integrity, honesty and transparency. Furthermore, any potential conflicts of interest have been presented and cleared in advance by legal counsel and the respective Boards of the University and the Foundation.

Our interest in participating in this project is simple: it’s necessary for our community. No other developer has been willing to take on this project. We owe it to the community, the City and the University to see this through and we intend to do exactly that.

Below is a statement from Steve Arwood, a party named in Cambensy’s original letter to the AG.

Representative Cambensy has named me personally in her letter to the Attorney General.  Her letter has already been proven to contain factual errors and in regards to me, the facts are wrong as well and need to be corrected.

First, I am not and have never been the CEO of Miller Canfield the law firm.  I did work for Miller Canfield Consulting, but that relationship ended over two years ago.  Simple facts, simple to check.

Second, Rep. Cambensy’s letter insinuates that as a former President and CEO of the Michigan Economic Development Corporation, I have had undue influence on the parties involved and that I may be assisting the Northern Michigan University Foundation and the city of Marquette to find ways to utilize various resources to enable the demolition of the former Hospital site.

While I hold little influence over anyone as a private citizen, I have assisted the effort in seeking ways that traditional economic development resources and programs can be pieced together to address the demolition of the former Hospital as a beginning point for attracting any new development.  There is nothing out of the ordinary here in terms of the economic development strategy being pursued.  What is needed now is extraordinary support for the effort, because if left unattended, the Hospital site will become a sea of blight in a vibrant neighborhood.

The actions taken by the Northern Michigan University Foundation to galvanize support for the Hospital project are a critical service to the community.

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