Exclusive: Falwell steered Liberty University land deal benefiting his personal trainer

[August 28, 2019]  By Aram Roston and Joshua Schneyer

LYNCHBURG, Va. (Reuters) - Evangelical leader and prominent Donald Trump backer Jerry Falwell Jr personally approved real estate transactions by his nonprofit Christian university that helped his personal fitness trainer obtain valuable university property, according to real estate records, internal university emails and interviews.

Around 2011, Falwell, president of Liberty University in Virginia, and his wife, Rebecca, began personal fitness training sessions with Benjamin Crosswhite, then a 23-year-old recent Liberty graduate. Now, after a series of university real estate transactions signed by Falwell, Crosswhite owns a sprawling 18-acre racquet sports and fitness facility on former Liberty property. Last year, a local bank approved a line of credit allowing Crosswhite's business to borrow as much as $2 million against the property.

Falwell, one of the most influential right-wing Christian leaders in the United States, has been buffeted by disclosures about his private dealings over the last year and a half.

A Florida lawsuit brought public scrutiny to a relationship between the Falwells and Giancarlo Granda, a young man they befriended while he was working as a pool attendant at a luxury Miami Beach hotel and later backed in a business venture involving a youth hostel. Falwell filed an affidavit in 2018 saying he used his own wealth to lend $1.8 million to the $4.65 million project with Granda.

And U.S. President Trump’s now-jailed fixer, Michael Cohen, has said he helped the Falwells suppress racy personal photos, as Reuters reported this May, in the months before Cohen persuaded Falwell to endorse Trump’s 2016 White House bid. There is no evidence that Cohen’s efforts to suppress the photos were a quid pro quo for Falwell’s vital political backing.

The support Falwell provided to the two young men, Granda and Crosswhite, has some parallels. Both were aided in business ventures and both have flown on the nonprofit university’s corporate jet.

One difference: When Falwell helped Crosswhite, he used the assets of Liberty, the tax-exempt university he has led since 2008. Among the largest Christian universities in the world, Liberty depends on hundreds of millions of dollars its students receive in federally backed student loans and Pell grants.

In 2016, Falwell signed a real estate deal transferring the sports facility, complete with tennis courts and a fitness center owned by Liberty, to Crosswhite. Under the terms, Crosswhite wasn’t required to put any of his own money down toward the purchase price, a confidential sales contract obtained by Reuters shows.

Liberty committed nearly $650,000 up front to lease back tennis courts from Crosswhite at the site for nine years. The school also offered Crosswhite financing, at a low 3% interest rate, to cover the rest of the $1.2 million transaction, the contract shows.

Crosswhite declined to answer questions about the deal. "All I will say is that my wife and I consult each other before every major business deal and we bought the complex from Liberty together," he said in an email. "My wife and I both work around the clock to make our business succeed."

Falwell referred Reuters to the university for comment. Liberty issued a statement describing the transaction as both proper and beneficial for the school.

Liberty had received the athletic center as a gift in 2011 from a trustee who has since died, but it quickly became a “drain on university resources,” the statement said. Crosswhite had been leasing gym space at the property since 2013, and was thus “the most viable purchaser.” Liberty said it adjusted the price and financed Crosswhite’s purchase because its tennis team would continue to use the courts.

Falwell has “tried to be a business mentor” to Crosswhite, the university statement said, but that effort did not “cause him to abandon his fiduciary duties” to Liberty.

As Liberty’s leader, Falwell draws an annual salary of nearly $1 million, and is obligated to put the university’s financial interests before his own personal interests when conducting Liberty business.

“The concern is whether the university’s president wanted to do his personal trainer a favor and used Liberty assets to do it,” said Douglas Anderson, a governance specialist and former internal audit chief at Dow Chemical Co, who reviewed both the transaction and Liberty's explanation of it at Reuters’ request. That would be bad governance, he said. “At a minimum, the terms suggest the buyer got a great deal and Liberty got very little.”

The Crosswhite Athletic Club is set off a quiet residential lane about seven miles from Liberty’s campus. Its large windowless buildings house indoor tennis and racquetball courts, a gym and pavilion.

During a visit by a reporter in August, Crosswhite, a muscular 31-year-old with short blond hair, was training a client in the well-equipped facility, running him through kettlebell swings and dumbbell presses. On a wall: A sign for “Crosswhite Fitness,” with a cross where the T should be, and a citation to a verse from the New Testament’s Second Epistle to the Corinthians.

Falwell has publicly credited Crosswhite with helping him lose 75 pounds. “That’s the kind of guy he is,” Crosswhite told Reuters. He asked Reuters to submit written questions about his dealings with Liberty and Falwell, but did not respond to them.

Liberty University President Jerry Falwell Jr., attends the school's commencement ceremonies in Lynchburg, Virginia, U.S., May 11, 2019. REUTERS/Jonathan Drake

PITCHING A ‘SWEET DEAL’

The story of the business relationship between Crosswhite, Liberty and Falwell appears to begin in 2011.

That year, Falwell urged other Liberty personnel in an email to cut Crosswhite a “sweet deal” allowing him to offer private gym training at the Lynchburg fitness facility, then known as the Sports Racket, which Liberty had recently acquired through the trustee’s donation.

“Becki and I wouldn’t mind working out over there with Ben as a trainer because it is more private,” he wrote in the email, which was reviewed by Reuters. Falwell and his wife, who goes by Becki, each work out with Crosswhite twice a week, the university said. Falwell has become a vocal advocate of the trainer’s skills, as have other university executives and clients who work with Crosswhite.

The Falwells brought the trainer along on Liberty’s private jet during a 2012 trip to Miami. Later, Falwell sent an email directing Liberty to lease its gym space to Crosswhite’s fitness business, which began a five year lease in 2013. The cost, according to a lease document: $2,300 per month.

Liberty said Falwell uses the university-chartered jet to fly every year to his annual physical in Miami. Crosswhite joined him in 2012 “to explain to the doctors Mr. Falwell’s diet and exercise program and help document the results,” the university said. Because Liberty’s board requires an annual physical for Falwell, the president doesn’t have to reimburse the university for the corporate jet travel to Miami, the statement said.

It was in Miami in 2012, as well, that Falwell met Granda, the pool attendant he would later finance in business. The financial ties between Falwell and Granda have been detailed by BuzzFeed and others.

In 2016, Falwell signed the deal transferring the facility to Crosswhite. The contract says the price is $1.2 million, but notes that the “Net Purchase Price” is $580,000, because Liberty “agrees to credit” Crosswhite with rental payments for seasonal use of the site’s tennis courts through 2025. The courts are used by Liberty’s tennis team for practices and tournaments.

Liberty “agrees to finance the purchase” at a 3% interest rate, the contract says. To help Crosswhite in the transaction, Liberty was lending Falwell’s fitness trainer more than half a million dollars to buy its property. The university would receive no cash up front from the sale, the contract shows.

Transactions on such favorable terms could raise concerns over stewardship of corporate assets, and potentially insufficient scrutiny by the board, said Anderson, the independent governance specialist.

In 2017, after Liberty had sold the facility to Crosswhite, some university representatives voiced concern about whether the indoor tennis courts and roof over them were receiving needed maintenance, as the sales contract required, internal emails show. Falwell wasn’t included in the email chain.

Liberty’s general counsel, David Corry, responded that the school should remind Crosswhite of his maintenance obligations, according to the email exchange, which was reviewed by Reuters. But Corry, referring to Liberty University by its initials, added a note of caution: “Ben Crosswhite enjoys a close working relationship with several LU administrators, including the President.” Anyone communicating with Crosswhite should do so “with knowledge ahead of time that it may be second guessed,” Corry wrote.

Asked about Corry's warning, Liberty said he was raising the possibility that Crosswhite might complain to any one of "several people" at Liberty if he felt he was being treated "harshly" over the maintenance obligations. Therefore, Liberty said, the university needed to "have an approach that was not only legally sound, but cordial, professional and above reproach."

In 2017, Liberty provided Crosswhite with another $75,000 line of credit to conduct maintenance and repairs, the university said in its statement.

In an email sent earlier this month, Corry, citing a Reuters reporter’s “persistent” attempts to reach former board members and the Falwells, reminded the former trustees they had signed confidentiality agreements. He told them they were required “forever” to keep secret what they knew about the university.

Crosswhite’s acquisition of the sports facility appears to continue benefiting him. Last year, according to a Lynchburg Circuit Court filing, the trainer's business obtained a $2.05 million credit line from a local bank against its interest in the facility. Liberty said the credit line amount was linked to the property’s future value after Crosswhite builds a swimming pool there.

On April 23, 2018, the day after the $2.05 million bank financing, Liberty University filed paperwork saying the $576,000 note Crosswhite owed for the property had been paid in full.

(Editing by Ronnie Greene)

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