IU added to $2B suit over resort trade secrets

An Indianapolis development partnership has added Indiana University to a $2 billion lawsuit that alleges one of the university’s professors and five former students stole trade secrets and interfered with contracts for a business development project in Puerto Rico.

The plaintiffs in the case, holding company World Trade Center San Juan LLC and commercial real estate company Gantry LLC, said they procured the exclusive use of 1,500 acres from the Puerto Rican Local Redevelopment Authority to bring an “ultra-luxury” resort to a now-closed government facility.

The university joins Will Geoghegan, a clinical professor in the Kelley School of Business Management & Entrepreneurship department, and former Kelley MBA students Jim Sprayregen, Kelly Webb, Nicholas Prazuch, Rachel Sprayregen, and T.R. Hollis as defendants in the lawsuit.

The partnership alleges the professor and his students stole plans for a resort project worth up to $2 billion.

Mark Bode, IU’s executive director of media relations, on Tuesday told Indiana Lawyer the university does not comment on pending litigation.

Paul Jefferson, the attorney representing World Trade Center San Juan, LLC and Gantry LLC, told Indiana Lawyer, “It’s clear from the professor’s answer that he was operating as an agent of Indiana University when he signed the NDA, and it’s also clear that there was protective information involved in the class, and so, we’re bringing in all the parties necessary to resolve the issues.”

Geoghegan and the students, as well as Discovery Land Co., a real estate developer with operations in San Juan, were named as defendants when the lawsuit was originally filed in December in Marion Superior Court.

According to the lawsuit, the owners of the resort, which was to be called “Roosevelt Reserve” agreed to let IU create a class in the school of business’s MBA program related to the resort project. Within the class, students were assigned to analyze the project and offer feedback. Geoghegan allegedly agreed to the terms of a non-disclosure agreement, or NDA, and promised to have all students sign an NDA.

Confidentiality was expected and guaranteed by IU, Geoghegan, and the students, according to the suit.

But the plaintiffs stated that two students in the class had a close personal or familial relationship with Discovery Land executives, which engages in similar activities as the owners of Roosevelt Reserve, and allegedly shared the idea of the resort with its executives despite signing confidentiality agreements.

Discovery Land eventually convinced the Puerto Rican Local Redevelopment Authority to breach its agreement with plaintiffs and took the Roosevelt Reserve project, according to the lawsuit.

The plaintiffs allege that, “beginning with undermining the Plaintiffs’ relationship with the [land reutilization authority] and continuing through the business relationships Plaintiffs had developed with the golf course designers, investors, developers, and others, Discovery Land systematically interfered with and ultimately stole Plaintiffs’ entire business model.”

In December, Doris Anne Sadler, co-founding principal of World Trade Center San Juan, told IBJ: “We poured our heart, soul, time and money into this project for years. We were not looking for a partner and never authorized the disclosure of our plans.

“To have this project stolen after investors had been secured and high-profile names lent their prestige exclusively to the project is not something we ever anticipated. Particularly galling was having it stolen through the help of a higher-ed institution we both love. We did not want a legal battle. We wanted a golf resort. But the defendants’ actions leave us no choice.”

The plaintiffs are suing Discovery Land and the MBA students defendants for tortious interference with contracts, tortious interference with business relationships, and punitive damages.

They’re suing Geoghegan for negligent supervision.