UPDATED: Liberty University files $10M suit against Falwell

Lawsuit alleges breach of contract and fiduciary duty

Published April 16, 2021 by Kate Andrews

Liberty University has sued Jerry Falwell Jr. for $10 million, accusing the former president and chancellor of the Lynchburg-based Christian university of breach of contract and fiduciary duty. The suit alleges that Falwell negotiated a salary increase and larger severance package in his 2019 contract while not disclosing to the university’s executive committee his entanglement with a young Miami man who was threatening to make public his sexual involvement with Falwell’s wife.

The lawsuit claims that Falwell, who resigned as president and chancellor last August after widely publicized allegations of sexual misconduct involving his wife and a former pool attendant at a Miami hotel, schemed to “cover up the illicit conduct” in an attempt to silence Giancarlo Granda, whom Falwell and Liberty’s suit claim were trying to blackmail the couple with salacious photos and private text messages confirming his affair with Becki Falwell as well as Jerry Falwell’s knowledge of the affair.

Falwell issued a written statement Friday afternoon in response to the lawsuit: “The Executive Committee of the Liberty University Board of Trustees has made yet another attempt to defame me and discredit my record, following a series of harsh and unnecessary actions against my children, Becki, and me. Throughout all my years at the university, where we built a multibillion-dollar enterprise that reaches Christians worldwide, I always abided by the requirements that applied to everyone on the university staff. This lawsuit is full of lies and half truths, and I assure you that I will defend myself against it with conviction.”

He also claimed in a tweet Saturday that he and his wife were “banned” from the campus last week and “threatened with arrest if we walk on campus.”

In a tweet Friday Becki Falwell wrote, “Our whole family is so proud of my husband … for overcoming so much this past year, including serious health issues with his lungs and stress-induced depression. Christians should rejoice at such achievements, not use them as a weapon in a frivolous lawsuit.” Falwell Jr. retweeted her statement Friday evening.

According to an Instagram post in March, Falwell wrote he has been hospitalized four times since last August due to clots in his lungs, along with a photo of him in a New York City hospital room.

Granda has denied trying to blackmail or extort the Falwells. In a statement Friday on Twitter, he said, “Liberty University’s lawsuit continues to perpetuate a false narrative. The truth detailing the Falwells’ — and their enablers’ — abuse of power, predatory behavior and corruption will come in due time.”

Liberty’s lawsuit alleges that the “Falwells knew they shared a unity of interests with Granda. They had an important goal in common: silence about the Falwells’ salacious acts. The Falwell[s] needed silence from Granda in order to safeguard their personal reputation, Jerry Jr.’s professional standing, and his employment with America’s leading evangelical university.”

Liberty’s complaint includes a photo of Granda meeting Donald Trump during the future president’s 2012 visit to Liberty University, as well as photos of Granda with the Falwells on a tour of the U.S. Capitol, in the Florida Keys and at their farm in Virginia. These, the lawsuit claims, “were among the acts of appeasement that the Falwells used over the years to maintain Granda’s cooperative silence.”

However, as Granda began granting media interviews and suggesting to Falwell that he planned to make the entire story public, the suit alleges that Falwell “began to fashion a well-resourced exit strategy” in 2019, a “deceitful scheme to manipulate” Liberty’s executive committee during his employment contract negotiations. Although “Falwell Jr. knew he was under active threat of extortion from Granda,” the suit says, he did not inform the committee during negotiations.

During negotiations, Falwell was granted a “significant annual raise” to $1.25 million a year, which would remain his pay through 2030 in the contract, and he arranged for a severance of $2.5 million if he resigned for “good reason” or was terminated without cause. Also, the suit says, Falwell obtained a “catch-up ‘rabbi trust’ plan for retirement benefits that would cover his entire career of service at Liberty but had not been part of any previous employment agreement.”

The complaint also claims that Falwell, “emboldened by the financial security that he had negotiated for himself … struck out at Granda,” saying via text that “the extortion attempts would have to end.” Further, the lawsuit alleges that “to manage his stress, Falwell Jr. began drinking significantly,” prompting concerns “that he smelled of alcohol during work interactions,” the suit says. In August, when Falwell took an indefinite leave of absence after posting a controversial photo of himself and a Liberty employee with their pants unzipped and stomachs exposed on his Instagram account, the executive committee of the university’s board of trustees insisted on residential alcohol treatment.

Instead of agreeing to seek treatment, the lawsuit alleges, Falwell was seen in an Aug. 20, 2020, video at his trainer’s gym, showing him “performing pelvic thrust exercises on a weight bench with two young women, likely Liberty students, inexplicably riding either end of the barbell as Falwell Jr. exerted himself.” The video was posted on social media.

Days later, Falwell wrote and submitted a statement to the Washington Examiner newspaper about the Granda affair, alleging that he and his wife were victims of attempted extortion, the lawsuit says. Reuters published an interview with Granda about the affair the next day. The following day, Aug. 25, Falwell resigned.

In a tweet Friday night, Falwell wrote, “The university I built has simply gone off the rails! Sad. Without leadership, the people perish.” He also shared a story posted by ABC News, in which Falwell said in a statement, “I have serious questions about why the LU Executive Committee has acted with haste and hostility towards me since last August despite the fact that I never violated any university rules that applied to staff.”

The lawsuit was filed Thursday by McGuireWoods attorney Scott Oostdyk on the university’s behalf in Lynchburg Circuit Court.

Scott Lamb, a spokesman for Liberty University, said Friday the university has no other comment beyond what is stated in the lawsuit.

Last October, Falwell filed a defamation suit against Liberty, claiming that officials at the university made libelous statements about him following his forced resignation last August following a series of controversies, including the revelation in a Reuters news story that his wife was having an affair with Granda, who later was their business partner, and that Falwell himself was aware of the affair and participated by watching the two have sex. Falwell has vehemently denied his own participation in the affair.

In December 2020, however, Falwell dropped his lawsuit seeking punitive damages and attorney’s fees from the university where he was president from 2007 to 2020. In a statement, Falwell said he decided to “take a timeout” from the litigation while continuing “to keep all options on the table for an appropriate resolution to the matter.”

Falwell did not respond to a question on whether he plans to revive his lawsuit or countersue.

Liberty filed the complaint one day before its semiannual board of trustees meeting Friday and Saturday, several months after announcing a third-party investigation into the university’s finances during Falwell’s tenure. Although Lamb did not announce a timeline for the report, or whether it would be made public, the Chicago-based public accounting firm Baker Tilly US closed its anonymous whistleblower website in late December.

Also, Politico reported Thursday that Jerry “Trey” Falwell III, Jerry Falwell Jr.’s eldest son, is no longer employed as a vice president at Liberty. Although no allegations of impropriety have been made publicly about the younger Falwell, in 2013, a shell company, Alton Hostel LLC, purchased a Miami Beach youth hostel for $4.65 million, with Falwell III listed as its sole manager. According to a 2017 Politico article, Granda managed the hostel, and Falwell III was given the money to purchase the property by his father, Falwell Jr.

Liberty’s suit also alleges that Trey Falwell was hired Jan. 1, 2016, as an administrative assistant to the president for a 15-year term ending July 1, 2030, with a $23,000 elevation in salary, from $65,000 to $88,000 a year, as well as a car allowance that boosted his annual compensation to $95,200 in his first year. In 2017, Falwell III was promoted to the position of vice president of university services, and his salary was raised to $195,000 by July 1, 2017, the suit says.

With more than 127,000 students enrolled, most of them online, Liberty is Virginia’s largest school by enrollment and is the nation’s second-largest online university, behind the University of Phoenix.

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