Cancer Institute: Rhodes pledged $11 million, gave only $600,000

By Marshall Allen

Published Monday, May 4, 2009 | 4:40 p.m.

Updated Tuesday, May 5, 2009 | 2:46 p.m.

The Nevada Cancer Institute, one of the state's premier medical research institutions, is suing beleaguered home builder Jim Rhodes and his wife, Glynda, for allegedly reneging on more than $10 million in philanthropic pledges.

The lawsuit, filed late this afternoon in Clark County District Court, alleges that the couple pledged money to improve their public image after Jim Rhodes was accused of "improper dealings" with Clark County Commissioners and other public officials.

The failure to fulfill commitments of $1 million and $10 million also hurts the Nevada Cancer Institute's mission to perform research and treat patients, the lawsuit said.

The lawsuit is the latest problem confronting Rhodes.

In April the creditors for more than $370 million in outstanding loans to Rhodes Homes accused Rhodes of misappropriating funds and wanted him out to prevent what they say is continued mismanagement.

In Chapter 11 bankruptcy proceedings, attorneys for Credit Suisse and other lenders allege Rhodes directed millions in loans to Rhodes Homes to finance companies not covered by the loans. That included Harmony Homes operated by Rhodes through a trust in his children’s names, the bankruptcy filing said.

According to the Cancer Institute complaint, Rhodes has been the subject of negative publicity since 2003, including allegations that he bribed Clark County Commissioner Erin Kenny, who later was sentenced to federal prison for taking bribes.

The lawsuit accuses Rhodes of using philanthropy to leech onto the Nevada Cancer Institute image. It started with a $1 million commitment by the Rhodes to the start-up institution in 2005 that was never paid in full, the lawsuit said. Rhodes paid $600,000 of the pledge, the lawsuit said.

On February 24, 2007, the Rhodes met with Cancer Institute officials, including founder and chairman of the board Heather Murren, to discuss a large commitment, but it allegedly came with strings attached. The complaint said that Rhodes sought positive publicity for his donation, and presented as an example a scrapbook detailing the philanthropic commitments of others, including New York Mayor Michael Bloomberg. The couple said they wanted a similar public reputation for philanthropy, the lawsuit said.

In the next months, the couple repeatedly met with Cancer Institute officials, saying they wanted to make a $10 million commitment, the lawsuit said.

"In return, the Rhodes required publicity related to the binding agreement and the prominent display at Nevada Cancer Institute of the names of Jim and Glynda Rhodes," the complaint said.

The Cancer Institute had never before recognized a primary honoree at their annual Rock for the Cure fundraising event, but did so for the Rhodeses at the 2007 gala, where the $10 million pledge was announced, the lawsuit said.

Nevada Cancer Institute spokeswoman Lisa Stark called the lawsuit "an unfortunate situation."

"After 18 months of ongoing attempts to resolve this situation, it became apparent that Jim and Glynda Rhodes have no intention of honoring their personal obligation so NVCI had no choice but to take this legal action. We are simply acting according to the highest standards of fiduciary responsibility as we pursue our mission of reducing the burden of cancer in Nevada," Stark said in a statement. "NVCI works with our donors to give them every opportunity to create a giving structure that allows them to fulfill their obligation in a way that works for both of us and adheres to IRS guidelines. The failure of Jim and Glynda Rhodes to meet their obligation impacts all facets of our organization, and all the avenues we utilize to serve the community and cancer patients across the state.”

The Cancer Institute said that before it could announce a major philanthropic pledge at its Rock for the Cure fundraising gala, it needed a written confirmation of the gift. On Nov. 15, 2007, the day of the gala, the attorney for the Rhodes sent a letter detailing the arrangement. That night, the pledge was announced to a crowd of well-heeled attendees, and it led to many favorable stories in the media, the lawsuit said.

In 2008, the lawsuit alleges, it became clear the couple never intended to fund the $10 million commitment. Their attorney tried restructuring the agreement to place liability on Rhodes' companies, instead of with the couple personally, the lawsuit said.

The motive became clear when the Rhodes' companies filed for bankruptcy, the lawsuit said.

The restructuring attempts also included tying the $10 million commitment to the receipt of land use entitlements for a Rhodes' development near Red Rock National Conservation Area, the lawsuit said.

"In other words, the Rhodes were attempting to give Nevada Cancer Institute a financial interest in making sure the subject land received the entitlements the Rhodes previously had been unable to obtain," the lawsuit said.

After a year of discussion, the Rhodes refused to communicate with Cancer Institute representatives, the complaint said.

The lawsuit alleges breach of contract for the $1 million and $10 million commitments, fraud and negligent misrepresentation.

Rhodes' attorney, David Lyon, said in a statement: "Jim and Glynda Rhodes fully believe in the mission of the Nevada Cancer Institute, and they made their pledge at a time when the Las Vegas economy was booming. Obviously, the situation has changed. It is clear that the downturn in the economy has hurt non-profits as much as it has for profits, and like many other donors in our community, the Rhodes’ have had to seek alternatives to meet their obligations. We are disappointed that the Nevada Cancer Institute would publicly announce plans to file a lawsuit against a donor, particularly during these difficult times. Jim and Glynda hope that the issue can be resolved amicably."