Court documents reveal possible financial crisis at Morthland Co - WSIL-TV 3 Southern Illinois

Court documents reveal possible financial crisis at Morthland College

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WEST FRANKFORT -- Court documents filed through the Franklin County clerk show Morthland College owes the IRS more than $700,000, but the college's founder and president Tim Morthland owes money to others as well.

Morthland also hasn't paid his contracting company more than $80,000 for nearly half a year's work.

News 3 uncovered the documents after Morthland claimed on Thursday the school was "financially sound."

"We know that we are financially sound, whether we have 20, 40, 60 or 100 students given our current funding base," explained Morthland.

That statement from Morthland came just a day after the college's board of trustees decided to cut all athletic programs at the school made up almost entirely of student athletes.

"I love the student athlete and think a lot of them will come back, but a lot of them where their priorities are in athletics, we may lose a few and that's very sad," added Morthland.

His college has also been placed on HCM2 status, or "heightened cash monitoring," by the Department of Education. HCM2 means the DOE "provides additional oversight for a number of financial or federal compliance issues, some of which may be serious and other that may be less troublesome."  

When the college opened in 2013, the city of West Frankfort backed a private loan that Morthland obtained for building renovations. 

That's something Mayor Tom Jordan said was a boost to the local economy.

"They were having some problems securing this loan and everybody was understanding. The bank knew about it, the college knew about it and the city knew about it," explained Jordan.

Since the city helped Morthland College get the nearly half a million dollar loan, they've had to cover for 13 payments the college couldn't make, adding up to more than $35,000.

That money is coming from the city's tax increment fund.

"We were very welcoming to this and we understood at the beginning that their financial situation was pretty rough because they hadn't been approved for federal student aid or the ability to collect money," added Jordan.

Mayor Jordan says he hasn't spoke with Morthland, but says so far investing in Morthland College has been nothing but a positive for his city.

"This isn't going to negatively impact the community as far as the general fund this is money that we had that was set aside so I would do it again in a heartbeat," added Jordan.

The college has hired an accounting firm from California to sort out the debt.

The accountant told news 3, "it's unfortunate that taxes are owed, but management has a strong plan to deal with this and are already in the process of doing so."

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