Defaulting Donor

Executive who promised millions to three dental colleges reneges, forcing students to find money to pay tuition.
September 5, 2006

A Florida donor whose company pledged millions for scholarships and living expenses to orthodontic residents at three colleges has failed to make recent payments, forcing students on scholarship to scramble for tuition money this fall.

Gasper Lazzara, founder of Florida-based Orthodontic Education Company, promised money to dental programs at the University of Colorado at Denver, Jacksonville University and the University of Nevada at Las Vegas. Officials at the colleges said they didn’t know exactly why Lazzara couldn’t make good on his payments. Lazzara's office did not return calls for comment.

Earlier this summer, the University of Colorado School of Dentistry learned that OEC would be unable to provide scholarship money for this year's class of dental residents. Lazzara gave the program a $3 million gift in 2003 and committed to paying nearly $93 million over time to establish a partnership between the program and his company. As part of the then-30-year agreement, the company provided full tuition money for 12 students per year in return for a post-graduation work commitment from those students. In all, 48 residents are enrolled in the college's 27-month program.

University of Colorado President Hank Brown has offered to assist the School of Dentistry with $1 million to help keep tuition for current students at $10,693 until they finish the program. For residents who aren't currently enrolled, tuition will be raised to about $40,000 annually per year -- plus roughly $9,000 in annual fees. Officials said the financial aid office is working with residents to find loans.

“Our efforts now are to change the tuition structure and develop a new business model,” dental school dean Denise Kassebaum said. “We’re confident that with the support of the university we can identify appropriate resources.”

Lazzara has his name on the $25 million clinical dental education facility at Colorado. The dental school also needs to find money to make payments on the new building, which opened last September. Lazzara is the largest single donor, based on money he actually gave, to the School of Dentistry, according to Pete Steinhauer, a University of Colorado regent. Steinhauer, a volunteer professor at the dental school, said he was “surprised and disappointed” to hear about the money shortage but said he credited Lazzara for helping the program grow.  

At the Dental School of Orthodontics at Jacksonville University, Lazzara had provided 24 dental students in each class with $45,000 in tuition and a living stipend while they were in the two-year program. Similar to the Colorado program, dental students promised OEC a seven-year work commitment, said Laurance Jerrold, dean and program director for the orthodontics school.

The contract was initially signed in 2002, when the school was being created. Incoming students and those starting their second year have to pay their way through the program, Jerrold said. “[The money shortage] doesn’t do anything to the program,” Jerrold said. “The tuition had to be paid anyway, whether it was by Lazarra, the federal government, or mommy and daddy.”

At UNLV, administrators are “in a wait-and-see” situation, said university spokesman Dave Tonelli.

The OEC had funded part of students' tuition. Administrators sent Lazzara a breach-of-contract letter after he failed to make the first half of a $3.5 million payment in January, Tonelli said. He owes the second $1.75 million payment this month.

Earlier this summer, Larry Ellison, CEO of Oracle Corp.,  decided to renege on his planned $115 million gift to Harvard University to create a global health institute. Ellison he was unhappy with the departure of Lawrence H. Summers as president, but some suggested that other factors were in play, noting that the gift failed to materialize as expected well before Summers announced his resignation.


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