Part of the proceeds will be used to pay victims to a university doctor for alleged sexual abuse.
By Daniel Moran and Nick Querolo Bloomberg
Published April 22, 2022 April 22, 2022
The University of California is expected to sell bonds, some of which will be used to help fund settlement payments to victims of a university doctor’s alleged sexual abuse.
The school is set to issue $ 3 billion in bonds with total revenue from medical centers next week, through two series, $ 1.3 billion in tax-exempt bonds and $ 1.7 billion in taxable securities. Part of the taxable series will be used to fund more than $ 700 million in expected claims to settle the debts of the victims of James Heaps, a former gynecologist and oncologist at UCLA Health for alleged sexual abuse during exams, according to preliminary bond documents.
Although the university is insured, “the combined settlements will exhaust the available insurance coverage and efforts are being made to assess the options for financing the settlements,” the documents said. To date, all Heaps-related settlements exceed $ 330 million, while the university expects the cumulative settlement amount to exceed $ 700 million, according to bond documents. “It is expected that part of the bonds for 2022 will be used to finance part of the settlement of Heaps issues.
Although settlement bonds are not common in the $ 4 trillion municipal bond market, the University of California is not the first school to turn to Wall Street to fund victims’ settlement payments. In 2019, Michigan State University sold bonds to refinance a private placement loan that was used to compensate for Larry Nasar’s victims.
About $ 680 million in debt was sold by muni issuers in 2021, with part of the proceeds going to finance the settlement of lawsuits, including land disputes or taxes. That’s roughly 10 percent of 1% of total sales in 2021. Most of the issuance in 2021 may be due to the sale of $ 603 million from Michigan, which uses bond proceeds to finance government payments. for the settlement of the victims of the lead-contaminated water supply in the black town of Flint by the majority.
Heaps’ medical privileges have allowed him to treat patients at the Ronald Reagan UCLA Medical Center for more than two decades and was a consultant physician at UCLA Student Health from 1983 to 2010. He faces a felony complaint filed by the county. prosecutor of Los Angeles plus numerous lawsuits. have been filed in both state and federal courts, including a single class action lawsuit.
The sale is run by Barclays Plc and JPMorgan Chase & Co, plus a union of nearly two dozen other banks.
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