Thursday, September 3, 2009
An independent, student-run newspaper serving the Virginia Tech community since 1903
www.collegiatetimes.com
COLLEGIATETIMES 106th year, issue 78
News, page 1
Features, page 2
Opinions, page 3
Classifieds, page 4
Sudoku, page 4
Sports, page 6
Coach faces suit over Blacksburg project An investment in the proposed Legends of Blacksburg condominium development has resulted in a lawsuit for University of Michigan football coach Rich Rodriguez. Alabama-based Nexity Bank RODRIGUEZ filed suit against Rodriguez in the
South Carolina U.S. District Court last month for failing to repay a loan that he was a guarantor on. Wesley Few, a South Carolina-based attorney representing Nexity Bank, said Rodriguez signed a guaranty for Legends of Blacksburg, LLC, obligating him to repay lenders such as Nexity. Rodriguez is the only guarantor named in the suit. Few said the loan, originally in the amount of $26.1 million, was not used completely, and Rodriguez only owes the amount used.
“It was a construction loan,” Few said. “The only advance ever made was the initial advance to buy the property.” Nexity is seeking $3.63 million, which Few said is only reimbursement for the amount paid by the bank. Legends of Blacksburg is a proposed condominium development at the end of Warren Street near Lane Stadium. Bill Gearhart, president and principal broker of Coldwell Banker, said Coldwell Banker handled marketing for the project. However, he said marketing has
Bill eliminates on-campus credit card advertisting RILEY PRENDERGAST ct news reporter The constant stream of free beads, T-shirts, foam fingers and flying discs pouring in from credit card companies will be absent from the Hokie football experience this fall. The credit card representatives who flock to many campus sporting events offering students the chance to support their school by opening up an college affinity credit card are now banned by federal law. “We never allowed organizations to solicit on campus,” said university spokesman Larry Hincker. “They always had to work in concert with one of our organizations such as an alumni group.” President Barack Obama signed the Credit Cardholder’s Bill of Rights Act of 2009 into law on May 22 as an amendment to the Truth in Lending Act that established fair and transparent practices relating to the extension of credit under an open-end consumer credit plan. Credit cards were often advertised to students around football games. Affinity credit cards allow students an opportunity to support their school, even by swiping their credit cards at the grocery store. These cards offer to donate a portion of the purchases on the card to the institution, offer discounted terms to the consumer and sport the logos of the institution on the card. The new bill formally defines these accounts as “a credit card issued by a credit card issuer under an open end consumer credit plan in conjunction with an agreement between the user and an institution of higher education, or an alumni organization or foundation.” Virginia Tech Alumni Association currently holds a contract with JPMorgan Chase, according to Vice President for Alumni Relations Tom Tillar. Chase, however, has ended their affinity card plans in accordance with this new bill. Tillar said the alumni association’s contract with Chase prohibits him from disclosing the value of the agreement. Contracts at other universities range from $1 million to $20 million and give credit card companies access to alumni contact information, as well as the right to market to them. Tillar said existing cards are not affected by Chase’s change. “If you hold a card right now it will still be good and will work, but they have stopped accepting new applications,” Tillar said. “They are only keeping their Disney affinity cards because that is a global organization.” The bill has banned giving out free gifts to students as incentives and has prohibited credit card companies from providing credit cards to students under the age of 21 without consent from a parent or guardian. Credit card companies are still allowed to market toward alumni with an established annual gross income. “I believe at last count we had in the mid-20,000 alumni with Virginia Tech affinity cards,” Tillar said. “It does provide people with a way to support their school. Some consumer advocacy groups, such as the Consumer Federation of America based out of Washington D.C. have called into question the relationship between these companies and universities.” The CFA is concerned that the relationship is a conflict of interest and does not have the best interests of the cardholders in mind.
Irene Leech, an associate professor in apparel, housing and tourism management, is currently the vice president of CFA. She has been raising questions about the credit card policies at universities, specifically at Tech. “It is so important for students to start off on the right foot when it comes to their credit score,” Leech said. “We should be encouraging them to act responsibly, but what’s been happening is students have been enticed into using credit cards with programs that aren’t going to benefit them in the long run.” The plan that students, alumni and staff signed up for with the affinity cards included “double-cycle” billing, where interest is calculated over two months instead of the normally standard one month. This process often results in higher finance charges. The new bill prohibits double-cycle billing when the monthly payments are made on time. Chase dropped double-cycle billing in early-2009 following the decision not to continue with the university affinity cards. “They saw that is was costing them too much to keep the program running,” Tillar said. “They just weren’t seeing enough profits.” Most of the marketing for affinity cards was aimed at alumni, explaining why Chase, Bank of America, MBNA and FirstUSA mainly deal with alumni associations. “We don’t have many students who were issued cards; it’s a very small number,” Tillar said. “(Chase) mainly likes to market to college graduates because they are a good credit risk. They often make all of their payments on time.” Leech said the positive side of the credit cards offered to students through universities is the ability to learn how to build a credit score. “This society depends on credit, it is incredibly important for students to learn how to properly use credit,” Leech said. “It is very beneficial to learn while in college how to manage credit.”
Subway replaces Burger King in Johnston Student Center GORDON BLOCK ct news reporter Hungry students around Johnston Student Center will find new food options in the absence of previous tenant Burger King. The center’s second floor now houses Subway and will also host a soon-to-be-opened Seattle’s Best Coffee on the opposite end of the floor. Franchise co-owners Scott Hillyard and Melanie Morris estimated that about 1,000 customers ate at Subway on the first day of classes, including 200 customers per hour at lunchtime. “It’s been extremely busy here,” Hillyard said. The campus location is the 16th Subway franchise for the pair, adding to eight they own in the New River Valley area and the seven around Harrisonburg. The Seattle’s Best Coffee franchise, set to open Sept. 7, will be Morris and Hillyard’s first. Virginia Tech’s University Unions and Student Activities, which controls the Johnston Student Center space, awarded the location in May. The location had last been bid on in 2002.
LUKE MASON/SPPS
Subway beat out other francises bids to replace Burger King. Six offers, including ones from franchises of Jimmy John’s Gourmet Sandwiches, Einstein Brothers Bagels, and Seattle’s Best Coffee, LLC were considered when the bidding process was initiated in the spring of 2008. The deal is effective until Aug. 31, 2014, with 2-year renewal options following the initial five-year period. As a part of its agreement, the franchises will pay Tech a commission on sales, ranging from 10 percent to 12 percent, depending on sales. Sales numbers of up to $800,000
require the franchisees to contribute 10 percent to the university, while $800,000-$1 million requires an 11percent contribution. It reaches the maximum 12 percent if franchise sales exceed $1 million. Julie Walters-Steele, director of UUSA, said the move to Subway has received strong support from students. “We’ve received no complaints that the Burger King’s gone,” WaltersSteele said. “People were looking for fresher, healthier options in there.”
dwindled since late 2007, and the original owners are selling the project. “It is our understanding that there is a developer that has a contract on the project,” Gearhart said. Mike Wilcox, Rodriguez’s financial adviser, said Rodriguez had been the victim of a Ponzi scheme in a statement to the press issued Tuesday. A Ponzi scheme is a form of fraud in which the fraudster pays off old investors with money from new investors, creating the illusion of reliable, quick returns. Few said Nexity was the victim.
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on the web
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Check out the CT’s website at www.collegiatetimes.com to read the court documents
“My client is the one that has put money into the deal,” Few said. He said it seemed like a problem between Rodriguez and Legends of Blacksburg, LLC. “The people he chose to become business partners with didn’t run the business in the way he expected them
to,” Few said. Few disputed the claim that the project was a Ponzi scheme, saying Rodriguez and his business partners intentionally invested in the project to make money. “They knew what they were getting into,” Few said. “They were trying to make money.” While Nexity will no longer handle financing for the project, the property will belong to Legends of Blacksburg, LLC once the debt is paid. “Once they pay off the loan, they’re going to own that property,” Few said.
Generation gap
LUK EM ASO N
ct news editor
PHO TO I LLU STR ATIO N BY
ZACH CRIZER
AT&T adding 3G service in area BY ZACH CRIZER| nrv news editor
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ocal iPhone users could soon harvest the full power of the device as AT&T plans to launch 3G service for the Blacksburg area by midSeptember. 3G, a third-generation mobile broadband network, optimizes service for smartphones such as the two newest versions of Apple’s iPhone. Despite 3G iPhones being available since July 2008, local users have thus far been denied access the technology’s fast connection speeds. That painful era of slow download speeds is finally coming to an end. AT&T spokesperson Ellen Webner said the company hopes to have service available by the middle of this month. Blacksburg is one of several cities in Virginia where the company is expanding service. “We have plans to launch 3G in the Blacksburg area and that includes the Virginia Tech campus,” Webner said. She said there is a dramatic upgrade process involved when upgrading from regular service to 3G service. “It’s sort of like putting a video card into a TV set,” Webner said. “The data and voice can
go through the same channel at much higher speeds.” Video is a major aspect of 3G capability. Phones will be capable of performing a feature called “videoshare” when 3G service is made available. “Videoshare is the ability to send video and talk at the same time,” Webner said. “There’s a lot of consumer practicality with that for small business.” Strong college populations in areas such as Charlottesville and Blacksburg have increased demand for 3G service, Webner said. AT&T is also working on an expansion of coverage in the Hampton Roads area. “We’re constantly tweaking the network and evaluating the next area we need to fill in,” Webner said. AT&T has suffered criticism for its lack of support for sending multimedia messages using
an iPhone. Currently the target date for MMS messaging is “late summer.” Webner could not give any guaranteed date the 3G service would take effect, but customers may notice the company’s trials of the service as they proceed with the upgrades. “You may in the next several weeks before we launch see the little icon that everyone has become quite familiar with — 3G.”