Husband of soon-to-be RI Dem Party Chair marked by controversies What we know.

The husband of the political donor vying to take over as chairman of the Rhode Island Democratic Party is embroiled in hotly litigated lawsuits accusing him of fraud for withholding crucial information in the $120 million sale of his former business.

Michael Perik, of Jamestown, is at the center of lawsuits brought in federal court in Delaware and Ohio involving the June 2021 sale of his former business, Student Resource Center LLC.

Perik is the husband of Elizabeth “Liz” Beretta-Perik, the prolific fundraiser who is running to replace state Rep. Joseph McNamara as chairman of the state Democratic Party. A vote is set to take place Nov. 15.

What the lawsuit says

The new owner, Sterling Small Market Education Fund, L.P., alleges in the lawsuits that Perik and others failed to disclose during discussions leading up to the sale that the community college – from which Student Resource Center derived 95% of its revenue – was in accreditation trouble.

Eastern Gateway Community College was the main partner of Student Resource Center, which Perik co-founded in 2015 and led as CEO. The Ohio Higher Learning Commission placed Eastern Gateway on probation in 2021, just months after the $120 million sale went through. The commission is expected to determine this month whether the school will be taken off probation or face further sanctions, including possibly having its accreditation yanked altogether.

Student Resource Center partnered with the school to provide low cost, debt-free educational programs to union members and their families.

"Michael Perik and others were sued by a private equity fund and entities created by that fund. We contend that that lawsuit is meritless. We have filed counterclaims and third party claims alleging gross negligence, bad faith and improper conduct, as well as for breaches of contract, which claims will go forward," Michael F. Connolly, Perik's lawyer, said in an email.

"We ask that you respect Mr. Perik’s privacy while we continue to litigate this garden-variety business dispute in the Delaware courts," Connolly continued.

A phone call to the Perik residence in Jamestown was not immediately returned.

More: A prolific RI fundraiser is poised to take the helm of the state's Democratic Party. What to know.

Allegations of lies, fraud and breach of contract

Sterling argues in federal court in Delaware that the news of the accreditation lapses sent “shockwaves” through the new buyers. It accuses Perik of directly lying to them and withholding key information in repeated discussions.

“Had Sterling … known about the [commission’s] report or its plans to place EGCC on probation before closing, they would have never agreed to the purchase agreement,” Sterling argues in seeking unspecified damages.

But Perik and the others hit back, denying they ever concealed anything. They assert that Perik directly informed Sterling’s leaders that Eastern Gateway could be placed on probation.

They argue, too, that they had to withhold a report detailing the accreditation troubles because Eastern Gateway shared it with them in confidence.

Perik and his fellow defendants accuse Sterling of breaching its contract with them and are seeking $2.9 million, plus interest, they say they are owed.

They argued that it was Sterling’s own misconduct and negligence that caused the business to flounder in its first year under the new ownership.

A federal judge recently dismissed the negligence and misconduct claims against Sterling without prejudice, meaning they can be refiled in a separate suit. The judge allowed breach of contract claims raised by Perik and the others to proceed.

Claims in Ohio over Perik's firing

In Ohio, Sterling and Student Resource Center are accusing the Eastern Gateway of breaching its partnership agreement with the company by pulling out of the collaboration and withholding more than $2.6 million in payments after they fired Perik for his alleged fraud.

Eastern Gateway argued that it was Student Resource Center’s new owners that, in fact, breached the agreement when they fired Perik as its CEO “for engaging in questionable conduct related to the sale.” It asserts the company’s failure to perform has caused a disruption in services and confusion among students, applicants and potential applicants.

A judge in that case ruled that the agreement barred the school from “spuriously severing” Student Resource Center's main revenue source.

Other controversies

Perik also made headlines in 2010, when he contributed, over the course of a decade, some $1 million to Democratic causes, including $13,800 to former U.S. Sen. Tom Harkin, D-Iowa. Perik's companies over three years during that period received $6.2 million in federally funded contracts from the Iowa Association of School Boards, according to Des Moines Register reports.

Like The Providence Journal, the Register is owned by Gannett.

Political power couple

Earlier this year, Michael Perik was in the running to join the University of Rhode Island's Board of Trustees. He later withdrew from consideration, citing personal reasons.

Beretta-Perik put in a bid to become new Gov. Dan McKee's replacement as lieutenant governor after Gina Raimondo was named U.S. Commerce Secretary. McKee instead appointed then-Providence City Council President Sabina Matos.

She has been named as House Speaker K. Joseph Shekarchi's choice to succeed McNamara as the state Democratic Party chair.

As the titular head of the party, Shekarchi's voice carries a lot of weight with the "state committee," which is made up to a large extent by the committeeman and committeewoman for each of the 75 House Districts, city and town Democratic committee chairs and officeholders.

"Liz Beretta-Perik has my full faith and confidence that she will do an outstanding job as the Democratic Party's chair – a historic moment as the first woman to be elected to that position," Shekarchi said.

As for her husband's legal troubles, Shekarchi said: "Liz stands on her own record of personal success, philanthropic efforts and political achievements."

Berreta-Perik cited her record as a "champion" for the state Democratic Party in a statement asking for support.

"It’s that record and my long history of supporting and working for Democrats that I hope my friends and colleagues will consider in determining who will lead our party in this challenging time. If elected, I will proudly serve as the first woman to chair the Rhode Island Democratic Party," she said.

Perik and his wife have each given more than $100,000 in donations to Rhode Island Democratic politicians since the online reporting began in 2002. During the 2022 election-year alone, she contributed $39,526 and he, $13,000 to Rhode Island politicians. They are known for hosting numerous fundraisers at their home in Jamestown.

This article originally appeared on The Providence Journal: RI Dem fundraiser Michael Perik faces fraud allegations