Apr 19, 2022

Donor's wife sues Maharishi University in Fairfield over stock mixup, claiming she lost $500k

Tyler Jett
Des Moines Register
April 19, 2022

In December 1984, Mary and Phillip Town gave a gift to Maharishi International University: 166,667 shares in their organic farming startup.

But, according to a lawsuit filed in federal court, officials at the Transcendental Meditation school in Fairfield, Iowa, preferred cash. So the Towns gave the school about $21,000 in exchange for the return of the shares, according to the lawsuit.

Mary Town said university officials never properly signed documents turning the shares back over, an issue that came to a head two years ago when an Austrian company bought the business that her husband and a business partner started.

Mary Town’s lawyer estimated in a lawsuit filed against the university Thursday that it ultimately received about $500,000 because it was still the registered owner of those shares when the sale went through. She is demanding to be repaid the amount the school received.

"MIU's enrichment was at the expense of Town," her attorney, Jeff Stone of Cedar Rapids, wrote in the lawsuit.

Mark Zaiger, a Cedar Rapids lawyer representing the school, declined to address the details of the allegation.

"MIU does not respond outside of court regarding pending litigation matters," he said in an email to the Des Moines Register. "I can tell you, however, that MIU has a policy to seek resolution of disputes as they arise."

The start of Maharishi International University and an organic farming company

The roots of the lawsuit begin in the late 1970s, when the Towns lived in southern California. Phillip Town was working in real estate and went into business with another local agent, Bill Witherspoon.

Witherspoon told the Register that he and Phillip Town meshed well, and they believed they could form a successful business partnership. Phillip Town had a head for numbers and enjoyed researching potential investments. Witherspoon, meanwhile, was creative — a lover of science who previously lived alone as a painter in rural Oregon.

Both men happened to practice Transcendental Meditation, a method created by Maharishi Mahesh Yogi in the mid-1950s .  

After attending training in Colorado in 1970, Witherspoon said he became a TM teacher and eventually oversaw other teachers throughout the Midwest. In 1973, he helped establish Maharishi International University after an Iowa banker who was also part of the movement found property in Fairfield for a reasonable price.

But Witherspoon said the movement didn’t pay him enough to support his family, so he took up real estate in California. After he and Phillip Town went into business together, the two bought vineyards and farms, growing almonds, peaches, plumbs, stone fruit and walnuts.

Witherspoon said he and Phillip Town were unhappy with the chemicals needed to protect the crops. In 1982, they formed Westbridge Research Group in Vista, California, selling organic products that helped crops grow faster, repel bugs and survive during periods of drought. He said Dr. Jonas Salk, the inventor of the polio vaccine, became a board member.
Medical researcher Dr. Jonas Salk studying slides in his laboratory, following the invention of his pioneering polio vaccine, circa 1957.

A few years later, Witherspoon and Phillip Town stepped back from running the day-to-day operations. Both moved to Fairfield to be closer to the university and raise their families in a quiet community. They started other companies, which weren’t successful, and Witherspoon returned to full-time painting.

He said he and Phillip Town agreed in 1984 to each donate 166,667 shares of Westbridge stock to the school. He said they both believed the Transcendental Meditation movement improved people's lives.

"I wanted to do whatever I could to promote the wellbeing of the planet," Witherspoon said. "The people in it. The animals in it. The air. The water. The whole thing."

A stock transfer that never transpired

According to the lawsuit, Maharishi International University development officer Bobby Warren told the Towns that the school would prefer a cash donation instead of the shares. Mary Town alleges in the lawsuit that Warren agreed to return the shares in exchange for the donation. 

Witherspoon told the Register that Warren made the same request to him, which he denied.

"I said, 'No way. You guys just sit on it. Relax,'" Witherspoon recalled. "Of course, I didn’t have $20,000" to give. 

He added: "The stock didn’t have significant value at that time. It had just been sitting and sitting and sitting. And nobody was following it. And to be truthful, it wasn’t worth a whole huge amount.

"Later, it turned out to be worth a lot."

The Towns reportedly gave the university $21,000. According to a letter attached to the lawsuit, university treasurer Ken West wrote to Security Pacific National Bank in March 1990, asking an employee to "please transfer 166,667 shares of Westbridge Research Group stock ... from Maharishi International University to Mary Town."

West sent the original stock certificate to Phillip Town. But, according to the lawsuit, West didn't sign where he was required, therefore the university did not properly register the stock's transfer.

Mary Town, who now lives in Wyoming and is no longer married to Phillip Town, met with university officials in the summer of 2014 to discuss the issue. According to the lawsuit, university officials acknowledged at the time that they should have registered the stock transfer.

Emails attached to the complaint outline Mary Town's attempts to get university attorney Caterina Roesler to finalize the transfer. 

Mary Town asked Roesler on Oct. 16, 2014, whether she had requested new stock certificates from Continental Stock Transfer & Trust Co., which records share ownership for businesses. 

Roesler responded to a second email Mary Town sent six weeks later, telling her that the paperwork to request the certificate was sitting on her desk. She asked Mary Town if they could "do it together over the phone."

"It would help to get it done," Roesler wrote on Nov. 30. "I am really sorry that it is taking so long."

When Mary Town followed up again a few months later, Roseler wrote that she had requested a new certificate from Continental.

"Let's see what they say," Roseler wrote in May 2015.

The lawsuit does not mention what happened next until April 2020, when Austria-based Erber Group bought Westbridge. According to a shareholder letter from Westbridge President Tina Koenemann, the deal would net investors about $10 per share, plus a cash dividend. The letter does not outline the dividend amount each investor would receive.

According to the lawsuit, the university redeemed payment for the 166,667 shares when Erber Group's acquisition closed. Mary Town learned about this from her ex-husband in October.

Phillip Town, who is now an investment adviser in Georgia, did not return an email or a phone call this week.

How much money are those shares worth?

The lawsuit does not make clear exactly how much money Maharishi International University received because of the Westbridge sale. Stone, Town’s attorney, estimated in the complaint the deal netted the school about $500,000.

Witherspoon said $500,000 is "on the low side" of what the shares were worth. In the years leading up to the sale, Westbridge paid dividends to shareholders, which Mary Town did not receive, he said.

He added that Continental Stock Transfer & Trust Co. likely has a straightforward accounting of how much money the university received over the years since they held Mary Town's shares.

"It could be nailed down," he said. "I'm sure it will be."

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at tjett@registermedia.com, 515-284-8215, or on Twitter at @LetsJett.

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