A Boston-area developer has sued the University of Notre Dame and several other universities and foundations, claiming they violated a Massachusetts law that forbids charging interest rates greater than 20 percent.
Notre Dame - along with Harvard, Yale and Princeton universities, among others - invested in Realty Financial Partners, an entity that made $16.7 million in loans to developer Fred Fahey to build a golf course community near Boston.
Realty Financial Partners, headquartered in Wellesley, Mass., loaned $6.7 million of the $16.7 million at a 42-percent interest rate, according to Bloomberg.
The defendants, which also include Spelman College in Atlanta, Oberlin College in Ohio, New York-based Carnegie Corp. and the John D. and Catherine T. MacArthur Foundation in Chicago, responded to the suit by saying they weren't involved in managing Fahey's project. The defendants also say they are shielded by state law because they are limited partners.
The state law was intended to discourage loan sharking, which makes loans with threats of violence.