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Families still awaiting refunds eight months after IU fraternity shut down

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BLOOMINGTON, Ind. -- Eight months after an Indiana University fraternity chapter shut down, CBS4 Problem Solvers found out that its housing corporation had run into serious financial trouble.

Tau Kappa Epsilon closed in February, after police found evidence of a drug-dealing operation inside the fraternity house in Bloomington. Levi Lewis, 20, later pleaded guilty to dealing marijuana.

Gordon Baldwin, whose son is a junior at IU, contacted CBS4 Problem Solvers for help recovering his $2,000 housing deposit, after he spent the past eight months trying to get answers from both local and national fraternity administrators.

Baldwin, who lives in New York, said he had initially resisted putting down the deposit, since at the time his son was a freshman who would not be moving into the house for another two years.

"I was sort of pushed into it, saying, 'Well this is what you have to do,'" Baldwin said. "The housing director made it seem like there was no option unless it was such a financial struggle that you could document (it)."

Baldwin was not struggling financially, so he put down the deposit. CBS4 Problem Solvers has learned, though, that the housing corporation was struggling, particularly as the house shut down.

TKE's national organization does not run its fraternity chapters' housing and instead allows those chapters to set up separate housing corporations and boards which handle housing on their own.

In the case of the IU Bloomington chapter, Gamma-Kappa Housing Corporation formed in recent years and began renting the fraternity house from an out-of-state landlord. A 2016 graduate was enlisted to run the corporation and handle its financials.

After the house shut down, Baldwin, whose son was not living there, immediately asked for his deposit back.

"(It) was the first question I asked the housing director," Baldwin said.

In the meantime, another family filed a small claims case in Monroe County court. Their son was living in the house and his lease included a "refund upon termination" of $400 per month remaining in the lease.

As of October, neither Baldwin nor the other family had received any money back.

"I just want my money back and I’d like to see everyone else who put deposits down in good faith get their money back," Baldwin said.

CBS4 Problem Solvers spoke to Matt Shute, the graduate who was running Gamma-Kappa Housing. Shute said he is currently in law school and has run into numerous problems trying to hire a bankruptcy lawyer to liquidate the corporation's assets.

Shute sent CBS4 this statement on behalf of Gamma-Kappa:

"There have been numerous unfortunate and unforeseen delays relating to the collection of overdue rent, coupled with attorney conflict of interest issues and lengthy response times from key stakeholders not directly affiliated with Gamma-Kappa Housing. The housing corporation will continue to work with an attorney to execute a fair and ethical disbursement of remaining assets and closure of the business entity. We appreciate the continued patience of all involved parties, and we look forward to this matter reaching a swift and final conclusion."

Baldwin, meanwhile, was so frustrated that he had begun to wonder not only what was taking so long, but also what happened to his money.

"I’d like to see an accounting of where all the money went and where is the money?"

CBS4 Problem Solvers also contacted Tau Kappa Epsilon's national headquarters. Leaders there sent us this statement:

"Tau Kappa Epsilon International Fraternity does not manage or supervise any local entity, including housing corporations. Unlike some other organizations, Tau Kappa Epsilon International Fraternity does not own any chapter properties and does not provide or supervise property management services.

Each chapter is a separate entity with their own board and can choose to pursue housing through a housing corporation. The board has its own members, bylaws, priorities, and operates autonomously from TKE International. In this matter, the Gamma-Kappa Housing Corporation had a lease with a landlord and under their authority as a separate entity, hired Matt Shute as a housing manager. Each member living in the house, likely then signed a lease or submitted a deposit with the Gamma-Kappa Housing Corporation. Members did not have a lease from the International Fraternity and no housing funds were ever paid to the International Fraternity.

Tau Kappa Epsilon International Fraternity offered assistance with communications and accounting. It also encouraged Gamma-Kappa Housing Corporation to secure legal representation towards seeking an amicable end to this matter for both parents and the Gamma-Kappa Housing Corporation. The Gamma-Kappa Housing Corporation was under no obligation to take the assistance or advice."

Shute said a bankruptcy filing was eminent, and he hoped to be able to return some money to families in the coming months.

If you have a problem you'd like CBS4 Problem Solvers to consider, contact us at 317-677-1544 or

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