An Executive's Exit And A Daughter's Honesty Could Spell Turbulence For A Wall Street Darling

Earl Howell (left), with other members
of the Campus Crest team

The president and chief operating officer at Campus Crest Communities stepped down last week--a sign of possible instability, or perhaps progress, at the developer of student housing.

But news of a different variety definitely was alarming. It came from the daughter of CEO Ted Rollins. Young people have a way of being honest in a way that is foreign to corporate executives, and Sarah Rollins' heart-felt words about her father's ugly past should cause deep concerns for investors who have poured more than $400 million into the company.

Earl Howell hit the exits on October 20, less than two years into his tenure as a full-time executive at Campus Crest, and Robert Dann will take his spot. Howell had been the No. 3 guy on the company's depth chart, behind only CEO Ted Rollins and Co-Chairman of the Board and Chief Investment Officer Mike Hartnett. Reuters reported on Howell's departure as follows:

Mr. Earl C. Howell is no longer President of Campus Crest Communities Inc., effective October 20, 2012. He is no longer Chief Operating Officer of the Company, effective October 20, 2012. Prior to initial public offering, Mr. Howell had been providing consulting services to the company since October 2009.

A Wall Street analyst recently told Legal Schnauzer that Campus Crest performed poorly in the months immediately following its IPO, and a veteran executive came on board in a full-time capacity to right the ship. The analyst did not identify the executive, and it's not clear if Howell's departure will be seen as a step back or a step forward for the company. Both he and Dann became full-time executives at Campus Crest after the IPO.

We do know that Howell is an ex military man with extensive experience in the financial-services industry, while Dann brings more than 25 years of experience in the hospitality business. It probably is too soon to tell if the transition from Howell to Dann will be a plus for Campus Crest. (A contributor at Seeking Alpha sees positive trends.) But Sarah Rollins' words about her CEO father could not have been pleasing to the ears of Campus Crest's financial backers.

Emma, Ted, and Sarah Rollins

Ms. Rollins has an insider's knowledge about the abusive relationship between her father and his stepson (her half brother), which includes Ted Rollins' 1995 conviction in North Carolina for an assault on the stepson and a 1993 social-services investigation after a citizen complaint about possible child sexual abuse.

Now a freshman at the University of the South at Sewanee, Ms. Rollins unexpectedly called me late last winter, and we reported on that conversation in a recent series of three posts. (See here, here, and here.)

We take home three key points from what Ms. Rollins said:

* She confirmed that an investigation regarding possible child sexual abuse did target her father (from Part I);

* She confirmed that her father and half brother had "somewhat of an unusual relationship," something that she found to be "no good" (from Part I);

* She was concerned that her brother would be negatively affected by reporting on the subject. (from all three parts).

Perhaps most important is what Ms. Rollins did not say--and we will examine that closely in a moment. But first, let's look at some of her key comments. This is from Part II of our conversation:

I do respect that you are trying to help or have some sort of affirmative action. But I just know that my mom lately has been so torn up about that story about my dad and my brother. I just think this is not really a positive outcome for it to be so in the open. . . . My brother would be very, very upset. . . . 

I think he's upset because, well probably, because he knows that you know everything, because my mom talks to you a lot. He does worry . . .

This is from Part III:

"I do appreciate all your efforts about my mother and father's divorce case. But this is something that would emotionally wreck our family unit . . . I would appreciate if if you would not jump into that right now. . . . I can't tell you what to write and what not to write, but I would really appreciate it so very much if you would just keep that story to yourself because it's one my mother so seldom shares . . . 

"I've been talking to her and she's so very distraught over the whole Zac situation because she knows it would cause a huge hole between her and her son."

If you read Ms. Rollins words closely--and listen to the full conversation via videos at the end of our previous posts--she never expresses any doubt that her brother was the victim of sexual abuse at the hands of her father. She is too young to have been a first-hand witness to the events in the mid 1990s. But she has lived with a dysfunctional family environment for all of her 18 years, and her words clearly show that she believes something was seriously wrong with the relationship between her father and her brother.

The transition from Earl Howell to Robert Dann could be good or bad news regarding business operations at Campus Crest Communities. But Sarah Rollins' words go to a hole in the company's soul. And that definitely is troubling news for the company's future.