Complete 2012 forensic audit documents - Kansas Bioscience ...

• assisting KBA with understanding health care investment interests nationally and at the
fund level, and reviewing opportunities in order to target investors; and
• assisting KBA in creating a strategy for marketing and public relations with a focus on
regional entrepreneurs and national investors and the development of selection criteria to
be used in the due diligence process for identifying HBV clients.
Mr. Baiju Shah stated that the services provided to HBV included hands-on training. Mr. Shah
indicated that members of HBV’s team spent time at BioEnterprise’s offices to actually see the
business model in action and participated in meetings with BioEnterprise clients. In addition,
BioEnterprise made introductions of HBV personnel to BioEnterprise’s network of Technology
Transfer and Venture Capital contacts. BioEnterprise was paid $200,000 for its services over the
term of the Affiliation Agreement. Mr. Shah stated that the relationship between BioEnterprise
and KBA/HBV ceased with the end of the Affiliation Agreement, and that other than the
$200,000 received under the Affiliation Agreement, BioEnterprise has received no other
payments or funding from KBA/HBV. Of the $200,000 paid to BioEnterprise by KBA,
$122,723.69 was paid while Bill Sanford was a member of the BioEnterprise BOD. 51 Mr. Shah
indicated that he was not acquainted with Thornton prior to being introduced to him through
KBA/HBV.
BKD reviewed a Crain’s Cleveland Business article 52 dated January 29, 2007 in which Mr. Shah
was quoted as stating that “once Heartland (BioVentures) becomes active, the organizations plan
to help each other find venture capital, technology, talent and information in their respective
regions.” The same article quoted Mr. Shah as stating, “Though Kansas is not yet brimming
with venture capital, it is already a source of other resources. For instance, though the Cleveland
area is active in biopharmaceutical research, Kansas is a good source of pharmaceutical
entrepreneurs who could help launch companies in Ohio.”
With regard to the above quotations from the article, Mr. Shah indicated that the “partnering”
between BioEnterprise and HBV in reality was the services provided to HBV by BioEnterprise
under the Affiliation Agreement and Mr. Shah’s participation in the short-lived HBV Advisory
Board. Mr. Shah indicated that BioEnterprise never received any client referrals from HBV and
never made any client referrals to HBV. Mr. Shah indicated that BioEnterprise clients do not
have any Kansas based entrepreneurs or technology involved in their operations. However, he
indicated that he is not knowledgeable regarding BioEnterprise clients’ possible Kansas contacts
or connections.
In summary, KBA looked to other established organizations with a similar set of service
offerings to those KBA envisioned offering. KBA hired BioEnterprise of Cleveland, associated
with KBA Director Bill Sanford through his position as COB of BioEnterprise, and paid
$200,000 under an Affiliation Agreement for start-up operational advice, assistance with
recruitment of staff and introduction to useful contacts in the areas of technology transfer and
funding. BKD identified no evidence of purposeful partnering between the two organizations,
and the Affiliation Agreement has terminated.
51 Mr. Sanford’s last meeting as member of the BioEnterprise BOD was November 11, 2009.
52 “Kansas BioEnterprise to Mirror Local Operations,” Crain’s Cleveland Business, January 29, 2007.
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