Complete 2012 forensic audit documents - Kansas Bioscience ...

Open Prairie
Open Prairie met its funding requirement in October 2010 and received $5 million from KBA.
Open Prairie has an office in Olathe, Kansas with a full-time principal located in that office since
2005. Open Prairie had already invested in three Kansas-based companies prior to funding by
KBA. One company is a life sciences company also invested in by KBA. On May 31, 2011,
Open Prairie invested $3 million 70 into Novita Therapeutics, a Venture Accelerator tenant and
KBA client company.
Therefore, the venture capital funds, which through June 30, 2011 have received $6,841,382
from KBA, have already participated in $22 million in investments in Kansas bioscience
companies.
Status of Remaining Growth Fund Awards
Given the difficult economy in which the remaining funds have attempted to raise the minimum
required capital, the 12-month requirement from approval date was extended for the remaining
five funds. Of those five, Burrill Life Science Capital and Triathlon Medical Ventures remain
viable investment opportunities. However, the awards to Midwest Venture, Prolog Capital and
Meadowlark Venture Partners were cancelled as it appeared those funds would not be able to
raise the required capital. However, the $15 million in cancelled awards remains available
through the KBGF.
LEGISLATOR EXPENSES
BKD was asked to identify expenses paid by KBA for the benefit of state and federal
government agency representatives related to events organized by KBA. With the assistance of
KBA personnel, including Marsh LoScalzo, Executive Assistant and Mary Cummings,
Marketing Communications Specialist, we identified two such annual events. They are the
Federal Priorities Trip and the Legislative Bioscience Innovations Tour.
As part of our procedures, BKD reviewed KBA’s policy regarding the payment of travel
expenses related to state and federal government agency representatives’ attendance at KBA
sponsored events or events that benefitted KBA for 2008 through the present. KBA has never
had a written policy indicating under which circumstances it would or would not pay for state
and federal government agency representative expenses. Furthermore, current KBA
management was unaware of the existence of any informal policy or standard practice. BKD
was requested to review the evolution of practice relating to reimbursement of these expenses.
We reviewed available itineraries, invited guest listings, RSVP listings, email communication
and expense documentation related to these events. There was not a single final guest list for
each event, but rather various Excel spreadsheets and emails which indicated who was to be
invited or who had responded and indicated they would be attending. We summarized this
information for each event into a guest listing, which is located at Exhibit 37. These listings
70 http://www.openprairie.com/Novita_Therapeutics_News.html.
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