Complete 2012 forensic audit documents - Kansas Bioscience ...

Ennis Knupp & Associates, Inc.
KBA had multiple contracts with Ennis Knupp & Associates, Inc. for the following:
• due diligence review and ranking of selected capital funds for potential investments,
effective April 8, 2009 for $45,400;
• due diligence review and ranking of selected capital funds for potential investments,
effective May 6, 2009 for $10,000;
• investment consulting services relating to private equity “back office” services, effective
March 1, 2010 for $33,000;
• evaluating Open Prairie Ventures & Prolog Capital, effective August 18, 2010, for
$6,000;
• evaluating Burrill Life Sciences Capital Fund, Triathlon Medical Ventures Fund,
Midwest Venture Fund, and Meadowlark Venture Fund, effective September 9, 2010 for
$14,000; and
• investment fund management, initial contract effective October 7, 2008 for $110,000 and
second dated October 1, 2009 for $224,000. We noted an RFP dated June 16, 2008 for
this contract.
The contracts were signed by Brett Nelson, Rick Ivinjack and David Testore. The total amount
paid to Ennis Knupp & Associates, Inc. was $408,660.
K&L Gates, LLP
K&L Gates, LLP (“K&L”), previously Bell Boyd & Lloyd, LLP, contracted with KBA for legal
services related to equity investment by KBA. The contract was effective June 2, 2008, signed
by Jude M. Sullivan, and was for $350 per hour. The total amount paid to K&L was
$115,018.12. As these were ongoing services with the potential to go over $75,000, BKD would
have expected to see an RFP in the corporate files. This finding is included in Exhibit 53 -
Contract Exhibit B- RFP Findings.
Mr. Sullivan had been an associate of Tom Thornton’s at divine interVentures, where
Mr. Sullivan was General Counsel. Mr. Thornton indicated that Mr. Sullivan’s law firm was
hired to work on KBA’s equity investments after two large local law firms consulted for client
companies with which they had a relationship while representing KBA, thus creating a conflict.
KBA management and the BOD, therefore, determined that there was a need to contract with a
law firm outside of the area. Thornton indicated that everyone knew he had an existing
relationship with Mr. Sullivan because Thornton gave Mr. Sullivan a personal endorsement.
Venture Accelerator/Bioscience Park
Expenses paid directly by KBA for the Venture Accelerator included those funded through Bond
Series 2009C, KBA’s self-funded bonds. The significant contracts for the Venture
Accelerator/Bioscience Park are below.
Excel Contractors
The total contract with Excel Contractors, Inc. was for $10,631,200 for the construction of the
Venture Accelerator. Pay applications #17 and #18 were paid directly by KBA within Series
2009C Bonds. The total paid directly was $901,022. See the Bioscience Park and Venture
Accelerator sections of this report for further details.
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