Complete 2012 forensic audit documents - Kansas Bioscience ...

As previously discussed, EnalaPed received a $74,500 grant under Heartland BioVentures POCI
program, the majority of which was used to pay Beckloff Associates for services provided to
EnalaPed. This fact was disclosed in the EnalaPed POCI application. Per the structure of the
POCI program, Heartland BioVentures staff can approve a POCI Grant up to $75,000 based on
uncontested notification of the Investment Committee. The notification is the submission of a
formal written Investment Recommendation as is required for all other investment opportunities
under consideration. The formal presentation and discussion of the Investment Recommendation
by the Investment Committee or BOD is not required if no questions are raised by committee
members. Therefore, EnalaPed was not brought before the Investment Committee or the BOD
for discussion. BKD identified no evidence of Thornton’s disclosure of his relationship with Mr.
Beckloff at any stage of the consideration of the EnalaPed investment. Furthermore, it does not
appear that disclosures were required under either K.S.A. 74-99b08(a) or KBA’s Conflict of
Interest and Documentation Policy as Thornton had no direct or indirect interest in Beckloff
Associates and received no form of compensation from Mr. Beckloff.
Although Mr. Thornton had an existing relationship with Mr. Beckloff, the EnalaPed grant went
through the standard KBA investment process for POCI Grants. BKD noted no evidence of any
potentially inappropriate influence on Mr. Thornton’s part with regard to the EnalaPed
investment.
Please refer to the Relationship Appendix for a depiction of Mr. Beckloff’s relationship map.
Theron Odlaug
Tom Thornton sat on the BOD of Advanced Life Sciences, Inc. with Theron Odlaug.
Mr. Odlaug is the CEO of CyDex, a company that received a $195,000 grant from KBA in 2009.
BKD identified no evidence of Thornton’s disclosure of his relationship with Mr. Odlaug at any
stage of the consideration of the CyDex investment.
In responses to the Commerce Committee’s concern regarding the lack of disclosure by
Thornton of this relationship, KBA offered that Thornton’s acquaintance with Mr. Odlaug did
not constitute a substantial interest or conflict in that Mr. Thornton: 101
• Did not own any legal or equitable interest in CyDex as evidenced by his annual
Statements of Substantial Interest
• Did not receive compensation from CyDex or Mr. Odlaug
• Had not received, directly or indirectly, gifts or honoraria having an aggregate value of
$500 or more from CyDex or Mr. Odlaug
• Did not hold the position of officer, director, associate, partner or proprietor of CyDex
• Had not received any fee or commission from CyDex or Mr. Odlaug
Although Mr. Thornton had an existing relationship with Mr. Odlaug, the CyDex grant went
through the standard KBA investment process. BKD noted no evidence of any potentially
inappropriate influence on Mr. Thornton’s part with regard to the CyDex investment.
101 Kansas Bioscience Authority Responses to Materials Distributed by the Senate Commerce Committee Hearing
Date: Friday, April 1, 2011.
141