Complete 2012 forensic audit documents - Kansas Bioscience ...

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KBA Forensic Audit Summary Page 16 of 30 Alleged or Potential Conflicts of Interest Audit location Issue/Question Summary (continued from previous page) and former KBA management and [board members] indicate that there is no requirement or recommendation that a client company be a member of Kansas Bio in order to receive funding or services from KBA. … The missions of Kansas Bio and KBA are closely aligned. … Therefore, it is natural that the president of Kansas Bio will have relationships with many of the client companies seeking funding from KBA. However, these relationships can result in the perception of a conflict of interest if the president of Kansas Bio is serving on the [board] of KBA. … Therefore, the appointing authorities to KBA’s [board] should consider the appearance of this conflict when considering future appointments that may link Kansas Bio and KBA too closely” (p. 147).
KBA Forensic Audit Summary Page 17 of 30 Issues Related to Former President and CEO Tom Thornton Audit location Issue/Question Summary Beginning on page 15 Beginning on page 35 BKD interviewed many people about the nature of Thornton’s leadership style and the KBA culture under his leadership. Did Thornton lie about his employment history while being interviewed for the KBA’s CEO position – particularly the nature of his job in the office of former Congressman Dennis Hastert? BKD: “Mr. Thornton was described by many individuals … as obviously intelligent, a strategic thinker, and a gifted speaker. However, just as often comments were made regarding his arrogance and the self‐aggrandizing manner in which he took credit for the work of others. … His behavior was often described as erratic by some who sought funding from KBA and some who worked for KBA” (p. 15). BKD enumerates specific reported instances of such behaviors and notes that “these issues, whether real or perceived, had a significant impact on the morale of some KBA employees. … Based on the totality of comments shared with BKD by current and former employees and many individuals interacting with KBA from outside the organization, it appears that Mr. Thornton’s leadership style was problematic and overall did not garner the type and level of respect that is expected for someone leading the KBA” (pp. 15 and 16). Thornton resigned as CEO in April 2011. No. BKD concludes that Thornton did not misrepresent his employment history. Beginning on page 38 Beginning on page 40 BKD investigated allegations “that Thornton was integrally involved in the financial decline of [his former employer] Divine Interventures” (p. 38), which declared bankruptcy in February 2003. BKD: “A few days into the forensic audit … Thornton resigned [as KBA CEO] and accepted the position of general manager of alliances with Cleveland Clinic Innovations …” (p. 40). BKD looked into allegations “that Mr. Thornton called in a few favors to obtain the job with Cleveland Clinic Innovations after the announcement of the forensic audit” (p. 41). BKD reviewed the filings associated with the bankruptcy and interviewed Divine’s former secretary and general counsel, Jude Sullivan. BKD reports that Sullivan’s “recounting of what led to the downfall of Divine Interventures closely approximated that detailed in the bankruptcy filings” (p. 39) and that “Sullivan indicated that everything that Divine did that mattered as far as its demise happened long after Thornton left” (p. 40). Two connections of Thornton’s are brought up in these allegations: Bill Sanford, a KBA board member who is also a member of the board of the Cleveland Clinic and a member of the advisory board of Cleveland Clinic Innovations; and Baiju Shah, the CEO of Bio Enterprise. “Both Messrs. Sanford and Shah deny assisting Thornton in his move to Cleveland Clinic Innovations” (p. 41) and “BKD saw no direct indication in Thornton’s emails of any involvement by Messrs. Sanford or Shah” (p. 43). BKD reports that the senior counsel of Cleveland Clinic Innovations “indicated that Thornton had been known to the management of Cleveland Clinic Innovations since the mid 1990s and no one associated with KBA, inclusive of Mr. Sanford and Mr. Shaw, assisted Thornton in securing his employment with Cleveland Clinic Innovations” (p. 43). BKD notes, too that “Thornton’s email indicates that he was first contacted by ... the executive director of Cleveland Clinic Innovations regarding a possible employment opportunity on December 7, 2010” (p. 41), weeks before the Senate Commerce Committee hearings on the KBA or the launch of the forensic audit they led to.
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Page 34 and 35: Table of Contents INTRODUCTION ....
Page 36 and 37: Other Employment Decision Allegatio
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Page 40 and 41: KBA again appeared before the Comme
Page 42 and 43: ENGAGEMENT APPROACH Interviews Inte
Page 44 and 45: • Kent Glasscock - President Nati
Page 46 and 47: Computer Forensics Computer hard dr
Page 48 and 49: START-UP PHASE KBA has operated und
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Page 54 and 55: Investment Committee. All current H
Page 56 and 57: The program goals are to: 1) recrui
Page 58 and 59: Through June 30, 2011, three Rising
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Accreditation Council for Graduate
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$581.8 Million Funding Cap Breakdow
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• Tom Thornton - President, Illin
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divine interVentures’ Bankruptcy
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Sullivan indicated that everything
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On January 11, 2011, Mr. Coburn ind
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CHANGE OF EMPLOYMENT STATUS OF CFO/
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Ethics Investigation Regarding Clay
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As a result of the possible violati
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large enough to meet KSU’s needs
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On January 9, 2007, KBA’s BOD aut
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The Kansas City Area Life Science I
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The committee that reviewed the arc
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Monthly payments for Series 2009A a
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If KBA is able to maintain the abov
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Debt Service Payments Debt service
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• assisting KBA with understandin
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Business Development: HBV has a net
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Beginning in August 2009, Ryan Whit
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offered by KBA and the federal gove
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On June 8, 2010, ICM announced that
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However, the EarCheck product langu
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Furthermore, HBV Director of Commer
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industry dating back to Marion Labo
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Kansas’ #5 Ranking in Top 10 Stat
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merger, acquisition or other restru
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In summary, it appears that Lindsay
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Allegations have been made that the
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and interview. As previously stated
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Computer Solutions’ invoice detai
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After the RFQ evaluation, Ennis Knu
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venture firms that will co-invest a
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include only those guests determine
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management of KBA-owned facilities
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Audit. After additional requests of
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Mr. Eisenbrandt, Thornton’s attor
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Ms. LoScalzo further recalled that
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Based on these findings, Buck Consu
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In addition to base compensation an
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Tom Thornton Overpaid Car Allowance
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The following expenses are discusse
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either version, contradictory to po
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KBA Meeting Expenses In general, wi
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Furthermore, the required supportin
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Jan Katterhenry was reimbursed twic
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The agreements state that Akin Gump
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Midwest Research Institute Midwest
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Mr. Bret Healy Mr. Healy was origin
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Ennis Knupp & Associates, Inc. KBA
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Cedar Creek Development VI, LLC Ced
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approval. The executive staff will
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General Ledger Classification Gener
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Additionally, KBA’s BOD approved
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Subsequently, on April 4, 2011, KBA
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Cary Nourie Tom Thornton worked wit
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Tom Churchwell Tom Thornton sat on
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KBA’s Response: KBA management wi
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member of KansasBio since 2006. Mem
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statements, capital charts and payr
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Recommendation: The BOD should cons
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RELATIONSHIP APPENDIX 151
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KU Center for Research, Inc. Associ
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APPENDIX B
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Two specific software programs were
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used to remove data from a system i
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Temporary Internet Files and Cookie
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EXHIBIT 1 CCleaner Product Informat
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EXHIBIT 2 Microsoft Word Files from
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Thursday, April 14, 2011 Gov. John
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Kansas Bioscience Authority applaud
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Transition plan.docx
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Personnel Director of Marketing and
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EXHIBIT 4 Archive.PST Folder Schema
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Thornton Laptop Windows Shortcut Fi
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USBStor ControlSet001\Enum\USBStor
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EXHIBIT 8 Windows Shortcut Files Po
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APPENDIX F
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600 BKD Professional Hours through
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