Complete 2012 forensic audit documents - Kansas Bioscience ...

• First funding decision – April 2006
• Commencement of CEO recruiting process – March 2006
• Announcement of siting of Kansas Bioscience Park – July 2006
• Tom Thornton hired – October 2006
OPERATIONAL PHASE
The Operational Phase (October 2006 to present) was primarily under the leadership of
Tom Thornton, former President/CEO of KBA. It is during this phase that employees were
hired, organizational structure was put in place, key operational policies and procedures were
implemented and most programs were initiated.
Directors serving on the BOD in 2006 indicate that Mr. Thornton brought needed organizational
structure to KBA. Administratively, he established the office and assembled the staff. He
oversaw the establishment of financial management procedures and systems; the development of
a post-investment monitoring and reporting system; the refinement of criteria for screening and
evaluating opportunities of interest and the establishment of Heartland BioVentures.
Programmatically, KBA funding tools through which client companies receive grants from or are
invested in by KBA were established or refined, and the number and magnitude of investments
grew significantly.
Strategic Direction of KBA during Operational Phase
Early in his tenure, Tom Thornton stepped into a leadership role in the pursuit of the National
Bio and Agro-defense Facility (“NBAF”) with which he and KBA became closely aligned.
Mr. Thornton also established the Cancer Cures project within KBA to support the University of
Kansas Cancer Center’s (“KUCC”) efforts to attain the National Cancer Institute (“NCI”)
designation. These two initiatives became significant strategic foci of KBA’s investment
strategy. As an example, KBA’s BOD and management made a specific decision that funding
related to the University of Kansas (“KU”) would generally be supportive of the NCI designation
pursuit.
However, KBA’s investment focus was not readily apparent to many seeking funding. In
interviews conducted by BKD, a common comment was that KBA’s investment strategy was not
readily understandable; that it was not transparent. Many individuals interviewed stated that they
would look to KEGA to determine if their project was something that was within KBA’s
mission. They would then be told by KBA that the intent of their project was not within KBA’s
scope, or in at least one instance, KBA’s BOD/management would rescind their support after a
Letter of Support (“LOS”) had been issued.
As an example of this occurrence, on September 29, 2008, KBA issued a LOS to Kansas State
University (“KSU”) under KBA’s Matching Funds program in the amount of $780,789. KSU
was seeking support for a proposal to the National Science Foundation’s (“NSF”) Integrative
Graduate Education and Research Training (“IGERT”) program. The central focus of the
training program was supporting doctoral students in the conduction of integrated bioenergy
research. In the LOS, KBA stated, “KBA is pleased to express its enthusiastic support for the
Kansas State University proposal to establish an integrated effort in renewable and sustainable
fuels in the state of Kansas.…We encourage the National Science Foundation to award Kansas
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