Complete 2012 forensic audit documents - Kansas Bioscience ...

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$581.8 Million Funding Cap Breakdown – Payment Status of Commitments (in Millions) Cash Received from State and Paid on Investment Commitments, $87.50 Cash Received from State and Paid on Other Operating Expense Commitments, $14.20 Cash Received from State Not Yet Paid on Commitments, $73.40 Receivable from State, $21.60 Not Yet Committed, $316.70 Commitments in Excess of Cash Received and Receivable from State, $68.40 KBA is audited by the firm Allen, Gibbs & Houlik, L.C. KBA’s audited statements as of June 30, 2011 are included as Exhibit 21. BKD performed no procedures with regard to the audited financial statements and presents them for informational purposes only. 34
REQUESTED AREAS OF INVESTIGATION In conjunction with the original and expanded scopes, Secretary Rodman requested that specific issues be investigated and explained in the report. HIRING OF TOM THORNTON In early 2006, the BOD undertook a search for a CEO/President for KBA, as well as a president for Kansas BioEnterprise (now HBV). The executive search consulting firm of Brill Neumann was hired on March 24, 2006 at the recommendation of Bill Sanford. Mr. Nick Brill indicated that Brill Neumann had previously done a number of economic development searches in Ohio and Mr. Sanford was on some of the search committees for those projects. Brill Neumann focuses on recruiting leaders to institutions of higher education, academic medical centers and research institutes. 31 Fees for Brill Neumann’s services totaled $60,000. Early in the process, Mr. Brill met with the KBA Search Committee as a whole and individually on at least two occasions to discuss the position descriptions for the two positions. Search Committee members included Clay Blair, Bill Sanford and Dolph Simons. 32 Mr. Brill indicated that he also participated in a number of telephone calls related to the position descriptions. The formal position descriptions enumerate the responsibilities of the job as well as the qualifications of desired candidates. Please refer to Exhibit 22 for copies of the position descriptions. The candidate pool was then created by Brill Neumann using three paths to identify candidates for both positions. Brill Neumann reached out to its contacts in the venture community to identify potential candidates who had experience investing in and/or starting and building bioscience companies and whose interests might be appropriate for the Kansas BioEnterprise position. Brill Neumann also spoke with sources in the economic development arena to identify potential candidates who had both commercial sector experience and strong track records in technology based economic development. And third, Brill Neumann sought candidates who had private sector experience and proven ability to commercialize intellectual property developed at research institutions. The contact list provided by Brill Neumann indicates that 75 individuals were contacted. Mr. Brill indicated that he did not recall from whom Brill Neumann received Mr. Thornton’s name. However, he believes it would have been through one of the economic development contacts. The information provided by Brill Neumann indicates that seven candidates were identified for the KBA CEO/President position, four of whom were pursued. Of the four pursued by Brill Neumann, the KBA Search Committee chose to interview: • Bill Duncan – President and Chief Executive Officer, Kansas City Area Life Sciences Institute • Tom Thornton – President, Illinois Technology Development Alliance Brill Neumann identified 27 candidates for the Kansas BioEnterprise President position, seven of whom were pursued. Of the seven pursued, the KBA Search Committee chose to interview: • Terry Crabtree – Former President, Inoveon Corporation • Vineet Kapur – Chief Financial Officer, Touchstone Asset Management 31 http://brillneumann.com. 32 Available minutes do not detail the members of the Search Committee. 35
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Page 34 and 35: Table of Contents INTRODUCTION ....
Page 36 and 37: Other Employment Decision Allegatio
Page 38 and 39: have all provided information and i
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
Page 50 and 51: State University the proposed grant
Page 52 and 53: described Thornton as an effective
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
Page 60 and 61: grants or bonds. KBA also works wit
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Page 64 and 65: Some individuals BKD interviewed ob
Page 66 and 67: The Texas Consortium also requested
Page 68 and 69: Accreditation Council for Graduate
Page 72 and 73: • Tom Thornton - President, Illin
Page 74 and 75: divine interVentures’ Bankruptcy
Page 76 and 77: Sullivan indicated that everything
Page 78 and 79: On January 11, 2011, Mr. Coburn ind
Page 80 and 81: CHANGE OF EMPLOYMENT STATUS OF CFO/
Page 82 and 83: Ethics Investigation Regarding Clay
Page 84 and 85: As a result of the possible violati
Page 86 and 87: large enough to meet KSU’s needs
Page 88 and 89: On January 9, 2007, KBA’s BOD aut
Page 90 and 91: The Kansas City Area Life Science I
Page 92 and 93: The committee that reviewed the arc
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Page 96 and 97: If KBA is able to maintain the abov
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Page 102 and 103: Business Development: HBV has a net
Page 104 and 105: Beginning in August 2009, Ryan Whit
Page 106 and 107: offered by KBA and the federal gove
Page 108 and 109: On June 8, 2010, ICM announced that
Page 110 and 111: However, the EarCheck product langu
Page 112 and 113: Furthermore, HBV Director of Commer
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Page 116 and 117: Kansas’ #5 Ranking in Top 10 Stat
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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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