Complete 2012 forensic audit documents - Kansas Bioscience ...

and dinner potentially hosted by UBS and further indicated that the UBS Special Investigations
Unit had started an internal investigation, pursuant to their normal protocol, into the allegations that
Blair personally benefitted from KBA’s relationship with UBS. However, UBS did not commit to a
timeline for the internal investigation.
On February 22, 2008, Polsinelli received a letter from Michael Norton of Blackwell Sanders, LLP,
representing Mr. Schmisseur, inquiring about the status of the ethics complaint lodged by
Schmisseur four months earlier. The letter alleged that not only had no meaningful steps been
taken to address the serious ethical breaches identified by Schmisseur, but Schmisseur and others
had been subject to retaliation resulting in financial loss and other harm due to further ethical
breaches after the complaint.
The letter stated that the initial malfeasance reported by Schmisseur, and Ms. Kreps’ subsequent
breach of her duty of confidentiality, led directly to the termination of an individual from the KTEC
Pipeline Program and loss of business opportunity, and also led to the termination of Schmisseur
and another individual from the Center for Economic Development, Innovation and
Commercialization (“CEDIC”).
Through his attorney, Mr. Schmisseur requested information regarding what safeguards were taken
to ensure an independent investigation and regarding the level of knowledge Ms. Lawrence and
other KBA BOD members had regarding Schmisseur’s complaint and Ms. Kreps’ involvement in
the underlying issue (assumedly, his termination from CEDIC). The letter ended with the comment
that Schmisseur had authorized his attorney to explore other legal avenues to address his concerns
to the extent he was not satisfied with KBA’s diligence in these matters.
On March 19, 2008, Polsinelli replied to the Schmisseur letter. The response indicated that the
issues raised by Schmisseur were highly sensitive as were the related findings. KBA’s Executive
Committee was informed of the information provided by Schmisseur and had identified certain
matters requiring action. However, the letter did not provide any detail and indicated that the letter
would be the last correspondence with regard to the issues raised.
KBA chose to self-report the issue related to the potential payment by UBS for cocktails and dinner
to the Kansas Governmental Ethics Commission in a March 26, 2008 letter with attachments. In
that letter, KBA reported the possibility that all or a substantial part of the costs associated with a
KBA BOD dinner meeting in Washington, D.C. on March 12, 2007 may have been paid for by
UBS. Under Kansas Ethics Laws, directors and officers of KBA are prohibited from either
soliciting or accepting free or special discount meals from a source outside of state government,
except under specific circumstances. KBA’s internal investigation found that Clay Blair may have
made the arrangements with UBS without the knowledge of any other BOD member. However,
KBA did not interview Blair to attempt to confirm that allegation.
The details of the payment indicate that the $4,326.74 catering invoice for the dinner was paid by
Mr. Thornton on his personal credit card, for which he was reimbursed by KBA. There were
reportedly six UBS employees in attendance at the dinner. By letter dated February 27, 2008, UBS
indicated that it did not host, sponsor or pay for the event. KBA informed UBS after it had
consulted with its attorneys, that instead of UBS hosting or paying for the dinner, KBA would
organize, host and pay for the dinner itself. However, UBS did make a $6,000 donation to KBA on
February 28, 2007, but that donation was unconditional in terms of how KBA would use the funds.
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