CONWAY — The University of Central Arkansas, beset by a series of scandals since 2008, plans to install a fraud hot line that employees and others can use to call in anonymous tips.
UCA’s Office of Internal Audit recommended the hot line in a draft report of its investigation of activities involving Jack Gillean, a former chief of staff who resigned abruptly in June and who later was charged with four felonies.
That report said in part: “Based upon the fraudulent behavior of upper administration in the last [four] years at UCA, it is [Internal Audit’s] opinion that UCA create a comprehensive board policy and implement a comprehensive confidential ‘Hotline’ for all UCA employees, students, vendors, and others to be operated by a third party server.”
In a management response e-mailed Thursday to Pam Massey, director of audits, UCA President Tom Courtway wrote that management agrees with the recommendation and “will take appropriate steps to draft and present to the University’s Board of Trustees a fraud policy.”
Courtway said management also agrees with the idea of installing a hot line and said that “this process is underway.”
“A contract is being entered into for a hot line” and the line will be operational in January 2013, he wrote.
The draft audit report said a fraud policy should “establish a process for reporting and responding to incidents of fraudulent or other dishonest acts.”
“It is also recommended that the University implement a single point of communication to receive information on suspected fraud or unethical behavior, such as a fraud hotline,” the report said.
Katie Henry, UCA’s interim general counsel, said in an e-mail later Thursday that UCA has selected Lighthouse Services Inc. as the vendor for the hot line but has not signed a contract or paid for the service yet.
Since 2008, three top administrators at UCA have resigned and subsequently been charged with criminal offenses.
In August 2008, Lu Hardin resigned from the presidency and later pleaded guilty to two federal felonies as a result of an illegal $300,000 bonus the board of trustees had secretly given him.
In September 2011, Hardin’s successor, Allen Meadors, resigned over a mishandled $700,000 offer from food-vendor Aramark to renovate the UCA-owned president’s house. Meadors is awaiting trial on a misdemeanor charge of solicitation of tampering with a public document.
Scott Roussel, a former board chairman, later resigned under pressure over the Aramark issue but was not charged with a crime.
Then on June 15, Gillean resigned as chief of staff after he was asked about his grandmaster key, which UCA police said a student had used to burglarize a campus building early June 9 and steal four prescription pills.
In October, Gillean, a former deputy attorney general, was charged with three felony counts of commercial burglary, one felony count of fraudulent insurance acts and one misdemeanor count of issuing a false statement. He has pleaded innocent.
An affidavit filed with the charges accuses Gillean of giving that key, a second key and his identification card which doubles as a key card to the now-former student, Cameron Stark.
The affidavit said Gillean did so knowing that Stark would use the keys to burglarize professors’ offices and steal tests.
Stark, a former Marine, has not been charged and has limited immunity from prosecution.
In another development, the preliminary audit report already has stirred some contention on campus.
The report found that Andrew Linn — the UCA employee from whom Stark is accused of stealing the pills in June — increased the amount of transportationrelated financial aid for a student whom he knew after that student said his car was stolen and recovered with damaged wheels.
According to a police report, that student was Stark, 24.
The audit, citing the lack of a police report in the financial-aid file, said documentation was insufficient to support the extra money Linn authorized for the student’s “unexpected vehicle repair expense” on March 12, 2010.
Linn said in an interview that he obtained a copy of the Conway Police Department report Wednesday and provided it to the Office of Internal Audit. Audit director Massey first agreed to amend the report but later said she would not do so.
The Conway Police Department report, obtained by the Arkansas Democrat-Gazette, shows that on March 8, 2010, Stark told police someone had driven off with his parked car. The report says that on March 12, 2010, police found the car in Burns Park in North Little Rock.
In an e-mail Wednesday to Cheryl Lyons, director of student financial aid, Massey spoke of her conversation with Linn.
“I originally told him that we would [alter the audit report] but upon further review, it was determined that the report as written is inaccurate,” Massey said. “Upon discussing this with Mr. Linn, he became unprofessional and argumentative.”
Massey said that, based upon the police report, the car was recovered March 12, 2010, and that on March 15, 2010, police were still trying to contact the owner to tell him the car had been towed to an impound lot.
Massey said comments on the student’s transportation aid adjustment, however, were dated March 12, 2012, “which is before [Stark] had been notified of the location and recovery of his vehicle.”
Further, Massey said: “In reviewing the sales order that was in the financial aid files, we noted that [it] was dated March 5, 2010,” before the police report said the car was even stolen.
The audit draft recommended that financial-aid staff obtain supervisory approval and adequate documentation when making a cost-of-attendance adjustment in student financial aid. Staff also should not take “any action on any applications of personal friends,” the draft added.
On another audited matter, UCA Police Chief Larry James said in a memorandum Thursday to Massey that the police are logging into all digital security video recorders on campus each week to make sure they are working properly. He did not say when this weekly routine began.
The draft audit noted that video footage in Wingo Hall, where Gillean worked, was not salvageable due to a malfunction. Police and auditors had hoped video footage would show who used Gillean’s office computer shortly before the drug theft about 1:30 a.m. June 9.
In another management response to the audit, Larry Lawrence, UCA’s Physical Plant director, said he “couldn’t agree more” with a recommendation that the school develop an electronic-access system to allow for closer monitoring than traditional keys can provide.
“We would love to have the funds to make this happen,” Lawrence wrote.
Lawrence said he also agreed “that we should document and keep on file any information related to a key that is found.”
That was not done in the spring of 2011 when a Physical Plant employee found a key on the ground, turned it into the UCA locksmith, who verified it was Gillean’s key and gave it to Lawrence who returned it to Gillean, the report said.
“In the future we will document and report all keys that are found and brought to my attention and the attention of the Lock Shop,” Lawrence wrote.
According to the Pennsylvania-based Lighthouse’s website, the company “provides confidential, 24-hour reporting services, enabling companies of all sizes to maintain an ethical workplace and address fraud, abuse, regulatory violations and other inappropriate behavior.”
The website says all of its hot-line packages include “incident transcripts via email” and monthly summary reports, which are “permanently retained.”
The company says employees may contact it by fax, mail, e-mail or toll-free phone calls “Employees feel confident that their anonymity will be respected at all times,” it says.
Ben Beaumont, a spokesman for the University of Arkansas System, said in an e-mail Thursday that its university system has had “a System-wide fraud hotline which takes anonymous tips” for several years.
Beaumont said the UA System established a formal fraud policy in September 2007. “While the hotline existed for a little while prior to the policy, it was formalized when that policy was implemented,” he added.
Earlier this year, the UA System disclosed that a critical internal audit at the University of Arkansas at Pine Bluff resulted from a tip left on that fraud hot line.
The UAPB audit, released in February, found that a student-housing supervisor bypassed payroll and purchasing controls, employing family members, approving purchases that violated university policy, overpaying some workers and signing reimbursement forms to herself on the chancellor’s behalf. As a result of the investigation, UAPB fired four employees.
The UCA board’s audit committee is scheduled to consider the Gillean report at noon today. The full board, which meets at 1:30 p.m. in Wingo Hall, is scheduled to hear a report from that committee.
Front Section, Pages 1 on 12/07/2012