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No crime in UA deficit case, prosecutor says

Posted: December 12, 2013 at 1:36 p.m.

— Prosecutors found no evidence of criminal activity in connection with a multimillion dollar deficit in the fundraising division at the University of Arkansas at Fayetteville.

David Bercaw, deputy prosecutor for Washington County, issued a 14-page summary of his investigation today.

"This is a very unfortunate situation of a breakdown of internal control within the Advancement Division," he wrote.

The division had a cumulative deficit of $4.2 million as of June 30, 2012, according to an investigation by the Arkansas Division of Legislative Audit. UA officials said the cumulative deficit was reduced to $3.2 million a year later, after $4 million transferred from reserves in January was used both to augment the division’s budget and to pay down the deficit.

Legislative auditors found four issues of concern and referred to the prosecutor: a duplicate expense payment to Brad Choate, former vice chancellor for Advancement, for $2,052, which Choate later repaid; an improper deposit by former budget officer Joy Sharp of $1.35 million; two “accounts receivables” entries by university treasurer Jean Schook’s office that “partially obscured” deficits, according to the audit; and contradictory testimony Sept. 13 under oath about the alleged shredding of documents by Chancellor G. David Gearhart and former university spokesman John Diamond.

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