Audit finds no fraud against UCA by Baker

University releases 5-page report

CONWAY -- Former state Sen. Gilbert Baker committed no fraud against the University of Central Arkansas in his former job as the president's executive assistant, an internal audit to be released today found.

UCA released a five-page audit report on Baker, who now holds a $50,000 job teaching music at UCA, to the Arkansas Democrat-Gazette under the Arkansas Freedom of Information Act late Thursday. The board of trustees' internal audit committee is to meet at 9 a.m. today.

The report says the review found "no evidence that Mr. Baker had committed egregious acts or fraud against the University as it relates to his duties as an administrator at UCA."

The audit looked at various aspects of the Conway Republican's job and political activities as well as his handling of a $100,000 loan in the form of a July 8 check that Baker hand-delivered to the UCA Foundation from nursing-home owner Michael Morton of Fort Smith.

The audit began after Baker, abruptly resigned from his $132,000-a-year position April 2, less than two weeks after the foundation returned Morton's donation. That donation and thousands of dollars in contributions Morton made to eight political action committees were in the form of checks dated July 8.

Seven of those PACs later gave money to the appeals-court campaign of Circuit Judge Michael Maggio of Conway. Three days after the donations, Maggio cut a Faulkner County jury's $5.2 million judgment against one of Morton's 32 nursing homes to $1 million.

Four sources who did not want to be identified have told the Democrat-Gazette that the FBI is investigating the PAC contributions, which Morton has said he made at the request of Linda Leigh Flanagin, the sole employee of LRM Consulting, a company Baker formed shortly before he joined UCA in January 2013.

Two state agencies also are investigating, and the Arkansas Supreme Court has stripped Maggio of all court cases pending further notification.

The UCA audit report did not comment on the timing of Morton's check to the foundation or its return other than to give the July 8 check date, to note that the foundation received it July 15 and that the foundation returned it March 24.

The report also noted that on July 17 the foundation received a $10,000 donation dated that same day from Don Thomas, the Conway man who is a former campaign consultant for Baker and who has said he knew nothing about any of the PACs even though one of them was named after him and he was listed as an officer on two of them.

Like Morton's $100,000 donation, that one was also to go to UCA's nursing program, according to a note obtained Thursday from the office of internal audit.

The note, accompanying Thomas' check and signed by UCA employee Connie May, associate for administration, says, "Per Gilbert, Tom said this donation is for the Nursing building."

Elsewhere, handwritten notes apparently made by an audit employee ask, "Why was Donald Thomas money not returned if part of PAC's?" At another point, notes say Thomas was a "donor for a long time."

Shelley Mehl, UCA Foundation president, has previously said Morton was a first-time donor.

Neither Baker nor Thomas returned phone messages late Thursday.

Audit Committee Chairman Bunny Adcock and committee member Elizabeth Farris also did not return messages. A phone number was not available for the third committee member, Shelia Vaught.

The report said auditors reviewed travel expenses totaling $9,141.83 that Baker incurred from Feb. 28, 2013, through March 19 of this year.

The report said the expenses were "adequately supported" and related to his job and that it found "no instances" where he had failed to comply "with applicable laws, rules, regulations, or Board policies."

Auditors also reviewed the PACs as well as at least some activities of Chris Stewart, the Little Rock attorney who created the PACs for one or more clients he has declined to identify.

Stewart or his law firm also is the registered agent for LRM Consulting and for the Arkansas Faith and Freedom Coalition for which Baker was the incorporator and organizer in 2010.

The review had examined whether Baker was still involved with the coalition, for which he was paid nearly $60,000 in 2012, according to Internal Revenue Service records.

According to a timeline in the audit report, the coalition's articles of incorporation were amended Jan. 9, 2013, to remove Baker from the board of directors.

At Courtway's instruction, Baker has said he had his name removed as an officer of LRM Consulting earlier this year.

According to the timeline, that company's articles of incorporation also were amended Feb. 28 "to provide a share exchange" from Baker to Flanagin and to name James McAlister as incorporator and chairman.

Flanagin has not returned numerous phone messages since March. Baker has denied asking her to seek Morton's support for Maggio. Morton said the request came at a Little Rock restaurant while Maggio was presiding in the case against one of Morton's nursing homes.

The audit report indicates it is being shared with Larry Hunter, Arkansas' deputy legislative auditor.

A section on 05/30/2014

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