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ASU audit findings: Allegations of wrongdoing against multiple board members

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File Photo: ASU Board File Photo: ASU Board
File Photo: Judge Marvin Wiggins File Photo: Judge Marvin Wiggins
File Photo: Trustee Elton Dean File Photo: Trustee Elton Dean
File Photo: Dr. Lawrence Lemak File Photo: Dr. Lawrence Lemak
MONTGOMERY, AL (WSFA) -

Alabama Governor Robert Bentley released the preliminary findings of a forensic audit into the finances at Alabama State University Monday. The governor requested that the board suspend its current search for a new president until the allegations in the report could be addressed.

The 36-page report completed by Forensic Strategic Solutions details allegations of wrongdoing by multiple members of the Alabama State Board of Trustees including the Chairman Elton Dean, Vice-Chair Judge Marvin Wiggins and former member Dr. Lawrence Lemak.

The allegations of financial wrongdoing were originally raised by former ASU President Dr. Joseph Silver. Silver had only been on the job for two months when he began to ask questions about some contracts and financial agreements the university had with some vendors.

Silver never provided proof or documentation of his allegations but did describe them as "possible conflicts of interest." Forensic Strategy Solutions did report findings of conflict of interest in its preliminary report.

"Well I think that obviously some of the things that were reported to him are in this report, and there are other things that were not reported to him that are also in this report. You will see things that are very, very disturbing," Bentley said.

The report includes supporting documents like copies of checks and reference numbers for different contracts that the university entered into with various individuals with connections to the members of the board.

Further, the report outlines the difficulties for forensic auditors in obtaining all of the information that it requested from officials at Alabama State. ASU retained the legal services of a Birmingham law firm and the firm attempted to change the agreed upon procedures by which the auditors would obtain information.

Gov. Bentley referred to Alabama's State's actions as "stonewalling" when asked about the investigation. The governor said the preliminary findings of the audit will be turned over to state and federal authorities.

"We also will furnish all of this material to the appropriate authorities. We will furnish it to the Attorney General's Office and we also will furnish this to the federal authorities," Bentley said.

The preliminary findings concluded that auditors had found evidence that suggested evidence of conflicts of interest, numerous contracts with no proof of work completed, financial waste, inappropriate relationships, payments to family and friends of ASU board members, inappropriate payments and intentional obscuring of inappropriate payments and circumventing policies and procedures.

[DOCUMENT: Preliminary audit findings Pt.1 (.pdf)]

[DOCUMENT: Preliminary audit findings Pt. 2 (.pdf)]

[DOCUMENT: Governor's letter to the ASU Board (.pdf)]

JUDGE MARVIN WIGGINS

The report alleges that the wife of Judge Marvin Wiggins had been paid by the university to run a two-week camp held on the campus of ASU. The report also alleges that at least four other relatives, including his mother-in-law and sister-in-law, were paid by the university for jobs relating to the camp, but the payments were "not all identified by ASY as being paid under the Camp Eagle project in all instances."

One example of the connections to Judge Wiggins is the fact that ASU even hired his sister-in-law as a professor at ASU in 2011 after a stint as a practicing attorney in the state of North Carolina. She was disbarred in 2008 and pleaded guilty to mortgage fraud among other charges.

The payments to relatives or acquaintances totaled more than $250,000.

Auditors also alleged wrongdoing when it came to a contract the university held with the Alabama Medicaid Agency. According to the report, ASU agreed to "promote the physician's use of technology in their respective practices." The contract was for $1 million.

The report says that even though ASU had an individual whose job it was to execute and oversee the ASU-Medicaid agreement, ASU entered into a contract for Carol Jacobs, President of LORAC, INC. Overall, ASU paid LORAC $581,000 and attempted to bill the state's Medicaid Agency for reimbursement. The Medicaid agency refused to reimburse the entire amount because it "couldn't make sense of the documentation."

Overall, ASU spent more than $1.6 million related to the Medicaid contract to LORAC and other contract service providers.

Wiggins released the following statement Monday night:

"Governor Bentley was provided on Friday with information related to me that clearly and concisely disputed the findings of his report. Instead of basing his actions on facts, he has arbitrarily decided to try to remove me from the board so that he can begin the process of controlling Alabama State University. Our University has gained everything we have through struggles and fights for decades, and if a fight is what Gov. Bentley wants, he will certainly get it."

The report also alleged wrongdoing by Dr. Lawrence Lemak, and Board of Trustees Chairman Elton Dean.

DR. LAWRENCE LEMAK

For Dr. Lemak, auditors allege that ASU was used as a "pass-through" to pay Lemak's foundation which had members of his family on the payroll including his son and daughter-in-law. FSS also provided documentation that suggest money paid from ASU to the National Center for Sports Safety went to several private companies owned by Lemak.

In total, the report alleges that more than $739,000 was paid by ASU to the National Center for Sports Safety.

Lemak is the founder of the Alabama Sports Foundation and from 2007-2013, ASU paid $864,792.55 to the Alabama Sports Foundation. Of the payments auditors wrote, "ASU has not produced any contracts with ASF." In effect, FSS auditors say the money was simply asked for by the Alabama Sports Foundation and the money was provided.

ELTON DEAN

Regarding Elton Dean, auditors allege he violated the university's conflict of interest policy via a business owned by relatives. 

Dean's daughter and son-in-law are the only two members of Space Walker, LLC.  Space Walker is a company that rents inflatables and received thousands of dollars in payment from Alabama State. Dean did not disclose the nature of his relationship to the owners of Space Walker on a university required Conflict of Interest form nor on a State of Economic Interest Form. 

Over a period of two and a half years, Dean's daughter and son-in-law received more than $10,000 in payments to Space Walker for inflatable rentals and management.

And according to the forensic auditors, Dean's relationship with a woman named Falicia Rhodes, merits further investigation as she received $78,000 in payment from CLPP, an administrative account where 20% of money was deposited.

Dean released the following statement Monday night:

"I absolutely and categorically deny the baseless allegations made today about me. We worked with this Governor in good faith, and today he betrayed us and released a report that he knows is wrong. I can assure all those in the University family that we will not lie down and allow any Governor to take over ASU. We are being used and abused for political purposes by Gov. Bentley, and I resent it."

HUNDREDS OF MILLIONS OF DOLLARS

The auditors found more that $2.5 million in undeliverable contracts and more than $200 million in construction contracts that they have not even been able to look into.

Copyright 2013 WSFA 12 News.  All rights reserved.

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