NSCS, college officials’ actions trouble auditor

The Eagle has learned CSC and Nebraska State College System officials knew about possible NCAA violations in its football fundraising activities at least two weeks before publicly announcing they had reported the incidents to the NCAA.

On Oct. 13, the NSCS office in Lincoln, through Chadron State officials, issued a press release stating that they had reported possible NCAA violations and were “fully cooperating with the NCAA in a joint investigation regarding football fundraising activities and various financial transactions not part of the college foundation.”

Since then, Head Football Coach Bill O’Boyle has been temporarily removed from his position to focus on the investigation, college officials said. He has been replaced by Director of Athletics Brad Smith, who served as the Eagles’ head coach from 1987-2004.

Meanwhile, The Eagle learned last week from Nebraska Auditor of Public Accounts Mike Foley, that NSCS officials notified his office on Sept. 29 – two weeks before publicly acknowledging the possible violations – that the college had retained the services of a private auditing company, BKD of Lincoln, to assist the college during the NCAA investigation.

In addition to BKD, the college has hired the law firm of Stinson Morrison Hecker, which has eight offices in four states and Washington, D.C.

Nebraska APA Audit Manager, Sandra Steinbrecher, said the state’s staff arrived on campus Sept. 26 to perform a routine annual audit of CSC, and that the team, still on campus, is scheduled to leave Friday.

Foley said that on Sept. 29, three days after his auditing team arrived at CSC, the NSCS office notified him that it had hired BKD.

“We initiated the current audit a couple of months ago and were making good progress till we learned that the State College system negotiated and signed a contract with a private CPA firm to investigate this matter.  This all occurred without any communication to my office until after the arrangement was finalized despite the fact that my audit manager was on the Chadron campus at the time. I regard this act as both extraordinary and very troubling and certainly not in keeping with anything we have ever seen in government,” Foley stated last week in an email interview.

In addition, on Oct. 10, three days before announcing the possible NCAA violations and 11 days after notifying Foley’s office about BKD, NSCS Chancellor Stan Carpenter issued a campus-wide email to all CSC employees dictating procedures employees should follow if contacted by the state auditor’s office to “provide records or respond to written questions.”

That email made no mention of the NCAA investigation. It stated:

Dear Colleagues:

If you are contacted by staff from the Auditor of Public Accounts Office with a request to provide records or respond to written questions, please forward the request immediately to the College’s Vice President for Administration and Finance. Vice President Dale Grant will gather requested documents and coordinate written responses and information for Auditor Mike Foley and his staff in a timely, efficient and cooperative manner.

As a Chadron State College employee, you are not required to submit to an interview with the Auditor of Public Accounts or respond to verbal questions. The College and the System Office are not seeking to impede inquiries from the Auditor’s Office; however, it is important that the College administration is aware of the questions to ensure that answers are accurate and complete. The College will fully cooperate to make sure information and documents are provided in a timely manner.

Thank you for your prompt attention to these directions.

Chancellor Stan Carpenter.

In a phone interview last week, Foley confirmed that Carpenter’s email was related to the possible NCAA violations, and that his office was “deeply concerned about that communication.”

He apparently shared that concern with Carpenter.

On Oct. 14, four days after his initial email, and one day after publicly announcing the NCAA investigation, Carpenter issued a second email to CSC employees, revising his original statement.

That email stated:

Colleagues:

In my last note to you I indicated that you were not required to submit to an interview with the Auditor of Public Accounts (APA) staff or respond to verbal questions.  Auditor Foley has indicated that there may have been some misunderstanding about this matter.

My communication to you was the result of concerns raised by some employees who were contacted and felt they had to immediately rearrange work schedules to meet with APA staff.

Let me be clear that while you are not required to meet and/or speak with APA staff, you are free to do so if you so choose.  And, if you choose to speak with APA staff, you are free to answer any questions they might pose.

Further, if you ever have any audit concerns or become aware of fraud, do not hesitate to contact the APA anonymously at 1-800-842-8348 or visit the auditor’s website at http://www.auditors.state.ne.us.

I trust this clarifies any misunderstanding that may have occurred from my last note to you.

Stan Carpenter, Chancellor.

Last week in an email interview, Foley said he was troubled by the way the college and the system office were handling the investigation.

“The act of engaging a private CPA firm at taxpayer expense and the subsequent issuance of emails to all College employees regarding the optional nature of their cooperation with my office is stunning,” Foley said. “I am very disappointed in how the College is handling this matter. It’s just extraordinary.”

“I regard this act as both extraordinary and very troubling and certainly not in keeping with any we have ever seen in government,” Foley said.

The final cost of hiring BKD is unknown, but a BKD representative said Monday that the company’s hourly rate ranges from $100-400 per hour, depending on the complexity of a job.

Meanwhile, system office and college officials remain mum about the details surrounding the NCAA investigation.

On Monday, The Eagle called the system office and emailed Carpenter requesting comment about the investigation and Foley’s comments.

Wednesday morning, Kristin Petersen, NSCS general counsel and vice chancellor for employee relations, called The Eagle and said that Carpenter would not be available for comment prior to The Eagle’s Wednesday night deadline.

“I’m not sure there is going to be much I can say,” she said. “As far as the NCAA investigation is concerned, we aren’t making any comments other than what was already released in the press release.”

She also said the system office was satisfied about the time frame of its notifications.

“The chancellor notified the state auditor in a timely and appropriate manner,” Petersen said. “We’re comfortable that we’ve provided timely notice to our employees and the community; we’ve released as much information as we can as quickly as we could.”

About the cost of hiring BKD, Petersen said that she would have to look into it. She added that she doesn’t have a bill for accounting or for legal services.

Petersen also explained the system office’s rationale for hiring BKD.

“It’s not unprecedented that the colleges would contract with another professional service – in this case, we wanted an outside, independent, accounting service to come in who had expertise and resources available to investigate into the matter for us. The Board of Trustees has the ability to do that, so that’s what we’ve done.”

Foley said his office would conduct its own investigation. “Regardless of what the private CPA firm finds in this case, I intend to explore it fully and report to the public what we learn,” Foley said.