RESPONSE TO PRELIMINARY FORENSIC AUDIT SUBMITTED BY ALABAMA STATE UNIVERSITY

IN COMPLIANCE WITH SACS/COC LETTER OF OCTOBER 29, 2013

In a letter dated October 29, 2013, Dr. Barry D. Goldstein of the

Southern Association of Colleges and Schools’ Commission on Colleges

(“SACS/COC”) requested, among other things, that by December 1, 2013,

Alabama State University (“ASU”) “provide copies of the final forensic

audit conducted by Forensic Strategic Solutions, Inc., including copies of all

documents listed in the Appendix, and the University’s response to that

audit.”

Forensic Strategic Solutions, Inc. (“FSS”) has not issued a final audit;

and it is uncertain when, if ever, a final forensic audit will be issued. In this

document, ASU will respond to FSS’s Preliminary Update (hereinafter

“Preliminary Report”) delivered to Alabama Governor Robert Bentley’s

Chief Legal Advisor on September 20, 2013, and released publicly by the

Governor on October 14, 2013. The ASU summary response is that the FSS

Preliminary Report is factually incorrect, intentionally misleading and

otherwise fatally flawed.

I. Background of the FSS Preliminary Forensic Audit

In the fall of 2012, ASU President Dr. Joseph Silver was placed on

administrative leave by the Board of Trustees. His tenure as President ended

with a settlement with ASU. Before his departure from ASU, Dr. Silver

made several allegations of fraud, conflicts of interest and other

improprieties by senior executives and trustees of ASU.

At the Board of Trustees’ meeting of November 30, 2012, Governor

Bentley indicated that “the Board will ensure transparency by the immediate

engagement of an independent agency to conduct an internal audit to review

all financial records of the university.” (Ex. 1, pp. 1-2) Following the

Governor’s remarks, the Board unanimously passed a resolution to retain the

services of nationally known accounting firm Warren Averett Wilson Price

(“Warren Averett”) to conduct an independent review of contracts issued by

ASU based upon certain agreed-upon procedures. As the resolution stated,

the purpose of conducting the independent review was “to separate fact from

fiction” and “to provide the public with a level of confidence that the

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University follows all statutes and University policies related to the issuance

of contracts.” (Exhibit 2)

On December 14, 2012, three weeks after voting for the retention of

Warren Averett, Governor Bentley announced that he had selected FSS “to

conduct a separate analysis” of ASU.1 By its terms, the formal one-year

FSS contract commenced on February 12, 2013; the Governor’s Office was

obligated to pay FSS at the rate of $195 hourly and not more than $275,000.

According to the contract:

[FSS’s] duties shall include the forensic assessment of Alabama State University and will be further determined as the matter proceeds in the form of requests to [FSS]. In order to report on issues raised regarding Alabama State University, [FSS] will perform analysis including, but not limited to, examinations of specific relevant items such as : contracts, expenditures, payables, receivables, payroll, expenses reports, information technology systems, policies and procedures, analysis of financial and public documents, and interviews of individuals.

(Preliminary Report, Exhibit 1) Actually, FSS commenced its forensic investigation before its written

contract with the Governor. For several weeks in December 2012 and early

January 2013, FSS and Warren Averett shared information regarding ASU’s

financial operations. During a meeting on January 17, 2013, between ASU

1 See press release from Governor Bentley’s office at: http://www.americanownews.com/story/20348155/governor-bentley-announces-additional-audit-of-asu

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officials and FSS, Ralph Summerford, a principal in FSS, advised that FSS

was not simply conducting an audit of ASU; FSS was conducting an

“investigation” of ASU as well. Summerford subsequently explained that

from the beginning, FSS’s investigation was a fraud investigation of ASU.

Upon learning that it was being investigated by FSS for fraud, on

January 21, 2013, ASU retained the law firm of White Arnold & Dowd P.C.

("WAD”) to protect the interests of ASU during the course of the

investigation. On January 23, 2013, ASU sent to Governor Bentley's office

a Supplemental Memorandum of Understanding (“MOU”) that set out the

procedures for ASU's cooperation with the forensic audit and investigation.

As stated in the MOU, the purpose behind the supplemental procedures was

“to establish the administrative procedures for facilitating the availability of

ASU personnel, external vendors, and the production of documents and

records in an orderly manner.”2 (Exhibit 3)

The MOU required that FSS direct its document requests to WAD

engagement partner U.W. Clemon via e-mail or letter. WAD would then

inform FSS when the documents were available for delivery or pickup,

although it would subsequently be WAD’s practice to hand deliver records

directly to FSS. Requests for interviews of ASU employees were also to be

2 Ultimately, WAD was not involved in any interviews FSS may have conducted with vendors, and no vendors were advised by ASU not to speak with FSS.

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made through WAD, and each such interview was to be conducted in the

presence of a WAD attorney or an attorney from the Office of the ASU

General Counsel. ASU committed itself to acting expeditiously on FSS

requests. ASU and WAD faithfully carried out their obligations under the

MOU.

The cover and every single page of FSS’s Preliminary Report begin

with the admonition: “PRIVILEGED AND CONFIDENTIAL.” The

Preliminary Report begins with the following statement:

This document is a Preliminary Update (“update”) provided at the request of the Chief Legal Advisor to the Governor to provide an explanation of FSS’s progress and findings to date. As of the time of this update, FSS’s work is ongoing and is not complete. FSS will provide additional updates as our work continues, as requested by the Office of the Governor and/or when a final report is prepared. FSS reserves the right to supplement this update as additional information is obtained and additional work completed. This update is not a final report and is not intended to be relied upon as anything other than an update on FSS’s independent financial forensic assessment of Alabama State University.

(Preliminary Report, p. 3) (Emphasis original.)

FSS has collected over $600,000 from the Governor’s Office for its

Preliminary Report. 3

3 According to news reports, in December of 2012, Governor Bentley signed a $275,000 “emergency” contract with FSS. Then, in February of 2013, the Legislature’s contract review committee approved another $275,000 contract with FSS. In July of 2013, Governor Bentley signed another “emergency” contract with FSS for $50,000. On September 5, 2013, the Contract Review Board amended the February contract to

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II. ASU Has Not Attempted to Impede or Thwart the FSS Forensic Audit

The Preliminary Report accuses ASU and its counsel of hindering its

investigation. Nothing could be further from the truth. ASU had an

overriding interest in having the FSS audit completed as quickly as possible.

As described in detail below, at all times during the FSS investigation,

ASU and its counsel worked diligently to provide FSS the huge volume of

records it requested in a manner that (1) provided for the orderly and

efficient production of records, (2) did not unnecessarily disrupt the daily

operations of ASU, and (3) protected the rights afforded any person or entity

under investigation. As the following information will show, there is simply

no truth to the contention that ASU retained outside counsel in an effort to

hinder the Governor’s investigation.

a. Correspondence Reflects Timely Production.

As the attached letters show, the requested documents (to the extent

that they are not privileged) were timely provided. (Exhibit 4) Further, the

only ASU employees designated by FSS for interviews have been made

available to FSS by ASU. ASU even arranged for FSS’s interview of

increase the amount of the contract by another $50,000. Most recently, the Legislature’s contract review committee has approved yet another $338,798.48 to be paid to FSS. See http://www.americanownews.com/story/23354361/state-to; http://blog.al.com/wire/2013/12/governors_office_cleared_to_sp.html

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Professor Dr. Cheryl Plettenberg on less than a day’s notice. (Exhibit 5)

Remarkably, FSS has failed to schedule an interview of ASU Vice President

for Business and Finance Dr. Freddie Gallot even though he has been

available for many weeks. (Exhibit 6)

The conclusion that ASU and WAD have impeded the Governor’s

investigation is absolutely unfounded. It is indeed true that requests for

documents were to be directed to WAD, and that WAD reviewed the ASU

documents before they were made available to FSS for the reason that

certain privileges and information must be lawfully protected.

WAD promptly reviewed the compiled requested documents for

attorney-client privileged materials; and upon the completion of its review,

the documents were made available to FSS. All of the information redacted

from materials was protected from disclosure by the attorney-client privilege

or involved confidential information (such as Social Security numbers).

Beginning January 31, 2013, WAD commenced production of

numerous sets of voluminous documents to FSS. (Exhibit 4) As of March 1,

2013, ASU had already produced to FSS more than 35 Gigabytes of

requested information. (Exhibit 4)

On March 22, 2013, in making a "substantial" request for additional

documents, David Byrne, Chief Legal Advisor to the Governor, wrote: "On

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behalf of Governor Robert Bentley, I deeply appreciate the active

cooperation of Alabama State University responding to information requests

made for Forensic Strategic Solutions, Inc." He concluded: "Gentlemen, we

deeply appreciate the continued cooperation of Alabama State University."

(Exhibit 4)

Mr. Byrne later acknowledged in an August 27th letter that "[w]e have

received substantial, but not complete production form Mr. Clemon's office,

and expect to receive further production shortly." (Exhibit 4)

Since the September 20th Preliminary Report, FSS has continued to

make new requests for documents and WAD has continued to provide the

requested documents. (Exhibit 7) For example, FSS, for the first time,

requested additional materials related to construction contracts on October 9,

2013. (Exhibit 8) Seven days later, on October 16th, ASU provided many of

these requested documents and committed to providing the remainder in the

next few days. (Exhibit 9)

Contrary to FSS’s claims, ASU has produced the documents requested

by FSS, as shown above. If "critical documents" were not received by FSS,

it is simply due to the failure of FSS to request them. On September 23,

2013, WAD wrote to Mr. Byrne:

During the September 4 interview of Dr. Chapple, FSS indicated that it had not received certain documents. Dr.

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Chapple noted the documents; and on the following day, she provided FSS with a list identifying the "not received" documents. Our understanding was that FSS would promptly review the list and confirm either that the list was complete, or that other documents missing from the list have not been received. We have heard nothing from FSS concerning the list since September 5.

(Exhibit 6) Neither Mr. Byrne nor FSS has ever responded. b. FSS Failed to Retrieve the Michelle Crawford File.4

On September 10, 2013, in conformity with the MOU, Mr. Byrne

requested a copy of Michelle Crawford's "personnel file, along with a

Confidentiality Agreement for the use of Forensic Strategic Solutions'

forensic examination." (Exhibit 10) (Emphasis added.) Three days after this

request, WAD made the file available to FSS, subject to the execution of the

confidentiality agreement suggested by Mr. Byrne. (Exhibit 11) FSS never

executed the confidentiality agreement and never picked up the file.

4 “FSS, with the assistance of Byrne, sent a request for all the employment records of Crawford via email on September 3, 2013, a request to Clemon on September 4, 2013, and a letter request on September 10, 2013. FSS learned that the ASU staff was informed in the ASU faculty senate meeting that Crawford resigned from ASU on September 5, 2013 (shortly after the initial FSS request for her file). FSS has recently been informed that a redacted version of the employment records for Crawford is available for production subject to the execution of a confidentiality agreement, but FSS has not received those documents in part because FSS has not executed the confidentiality agreement as of the date of this update."

Preliminary Report, p. 14.

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Notwithstanding FSS’s failure to pick up the Crawford file, WAD

sent it to Mr. Byrne the last week of October.

Thus, the truth is that FSS did not receive the Crawford file earlier

simply because it chose not to do so. ASU cannot be blamed for FSS's

failure to pick up requested materials which ASU has made available. More

importantly, had FSS reviewed the file, it would have learned that Dr.

Crawford submitted her resignation on July 24, 2013, not on September 5th,

as the Preliminary Report erroneously asserts at p. 14.

c. FSS Failed to Schedule Dr. Gallot’s Interview and to Timely Request Construction Contracts.

The assertion that Dr. Gallot was scheduled to be interviewed on

September 5th is absolutely untrue. He was not scheduled to be interviewed

on September 5th. Rather, Mr. Byrne had designated three ASU employees

to be interviewed on September 5th: Danielle Kennedy, Antoinette Smith and

Alondrea Pritchett. (Exhibit 5, Exhibit A)

When FSS's Summerford and Dr. Gallot ran into each other near the

restroom on the morning of September 5, 2013, Summerford asked Dr.

Gallot if he was available for an interview that afternoon - knowingly

circumventing the MOU. Later that morning, FSS announced for the first

time that it was cancelling the interview with Alondrea Pritchett and would,

instead, interview Dr. Gallot immediately after the lunch break. Mr.

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Summerford stated that he would question Dr. Gallot about construction

contracts which FSS had not previously requested because FSS “hadn’t

gotten around to it.” After WAD conferred with Dr. Gallot’s personal

counsel, Mr. Summerford was advised that Dr. Gallot’s counsel would not

be available that afternoon. Mr. Summerford was asked to provide

alternative dates for Dr. Gallot’s interview. WAD committed to Mr.

Summerford that upon receiving the alternative dates, WAD would contact

Dr. Gallot’s counsel and have the interview scheduled as soon as possible.

Mr. Summerford never responded to the request for other dates for FSS to

interview Dr. Gallot. (Exhibit 5)

WAD subsequently wrote to Mr. Byrne:

On September 5, while interviewing properly designated ASU employees, FSS indicated its desire to interview Vice-President Gallot, who is represented by private counsel. We invited FSS representatives to suggest alternative dates for the interview so that Dr. Gallot's counsel may be present. We have heard nothing from FSS about the matter since that time. Does FSS wish to interview Dr. Gallot or any other ASU employees? If so, how soon can they be scheduled?

(Exhibit 6) Again, plainly, the only reason why Dr. Gallot has not been

interviewed by FSS is that FSS has failed and refused to schedule his

interview.

With regard to the construction contracts that FSS was going to

question Dr. Gallot about, the ones FSS “hadn’t gotten around to” asking

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for, those contracts were finally requested on September 30, 2013 (25 days

after FSS ambushed Dr. Gallot near the men’s room and 10 days after FSS

issued the Preliminary Report). (Exhibit 5) FSS claims that “[n]o forensic

assessment and/or examination can be completed without access to and

review of the books and records for these massive contracts," (Preliminary

Report, p. 32) and, yet, FSS did not even try to obtain the contracts, and thus

work to complete its investigation, until September 30th, which was,

interestingly, 25 days after FSS received another $50,000 increase to its

contract with the State.

Nevertheless, FSS made significant, conclusive accusations absent

construction contracts based on no evidence at all. Specifically, FSS

asserted that:

ASU spent over $200 million dollars on construction work at the university from approximately 2007-2013. FSS was preparing to investigate these expenditures and was scheduled to interview Dr. Freddie Gallot ("Gallot"), ASU's Vice President of Business and Finance, on September 5, 2013 regarding construction contracts and payments. Gallot welcomed the interview and stated he was available all day. However, the interview with Gallot was cancelled by WAD because Gallot's personal attorney was unable to attend. FSS has reason to believe that the same issues as discussed herein permeate the construction work, contracts, and payments at ASU. No forensic assessment and/or examination can be completed without access to and review of the books and records for these massive contracts.

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Preliminary Report, p.32. ASU provided the requested construction

contracts to FSS eight days after they were requested. (Exhibit 4)

d. WAD Has Never Invited FSS to Leave ASU’s Campus.5

WAD has never directed, invited or told FSS or anyone else to leave

ASU’s campus. FSS’s reporting of such an event is vague and unsupported

by any note, memorandum, correspondence, e-mail, text, affidavit or any

other written indicia of the event. Even if FSS was opposed to following the

procedures outlined in the MOU, it is intentionally misleading for FSS to

report that WAD was hindering when WAD requested that the MOU

procedures be followed with regard to the production of records.

Subsequent to WAD’s MOU, an FSS representative arrived on ASU’s

campus with requests for new information. At no point did WAD ask this

FSS representative to leave the ASU campus. Rather, WAD reminded the

FSS representative of the protocols for document requests which were

outlined in the MOU.

In one exchange in February, Mr. Summerford approached Dr. Gallot

directly with a request for documents rather than provide WAD with a

formal request. Dr. Gallot immediately contacted the WAD engagement

5 The ninth footnote of the Preliminary Report states that “[o]n one occasion, FSS personnel traveled to ASU to retrieve data that ASU stated was ready for pickup. Upon arrival, FSS's personnel were informed, via a telephone call from WAD, that the data had been provided to WAD and that FSS needed to leave ASU.” Preliminary Report, p. 7, n. 9.

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partner who then informed Mr. Summerford that newly requested documents

would not be made available to him. The following letter reflects the

occurrence:

ASU Vice President Dr. Freddie Gallot has informed us that on yesterday you again requested documents from him directly. While we cannot preclude you from contacting anyone, we fully expect that Dr. Gallot and other ASU officials and employees will decline any of your requests made directly to them. I assure you that our firm fully intends to produce any and all non-privileged ASU documents and data properly requested by you and your firm. But we will make such production only after you have made a written request to our firm.

(Exhibit 12) e. FSS’s Argument That ASU Intentionally Delayed Production of Relevant Records Defies Common Sense. In order to continue its participation in Title IV and HEA

financial aid programs, ASU was under a statutory mandate to

produce to the United States Department of Education acceptable

compliance and financial statement audits for the fiscal year ending

September 30, 2012. 34 C.F.R. § 668.23. (Exhibit 13) ASU’s ability

to participate in these programs is critical to its continued operations.

Warren Averett had prepared ASU’s audit for 2012 but would

not issue an unqualified audit opinion until FSS completed its forensic

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audit. As a result, ASU made every effort to produce documents

responsive to the voluminous requests made by FSS. To not have

been cooperative would have only worked as a detriment to ASU’s

viability. Therefore, the argument that ASU, or its counsel,

intentionally delayed the production of documents or failed to produce

the documents requested by FSS is nonsensical and baseless.

III. The ASU-Medicaid Contract

In preparation for the implementation of the Affordable Health Care

Act (“Obamacare”), the Alabama Medicaid Agency (“AMA”) contracted

with at least two historically black universities: Tuskegee University5 and

ASU. The ASU Medicaid contracts have three distinct phases. Phases 1 and

2 consisted of determining the number of physicians within a defined

geographic area of Alabama using electronic medical records, and

developing a policy and procedures manual. Phase 3 involved contacting

the physicians and their staff directly, explaining the policy and procedures

manual and other materials, and urging the participation of Alabama

physicians in electronic health records reporting aspects of the Medicaid

program.

5 In fact, the AMA contracted on various projects with many other universities including, but not limited to, Auburn University in Montgomery and the University of Alabama.

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ASU Associate Professor Dr. Cheryl Plettenberg was assigned the

responsibility for Phases 1 and 2 of the Medicaid Program. When the first

two phases of the Medicaid contracts were successfully completed, Dr.

Plettenberg informed the administration that she simply could not handle the

remaining phase (that is, “outreach”) under the ASU-Medicaid contracts.

Fully aware that in addition to her teaching responsibilities, Dr. Plettenberg

was also the Chair of the Health Information Management Department, ASU

agreed with her decision.

The Preliminary Update finds that

• [d]espite the fact that ASU had a full-time, highly qualified person in Plettenburg, ASU entered into a contract with LORAC for Jacobs to manage the ASU-Medicaid contract[;]”

• “…ASU had a qualified professor on staff in Plettenburg who was

capable of managing the project, was more qualified than Jacobs, and had previously directed the study which was the basis for the research….”

• ASU could have used the $8,333.33 per month Medicaid

infrastructure allocation to pay for Plettenburg (who, again, was vastly more qualified than Jacobs) to manage the ASU-Medicaid contract and work. ASU did not need LORAC or Jacobs.

Preliminary Report, pp. 18, 21, 25. But a transcript of ASU’s recording of

the FSS interview of Dr. Plettenburg reflects that Dr. Plettenburg told FSS

that she quit working on the ASU Medicaid contract on her own volition

because

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[t]he workload where I was at the school, there was just so very much that I had to do with the college and with the AFYI and community things, other programs that we were doing with HIM, I just couldn’t do it anymore, and it was just simply that I stepped away from it for that reason.”

(Exhibit 14.) FSS completely disregarded Dr. Plettenburg’s statements; and

creates the erroneous impression that ASU could have somehow forced Dr.

Plettenburg to perform a job she had voluntarily quit.

As a result of Dr. Plettenberg’s decision to quit, ASU had to look to

another source to handle Phase 3 of the Medicaid contracts. It turned to

Alabama Medicaid Commissioner, Carol Steckel and her then Chief of Staff,

Henry Davis. Henry Davis, in turn, recommended Carol Jacobs for the

position. Relying largely on this recommendation from the Alabama

Medicaid Commissioner, ASU administrative staff contracted with Carol

Jacobs’s company, to perform the outreach phase of the ASU Medicaid

program and delegated to LORAC the responsibility for its implementation.

The Preliminary Update contains many factual inaccuracies6

regarding the ASU-AMA contracts. The contracts were the subjects of

various amendments and task orders over an extended time period, thus

6 For example, it is not true that Dr. Plettenberg had to instruct LORAC on Medicaid rules and regulations. See, Preliminary Report, p. 21. Rather, her statement was that Carol Jacobs, “… like every body else, had to learn. You’ve got to remember that ‘s a -- it’s a science all by itself. (Inaudible) electronic record and Medicaid and HIPAA, etc., it’s a learning process because it changes every day. And, you know, I’d find something, and I’d call Carol and say, “Hey Carol, did you hear about this, have you talked to the doctors about this (inaudible) yet. …. But those are things that my -- my role was to keep them updated. And that’s what I would have done.” (Exhibit 14, p. 43.)

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raising the total amount of the ASU-AMA contracts to $2,000,000. In

addition, there were significant turnovers in state personnel assigned to

monitoring the contracts at AMA. As a result, the contracts have terms

involving Administrative and Staff Infrastructure, Outreach, and

Deliverables – which are subject to interpretation. ASU itself is undertaking

an investigation of the FSS allegations of mismanagement. That

investigation is ongoing.

If mistakes were made in the operation or administration of the ASU-

AMA contracts, they will be disclosed and corrected. What we can say now

is that we have found no evidence that anyone at ASU had any intention to

perform the Medicaid contracts in other than a completely appropriate

manner. No one in ASU’s administration has benefitted personally from the

contracts or engaged in any conduct that could even remotely be described

as inappropriate. While the review of these contracts is receiving substantial

attention and resources by ASU, additional time is needed to complete this

analysis.

IV. ASU Board Members Have Not Violated the Conflict of Interest Statute and Policy

The ASU Conflict of Interest statute and policy preclude a board

member from 1) being financially interested in a contract or transaction with

the university, 2) procuring the appointment of a relative to a position of

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financial trust or profit with ASU, or 3) influencing the hiring, promotion,

compensation, or dismissal of any ASU employee "except through the

prescribed procedures for such purposes." Alabama Code § 16-50-29.

As explained below, neither former Trustee Dr. Lawrence Lemak,

current Trustee Judge Marvin Wiggins, nor current Trustee Mr. Elton Dean

violated the Alabama Conflict of Interest Statute.

a. Former Trustee Dr. Larry Lemak

The Preliminary Report charges that former ASU Trustee Dr.

Lawrence (“Larry”) Lemak “was involved in several entities that violate

conflict of interest policy (among other things) as codified in the Alabama

Code § 16-50-29(1975).” Id., p.26.

Dr. Lemak is a renowned sports physician and orthopedic surgeon. He

is presently the Medical Director of the United Football League; and he

served more than fifteen years as the Medical Director of the Europe League

of the National Football League. He has served as Medical Director of Major

League Soccer for seventeen years. He was the first physician to be inducted

into the Alabama High School Athletic Association Hall of Fame, based on

his devotion to and care of Alabama high school athletes.

Dr. Lemak served as a faithful member of ASU’s Board of Trustees

from 2003 until his resignation in April 2013.

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Notably, the Preliminary Report does not accuse Dr. Lemak of being

financially interested in any contract or transaction with ASU. Quite to the

contrary, “FSS found no payments from ASU directly to Lemak for his

services.” Preliminary Report, p. 26. Further, the Preliminary Report does

not accuse him of procuring the appointment of a relative to a position of

financial trust or profit with ASU. Nor does the Preliminary Report accuse

Dr. Lemak of having influenced the appointment, retention, dismissal, or

compensation of any ASU employee. In short, the Preliminary Report does

not contend that Dr. Lemak personally violated the Conflict of Interest

statute and policy.

But the Preliminary Report contends that Dr. Lemak’s “was involved

in several entities that violate ASU’s conflict of interest law and policy.”

Id., p. 25. The “several entities” identified by the Preliminary Report are two

non-profit corporations: the National Center for Sports Safety (“NCSS”) and

the Alabama Sports Foundation (“ASF”). Preliminary Report, pp. 26-30.7

7 Although the Preliminary Report refers to Lemak Sports Medicine LLC, 2316 1st Ave South Partners, the Lemak Group of Companies, LLC, and Lemak Jones Insurance Agency, as “entities that received direct financial benefit from the ASU appropriations to NCSS,” FSS failed to establish any evidence that ASU has made a single payment to either of these corporations. (Id., pp. 28.) Moreover, the Report does not explain the basis of its bald conclusion that these corporations received a direct financial benefit from the NCSS.

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(i.) The National Center for Sports Safety

The 2011 Annual Report of the NCSS describes the 501(c)(3), not-

for-profit corporation as follows:

The National Center for Sports Safety (NCSS) was founded by world-renowned orthopedic surgeon Dr. Lawrence (Larry) Lemak, in 2001 to promote through education and research the importance of injury prevention and safety in all levels of youth sports. NCSS focuses on decreasing the number and/or severity of injuries through developing and teaching sports safety courses and collecting, analyzing and researching injury data. … The vision of NCSS is to standardize the level of care available to athletes on and off the playing field. By educating youth coaches in sports safety techniques and skills, they will gain the knowledge and confidence to prevent and respond to injuries and emergency situations appropriately until professional help arrives. … NCSS’s goal is to ensure all youth sports organizations proactively manage risks associated with athletics. The NCSS works to build relationships with groups and coaches on a national and grassroots level to become sports safety educated through PREPARE.

National Center for Sports Safety 2011 Annual Report. (Emphasis original.)

In fact, the NCSS has provided sports safety education to more than

14,000 coaches nationwide through its PREPARE course.

Indisputably, the Alabama Legislature appropriated more than

$2,000,000 to ASU from the Special Education Trust Fund for the benefit of

NCSS. In turn, ASU was required to distribute these appropriations to

NCSS. This arrangement is consistent with the longstanding custom and

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practice of the Alabama Legislature to fund non-profit entities with an

educational purpose through appropriations to state educational institutions

like ASU. In return for its facilitating the transactions, ASU, like all other

similarly situated state educational institutions, was entitled to an agreed-

upon amount, in this case twenty percent, for its administrative costs.

The NCSS’s 2012 Annual Report references funding received from

the State of Alabama.8 A financial summary contained in the 2012 Annual

Report reflects that eight (8) gifts totaling $1,222,590 were received by the

NCSS from “Government/Public Grants.” Id., p. 16. Obviously, these

“Government/Public Grants” were provided to NCSS through the ASU

legislative appropriations for that precise purpose. Other NCSS funding

came from corporations, foundations, and individuals.

Except for its agreed-on administration fee, ASU had no right to

divert/convert unto itself any of the funds appropriated by the Alabama

Legislature for the benefit of NCSS.

Of course, ASU had no involvement or influence in the selection of

the officers, directors and/or staff of NCSS. Neither ASU nor any of its

trustees, officers and/or employees are members of the NCSS Board of

Directors. The Preliminary Report does not suggest otherwise.

8 As further evidence of the transparency of the NCSS receiving monies from the State of Alabama that were “passed through” ASU, the NCSS’s website bears a large emblem stating, “[f]unding provided by the State of Alabama.”

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Based on the documents available to ASU, it appears that while Dr.

Lemak was a founder of NCSS, and continues to be a supporter and

benefactor of the NCSS, he is not one of its directors and receives no

remuneration from it. Regardless of the relationship between Dr. Lemak and

the NCSS, the pass-through transaction between ASU and NCSS required no

action by the Board of Trustees and did not violate the conflict of interest

statute or ASU’s policy.

(ii.) The Alabama Sports Foundation

In FSS’s view, the Alabama Sports Foundation (“ASF”), a second

“Lemak-related” non-profit entity, also violated the Conflict of Interest law

and policy. This erroneous conclusion arises from the considerations that 1)

ASF handled the ticket sales for the Magic City Classic, and 2) “ASU has

not produced any contracts with ASF.” Preliminary Report, p. 29.

On the latter contention, attached to this Response are the contracts

between ASF and ASU. 9 (Exhibit 15) These attached contracts are fatal to

FSS’s conclusion that there are no ASU-ASF contracts, and that the

9 ASU assumed that these contracts had been produced to FSS along with the many others. On several occasions, ASU has requested FSS to inform if any of its responses were incomplete. Most recently, we reiterated the request in a letter to the Governor’s Chief Legal Advisor on September 23, 2013. FSS has never informed ASU that the ASF contracts had not been produced.

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payments from ASU to ASF violated the conflict of interest law or ASU’s

conflict policy, or violated ASU’s contracting and purchase order policies.

ASF is the official sports lobby for the Birmingham-Hoover

Metropolitan Area as well as the State of Alabama. It promotes and handles

ticket sales for various international, regional, state and local athletic events,

including without limitation the United States Soccer Foundation, the Men’s

World Cup Qualifier, the Southeastern Conference, the Southwestern

Athletic Conference and the Magic City Classic.

The Magic City Classic is a legendary football game played in

Birmingham every year for over more than a half-century. “The Classic” pits

against each other the football teams of ASU and Alabama A&M University

(“AA&M”) - two historically black state-supported institutions of higher

learning. It is probably the most heralded, well-attended rivalry in

historically national intercollegiate sports - the HBCU equivalent of the

football rivalry between the University of Alabama and Auburn University.

Profits from the sale of tickets for the Magic City Classic are shared

between ASU and AA&M. ASU simply turns over to ASF, as the neutral

handler and promoter of the Magic City Classic for both universities, the

funds from its ticket sales for both the Magic City Classic and the Alabama

High School Athletic Tournament, and from game day programs. Likewise,

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AA&M does the same. After costs and expenses are deducted, ASF then

distributes to ASU and AA&M their respective pro rata share of the profits.

Astonishingly, the Preliminary Report treats ASU’s transmission of its

Magic City Classic ticket sales as “payments to ASF.” (Preliminary Report,

pp. 29-30.) Based on this distortion of reality, FSS proceeds to the flawed

conclusion that these “payments” violate the Conflict of Interest statute. The

conclusion is, in a word, ridiculous.

For the reasons set forth above, Dr. Lemak’s relationship to the ASF

is most assuredly not a violation of the ASU conflict of interest statute and

policy.

b. Judge Marvin Wiggins On October 6, 2013, ASU was advised that Governor Bentley

intended to remove Judge Marvin Wiggins from the ASU Board for

violation of the Conflict of Interest Statute. In response, ASU Interim

President William H. Harris wrote the Governor on October 8th cautioning

the Governor that because there were serious questions about the validity of

the information provided to the Governor, the Governor and ASU should

work together to find the truth and to avoid any injury to ASU. (Exhibit 16.)

Specifically, Dr. Harris wrote:

“I have been informed that you intend to take action concerning Marvin Wiggins’ membership on the Alabama State

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University Board of Trustees. I am gravely concerned of the negative consequences that will occur if such an action occurs based on unvetted and untested information. The limited information I have been provided and the fact-checking I have personally done raise serious questions about the validity of this information. We should all agree that nothing should be more important than the truth. The truth is what we all should seek. I know your sense of fairness and justice agrees with this point. Therefore, I want to recommend that you and I agree to a framework to separate fact from fiction regarding any questions raised about the service of Judge Wiggins. Simply put, let’s determine the facts together, discuss them, and then make decisions and take actions that help not harm Alabama State University. I believe this process can be agreed upon and completed in a matter of days not months so that you can make decisions based on the facts and so that I can take any appropriate action as well.”

(i) Camp Eagle and Dr. Michelle Crawford

Without responding to Dr. Harris’ letter of October 8th, Governor

Bentley wrote Judge Wiggins on October 9th setting out various allegations

(taken from the Preliminary Report) that the Governor concluded were

violations of the Conflict of Interest Statute. Despite the fact that the

allegations covered a period of time from 2009 to 2013, Governor Bentley

gave Judge Wiggins only until 3:00 p.m. the following day to provide the

Governor “with any evidence you may have in extenuation and mitigations.”

(Exhibit 15) Subsequently, Judge Wiggins was given until 5:00 p.m. to

submit his response.

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Specifically, the Governor mentioned as violations of the Conflict of

Interest statute:

(1) That Judge Wiggins had several relatives paid by ASU for

services related to the Camp Eagle project; and

(2) That Judge Wiggins’ sister-in-law, Michelle Crawford, was

hired as a professor at ASU in 2011.

The only piece of “evidence” the Governor cited to support his and

FSS’s conclusion that Judge Wiggins violated the Conflict of Interest statute

was a notation on a fax cover sheet from Gloria Julius, the former Director

of Housing and Residential Life, to Dr. Bernadette Chapple that stated

“Trustee Wiggins instructed us to submit this invoice to you for payment.”

(Exhibits 17 and 18.) The invoice from the ASU Housing and Residential

Life Department was sent to Dr. Chapple because Dr. Chapple has direct

supervision over the Center for Leadership and Public Policy (“CLPP”) and

the Camp Eagle project was a program under the CLPP. (Exhibit 19)

The invoice was for services rendered by Housing and Residential

Life to Camp Eagle because participants in the Camp Eagle program were

housed on the campus during the camp. Therefore, there was nothing

improper about the invoice being sent to Dr. Chapple or about Trustee

Wiggins advising Ms. Julius that the invoice should be sent to Dr. Chapple.

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It is grossly overreaching to suggest that this transaction rises to the level of

a violation of the Conflict of Interest statute.

As required, Judge Wiggins provided the Governor with a response on

October 11, 2013. (Exhibit 20) In his response, Judge Wiggins explained

that the predecessor to the Camp Eagle program was the Dropout Prevention

Program that was run by Mrs. Ella Bell and that Mrs. Bell had requested that

Judge Wiggins’ wife, Zina, serve on the program’s advisory board. Judge

Wiggins stated emphatically in the letter that he had no involvement in

Camp Eagle or the employment of any relatives by blood or by marriage.

As Judge Wiggins’ response clearly stated “[t]here is absolutely nothing

about the documents that in any way shows a conflict of interest or any

inappropriate conduct.”

In response to the Governor’s (and FSS’s) accusation that Judge

Wiggins violated the Conflict of Interest statute because his sister-in-law

was hired by ASU in 2011, Judge Wiggins provided the Governor the

affidavits of Saad T. Bakir, Dr. Le-Quita Booth, Charlie E. Hardy, Janel Bell

Haynes, and Sontachai Suwanakul, all ASU employees who were involved

in the selection of Dr. Crawford to fill a vacant professorship position and

who gave sworn statements that no one attempted to influence them in the

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hiring of Dr. Crawford. (See affidavits attached to Judge Wiggins’ response

letter dated October 11, 2013.)

None of the scenarios set forth by FSS in the Preliminary Report upon

which FSS bases its conflict of interest accusations actually supports a

violation under the Conflict of Interest statute. At no point in the 6 pages

dedicated to attacking Judge Wiggins does FSS provide evidence of, or even

bother to allege, that Judge Wiggins “procur[ed] the appointment of any

relative to any position of financial trust or profit; or to influence the

appointment, nonreappointment, retention, dismissal, or compensation of

any employee of the university.” Instead, FSS relies upon innuendo to

support its conclusion that Judge Wiggins violated the Conflict of Interest

Statute.

The Preliminary Report states that “no documents were provided by

ASU for the 2011 Camp Eagle project.” (Preliminary Report, p. 11) This

statement is absolutely false because on August 27, 2013, ASU produced 18

pages of documents related to the 2011 Camp Eagle project. (Exhibit 4)

At the September 4th interview of Dr. Chapple, FSS referenced

materials regarding Camp Eagle that FSS expected to have received. It was

agreed that Dr. Chapple would make a list of the documents referenced by

FSS as missing from the production and provide that list to FSS. FSS was to

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then review the list and advise if the list was complete or if there were other

documents, including those related to Camp Eagle, that FSS did not have.

Dr. Chapple hand delivered that letter to FSS on September 5th. At no time

has FSS bothered to respond to Dr. Chapple’s letter, which they had agreed

to do. (Exhibit 5)

Additionally, the Preliminary Report’s statements regarding Dr.

Michelle Crawford’s disciplinary action, indictment and guilty plea are

clearly an effort to embarrass Judge Wiggins and his family. These matters

have nothing to do with the issue of whether Judge Wiggins procured Dr.

Crawford’s employment, nor does FSS even affirmatively assert that Dr.

Crawford’s employment was the result of actions taken by Judge Wiggins.

ASU’s response regarding the production of the personnel file of Dr.

Michelle Crawford is set forth above. In summary, FSS did not undertake

the steps necessary to retrieve Dr. Crawford’s file and should not blame

ASU for FSS’s lack of effort. Had FSS bothered to retrieve Dr. Crawford’s

file, FSS would have learned that Dr. Crawford resigned on July 24th, not

“shortly after the initial FSS request for her file.”

(ii) Florence Catledge

In an October 10, 2013 follow up letter to Governor Bentley, Dr.

Harris gave the Governor an extensive history of the evolution of the Camp

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Eagle program and how Florence Catledge became involved. (Exhibit 21.)

Dr. Harris advised:

“… Alabama State University has long been involved in the efforts to heighten school completion among Alabama children, Specially those from the Black Belt area of our state. Such efforts date to the early 1990s when the University initiated a well-run and effective Dropout Prevention Program. That program evolved over the years with support from both the University and the Alabama State Department of Education. Josephine McCall was a founding director and Ella Bell, a member of the State Board of Education, was an early director and a primary mover of the Dropout Prevention Program at ASU. Mrs. Bell had a long relationship with Florence Catledge who worked with her in the Black Belt on dropout prevention efforts. Florence Catledge is the mother of Zina Wiggins. Indeed, together they created an advisory counsel to broaden the reach and impact of dropout prevention efforts. Bell, Catledge and Wiggins were members of that advisory counsel. Over the years, the women who ran the Dropout Prevention Program determined that immersing young middle grade children in an intensive on campus college experience would be an effective way to introduce them to college and provide a role experience that would affect their life choices concerning school. That idea resulted in the establishment of Camp Eagle. The Dropout Prevention Program chose Zina Wiggins and Lorraine Capers as director and assistant director, respectively, of the newly formed camp. The camp began operations during the summer of 2008 at Concordia College in Selma, Alabama. The initial camp was supported by funds from the Alabama State Department of Education and the general operation funds of ASU. The money from the State Department of Education originated in 2007 as the result of the funding of a proposal submitted by ASU Vice President for Academic Affairs Evelyn White and Ella Bell, director of the Dropout Prevention Program at the University, for a grant for $150,000. The grant was to ASU and the funds were administered by ASU through its department of grants and contracts. In 2010, the Camp Eagle program moved to the ASU campus from which it has

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operated since. Both Mrs. Wiggins and Ms. Capers, who had served as director and assistant director of the camp while in Selma, migrated with it to Montgomery. Mrs. Wiggins continues to this day to serve as director of Camp Eagle.”

Based on the information provided by Dr. Harris, which FSS

intentionally or recklessly ignored during its investigation, clearly, Mrs.

Catledge’s involvement with Camp Eagle was not the result of any action on

the part of Judge Wiggins.

Once again, as to FSS’s unsupported accusation that payments to

Judge Wiggins’ relatives were obscured in ASU accounting system, FSS has

failed to show any evidence of an intentional effort to “obscure” payments

related to the Camp Eagle project. Further, FSS has failed to show any

connection between Judge Wiggins and a payment from ASU to New

Beginnings Resource Center. Perhaps if FSS had made an honest effort to

interview Dr. Gallot, some of FSS’s complaints about the accounting system

counsel have been addressed.

(iii) Summary of Payments to Wiggins’ Relatives

FSS simply jumps to the erroneous conclusion that payments received

by relatives of Judge Wiggins constitute a violation of the Conflict of

Interest statute. Nowhere does FSS provide any evidence that these

payments were procured by Judge Wiggins or were the result of any

influence exercised by Judge Wiggins.

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FSS’s willingness to jump to erroneous conclusions is never more

clear than in its statement that its Table 1 “shows payments to Wiggins’

relatives, regardless of the source account, that were identified as being in

violation or potentially in violation of the conflict of interest policy.”

(Preliminary Report, p. 15) (Emphasis added.) Because FSS’s conclusion

does not consider the source, FSS wrongfully lumps into its accusations the

amount paid to Mr. Kenneth Williams. Of the $14,738.00 paid to Mr.

Williams, $1,200.00 was paid for services rendered by Mr. Williams on the

Camp Eagle project and the remaining $13,538 was the student financial aid

refund that was due to be paid to Mr. Williams after his school costs were

taken out of the monies ASU received from Mr. Williams’ student loan.

Had FSS set aside its need to find fraud and other improper conduct and

actually sought to find the truth, FSS could have more accurately reported its

findings.

c. Elton Dean

According to the express language of the Conflict of Interest statute,

Alabama Code, § 16-50-29, Trustee Dean has no conflict of interest based

on the business contracts between Alabama State University and Space

Walker, LLC. Likewise, there are no facts even alleged in FSS’s

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Preliminary Report that would support an allegation that Trustee Dean has

violated the conflict of interest statute.

As Trustee Dean explained in an October 21, 2013, letter to Governor

Bentley, he has no “financial interest” in Space Walker, LLC. (Exhibit 22.)

Instead, the company is wholly owned by his daughter, Dawneese Bowen,

and his son-in-law, Allen Bowen. Second, Trustee Dean has not procured or

been a party in any way to procuring the appointment of any relative to any

position of financial trust or profit. Third, Trustee Dean has not influenced,

or sought to influence, the appointment, nonreappointment, retention,

dismissal or compensation of any employee of ASU except through the

prescribed procedures for such purposes. Trustee Dean had absolutely no

input in or influence over the decisions of various ASU employees to

contract with Space Walker, LLC. In fact, the attached affidavits make clear

that not a single ASU employee who contracted with Space Walker, LLC

was even aware of any relationship between Space Walker, LLC and any

member of the ASU Board of Trustees. (See Exhibit 23, Affidavit of Debra

Jones; Exhibit 24, Affidavit of Ella Tucker; Exhibit 25, Affidavit of Kandis

Daramola; Exhibit 26, Affidavit of Gina Ishman; Exhibit 27, Affidavit of

Kenneth Waters; Exhibit 31, Affidavit of LaTonia Thirston; and Exhibit 32,

Affidavit of Elizabeth Strickland.)

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In addition, the first person at ASU to contract with Space Walker,

LLC was Kenneth Waters. Mr. Waters is the Marketing and

Communications Coordinator at ASU and has held that position since July

of 2010. In the fall of 2010, Mr. Waters was looking to rent inflatables for a

pep rally and block party held in conjunction with the Turkey Day Classic

and found Space Walker, LLC in the Yellow Pages. Mr. Waters continued

using Space Walker, LLC for other events because the company did such an

outstanding job “both with respect to the items rented to [ASU], and with

respect to supervising the use of the rental items.” (Exhibit 27) Neither Mr.

Waters, nor any other ASU employee who contracted with Space Walker,

LLC did so because of any connection with Trustee Dean, or any other

member of the Board of Trustees. Rather, ASU employees contracted with

Space Walker, LLC based on Space Walker, LLC’s experience and upon the

recommendation of others who had contracted with Space Walker, LLC.

Further, the attached affidavits explain that not a single ASU

employee who contracted with Space Walker, LLC was: (1) asked to contact

Space Walker, LLC; (2) pressured to rent from Space Walker, LLC; or (3)

told to rent from Space Walker, LLC. Likewise, the attached affidavits

eliminate any possible doubt as to Trustee Dean’s influence over the

decision to contract with Space Walker, LLC as the employees explained

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that whatever relationship there may be between Space Walker, LLC and a

member of the ASU Board had absolutely nothing to do with their doing

business with Space Walker, LLC.

The Preliminary Report also alleges wrongdoing by Trustee Dean in

failing to disclose his daughter and son-in-law on his Statement of Economic

Interest. (Preliminary Report, p. 30.) To the contrary, Trustee Dean’s

Statements of Economic Interest is entirely accurate. Trustee Dean listed his

daughter, Dawneese L. Bowen on question 4.3 when asked to list his living

adult children. (Exhibit 28.) The additional questions on Trustee Dean’s

Statement of Economic Interest relate or refer to business interests held by

or income received by Trustee Dean, his spouse or his dependent children.

In other words, there is no reason that Trustee Dean would have included

Space Walker, LLC, Dawneese Bowen or Allen Bowen in these responses

since his daughter is not a dependent child. Further, Trustee Dean explained

in a letter to Governor Bentley that at the time he filled out the Warren

Averett questionnaire, Space Walker, LLC’s sporadic rentals with various

Alabama State employees over a three-year period of time and totaling less

than $12,000.00, did not come to mind; however, had Trustee Dean thought

of it, he certainly would have included it in the questionnaire.

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Lastly, despite admittedly having nothing more than rumor and

innuendo, Governor Bentley and FSS allege an improper relationship

between Trustee Dean and Falicia Rhodes. (Preliminary Report, p. 31;

Exhibit 29, Bentley letter to Dean dated 10-9-13) Both Trustee Dean and

Ms. Rhodes are outraged and appalled that Governor Bentley would make

such a potentially damaging and defamatory allegation based on “received

rumors” before even allowing Trustee Dean or Ms. Rhodes to respond.

Trustee Dean has since explained to Governor Bentley that he had absolutely

nothing to do with Ms. Rhodes securing a personal services contract with

ASU, that he did not recommend her to anyone, that he did not ask anyone

to consider hiring her, and that he did not even discuss the fact of her

application with anyone. (Exhibit 22) Likewise, Ms. Rhodes’ affidavit

explains that Trustee Dean had “nothing whatsoever” to do with Ms. Rhodes

obtaining work with Alabama State University. (Exhibit 30, Affidavit of

Falicia Rhodes)

Conclusion

The Preliminary Report is a compilation of false statements, twisted

truths, and uninformed conclusions. It is a rush to judgment.

Because this was a “Preliminary and Confidential” report, it should

not have been released to the public. Also, because of its preliminary nature

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and the serious, damaging, and sometimes groundless accusations10 made

therein, ASU should have been afforded an opportunity to respond to the

allegations before the Preliminary Report was released. As ASU continues

its investigation of the allegations in the Preliminary Report, ASU will

supplement this response as necessary.

Under all these circumstances, Governor Bentley's release of FSS's

otherwise "Privileged and Confidential" and hopelessly flawed "Preliminary

Update" works a grave prejudice and hardship on Alabama State University,

and the people who have dedicated themselves to its educational mission.

Respectfully submitted, /s/ William H. Harris Dr. William H. Harris President

10 In an effort to stem the damage already being caused by FSS’s false reporting and inferences on ASU’s operations, ASU has had no choice but to file litigation against FSS.

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