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Office of Audit, Compliance & Privacy

Case in Point:
Lessons for the proactive manager

April 2017
Vol. 9 No. 4
“Conscience is the inner voice that warns us somebody may be looking.”

-- H.L. Mencken

This month we continue our review of last year's Case in Point stories with a focus on the category of Fraud/Ethics. In this category, we saw the following breakdown of topics during 2016:

  • Occupational Fraud 39%
  • Conflict of Interest 15%
  • Academic Fraud 10%
  • Grant/Federal Program Fraud 10%
  • General Questions Over Use of Funds 10%
  • Property Theft 9%
  • Other Issues 7%

Occupational fraud has long been the leader in this category. Occupational fraud is defined as, "The use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization's resources or assets." Typically, there are three elements present when an employee makes the decision to commit fraud: pressure (often financial), rationalization (the ability to convince self this isn't wrong), and opportunity (either funds or sometimes purchasing cards).

The strongest defense for preventing occupational fraud are good internal controls. Perhaps the best internal control is managers fulfilling their fiduciary duty and paying attention to what is occurring in their unit. As simple as it sounds, paying attention can substantially decrease the risk that fraud will occur in an area.

Conflicts of interest appear to be a growing issue in this category and occur when an employee has competing interests between their employment role and personal roles. This is an area where proactive disclosure and management is very important. Simply having a conflict of interest does not mean you have done anything improper, but it does mean you need to use caution and proactively ensure the conflict is managed. Employees can run afoul of state ethics laws in this category.

If you ever have questions about this topic or concerns that someone has committed fraud, we suggest you bring those issues forward to us or to your supervisor. One way you can do that is through AU's EthicsPoint anonymous reporting system. We again encourage you to review this month's events across higher education and consider ways you can proactively manage risk here at Auburn University.

M. Kevin Robinson, CIA, CFE
Associate Vice President
Office of Audit, Compliance & Privacy

Information Security & Technology Events

Apr 16, 2017: A late-January data breach at Westminster College in Fulton did not affect student academic records or financial aid information, college officials confirmed on Saturday. The breach of employee information was discovered March 26, according to a statement from Lana Poole, vice president and chief communications officer at Westminster. Poole said the breach was the result of a phishing scam and was reported to law enforcement authorities. (link)

Apr 07, 2017: Tax information for dozens of University of Louisville employees has been compromised after a hack of the online system the university uses to give employees access to tax documents. John Karman, university director of media relations, said Friday the university confirmed that 83 employees' W-2 forms were downloaded or accessed without authorization from the university or the employees. U of L uses W-2 Express, a product of Equifax Inc. (NYSE: EFX), to provide employees access to W-2 forms and other tax documents. This system was hacked, but it isn't clear where the hack happened. (link)

Fraud & Ethics Related Events

Apr 25, 2017: The administration of the University of California (UC) system hid $175 million in budget reserve funds from state officials, a new review found, prompting the state's auditor to call for "significant change" at the top to strengthen public trust in the system. In the audit, released Tuesday, State Auditor Elaine Howle urged California Gov. Jerry Brown and other lawmakers to increase oversight of the office of President Janet Napolitano. (link)

Apr 20, 2017: The University of California today (April 20) announced it has uncovered a massive scheme targeting students through its student health plan that fraudulently obtained student information and then stole almost $12 million from UC by writing phony medical prescriptions in the students' names. The university plans to file a motion for a temporary restraining order early Friday in Los Angeles County Superior Court to immediately shut down the scheme, which involved enrolling UC students in sham "clinical trials" and "recruiting" them at campus job fairs. (link)

Compliance/Regulatory & Legal Events

Apr 25, 2017: A federal judge on Tuesday dismissed the latest effort to claim that the NCAA's limits on what athletes can receive for playing sports violate the wage-and-hour provisions of the Fair Labor Standards Act. It is the third time in a little more than 14 months that federal courts have rejected such lawsuits. The latest bid, in a district court in California, was filed against the NCAA and the Pac-12 Conference on behalf of former Southern California football player Lamar Dawson. It alleged violations of the FLSA and the California Labor Code. (link)

Apr 24, 2017: A director on the staff of the University of Tampa was arrested Sunday after police say he had sex with a minor against her will. John Paul Stepro, director of media services at the university, is charged with sexually battering a person between the age of 12 and 17. University of Tampa spokesman Eric Cardenas said Monday that Stepro has been placed on administrative leave while officials gather information about his arrest. (link)

Apr 24, 2017: The dean of the law school at the University of Cincinnati, who was placed on administrative leave last month, sued the university Friday. Jennifer Bard, the first female dean of the college, filed a federal lawsuit against the university and its interim provost, Peter F. Landgren, for illegally placing Bard on leave. Bard's complaint asserts Landgren and UC illegally placed Bard on administrative leave in March immediately following her response to local media reports about financial deficits at the law school and faculty members' responses to her efforts to reduce those deficits. (link)

Apr 24, 2017: Students who invited conservative commentator Ann Coulter to speak at the University of California at Berkeley sued school officials on Monday, saying their cancellation of the event was discriminatory and violated free speech rights. The Berkeley College Republicans and the Young America's Foundation said in their lawsuit, filed in federal court in San Francisco, that U.C. Berkeley was violating their constitutional rights seeking to "burden or ban" events "involving the expression of conservative viewpoints." (link)

Apr 21, 2017: A state appeals court has prohibited the University of Texas, at least temporarily, from conducting a disciplinary proceeding for deciding whether to revoke a Ph.D. conferred in 2008. The order Thursday by the 3rd Court of Appeals is the latest development in Suvi Orr's long and circuitous legal battle to retain her doctorate in chemistry, which launched her career in the pharmaceutical industry. (link)

Apr 18, 2017: Former Stanford head basketball coach Johnny Dawkins has filed a lawsuit against the school for breach of contract after he was fired in 2016. Per Jon Wilner of the Mercury News, Dawkins is seeking "in excess of $7 million" in his lawsuit against Stanford, a combined total based on being owed "approximately $2.3 million in direct damages" and an additional amount of at least $5 million for "for the tortious ingredients of its wrongdoing." (link)

Apr 14, 2017: A legal settlement has been reached between the University of California, Berkeley, the former dean of its law school, and his former assistant, who said he sexually harassed her. Sorrell had sued her former boss and the university over the harassment allegations. Choudry in turn had sued the school for singling him out for additional investigation as the school looked into several cases of sexual harassment. Under the terms of the settlement, Choudry will give $50,000 to a charity of Sorrell's choice and pay another $50,000 to her lawyers. Choudry in turn will be officially considered to be on a two-year sabbatical until May 2018. (link)

Apr 13, 2017: Texas A&M WR Kirk Merritt is locked in an ongoing legal situation stemming from an arrest and two charges of indecent exposure after allegedly exposing his genitals to Texas A&M tutors on two separate occasions. Merritt's attorney has since explained the events, which resulted in an October arrest, were a result of a bad case of "jock itch." According to a report from Brent Zwerneman of the Houston Chronicle, at least one of Merritt's two alleged victims believe his "jock itch" defense is "absurd." (link)

Apr 12, 2017: The father of a male student who committed suicide after he was accused of sexual harassment by a classmate at the University of Texas has filed a lawsuit against the school for infringing on his son's Title IX liberties. Thomas Klocke, a straight male student at UT at Arlington, committed suicide June 2, 2016, after he was punished for allegedly typing homophobic slurs into his computer screen in a class that May. Klocke had previously denied the allegation, and administrative investigators had acknowledged there was no hard evidence to indicate he had perpetrated the harassment. (link)

Apr 11, 2017: After having fallen asleep at an off-campus fraternity house that night in October, Andrew Seely awoke to find his face puffy and red. His nose and lips had ballooned, his eyes nearly swollen shut. Seely, then a freshman at Central Michigan University, had a potentially deadly allergy to peanuts, a fact he had made known to those in the fraternity, Alpha Chi Rho, his father said. Yet on that night, someone smeared peanut butter on the 19-year-old's face in a hazing ritual that could have killed him, his mother, Teresa Seely, said. (link)

Apr 10, 2017: A former research assistant has hit a renowned 84-year-old American philosopher and the regents of the University of California with a wrongful termination suit in California court, alleging the school cut the 24-year-old assistant's pay after she reported that the professor groped and sexually harassed her for months. Joanna Ong filed the suit on March 21 claiming that John R. Searle, an emeritus professor at University of California, Berkeley, repeatedly harassed her when she was his research assistant. When she reported the incidents, her adviser allegedly said she wasn't going to follow up on the accusations, because they needed to "protect" Searle, the suit says. (link)

Apr 09, 2017: Kean University has agreed to a $375,000 settlement with a former administrator who sued the college alleging he was denied a promotion due to age discrimination. Wiliam DeGarcia, who had been with the college for 30 years, said in the lawsuit he was passed up for the promotion because his supervisor wanted "new blood" in the department. DeGarcia, of Westfield, was 55 years old at the time, according to court documents. (link)

Apr 06, 2017: State lawmakers acted illegally in making it a crime for medical marijuana users to possess their drugs on college and university campuses, the Court of Appeals ruled Thursday. The judges said the 2010 initiative that legalized the use of marijuana for medical purposes set out the specific places where even those entitled to otherwise use the drug may not have it. That list, they said, includes school buses, public schools and correctional facilities. (link)

Apr 06, 2017: A heralded director at the University of Montana is under investigation by the Montana Human Rights Bureau for allegations of discrimination based on gender and disability. Mark LoParco, subject of the investigation, is retiring in May after 25 years as head of UM Dining Services. LoParco denied this week that UM asked him to retire or that his coming departure is linked to allegations of sexual harassment and discrimination. UM spokeswoman Paula Short said the university respects the privacy of its employees and cannot comment on personnel issues. (link)

Apr 05, 2017: A University of Wyoming assistant professor of mechanical engineering has been charged with possession of child pornography, according to federal court records. Jian Cai, faces up to 20 years in prison and $250,000 in fines if convicted of the charges. Cai confirmed that he was an assistant professor at the University of Wyoming and he used his personal laptops to connect to the internet via the UW network, federal documents state. (link)

Campus Life & Safety Events

Apr 24, 2017: Indiana State University has announced that an assistant professor of aviation technology has been arrested for allegedly creating fake anti-Muslim threats back in March. The charges reportedly stem from a series of emails that were received on campus containing anti-Muslim messages and threats. "Based upon the investigation, it is our belief that Hussain was trying to gain sympathy by becoming a victim of anti-Muslim threats which he had created himself," said Joseph Newport, chief of ISU's police department. (link)

Apr 24, 2017: Wheaton College is in mourning after a student was killed in a tragic accident at a track and field competition on Saturday. Ethan Roser, 19, was volunteering at the event around 4:15 p.m. when he was accidentally struck by a metal hammer ball during the hammer throw event, according to a statement from the school in Wheaton, Illinois. (link)

Apr 20, 2017: Indiana athletics has enacted a policy disqualifying its programs from adding any athlete with a history of sexual or domestic violence. The policy bans "any prospective student-athlete -- whether a transfer student, incoming freshman or other status -- who has been convicted of or pleaded guilty or no contest to a felony involving sexual violence." It further defines "sexual violence" as "dating violence, domestic violence, rape, sexual assault or sexual violence as defined by the Indiana University policy on sexual misconduct." (link)

Apr 19, 2017: At least three people were arrested and at least one was left bloodied after dueling demonstrations outside Auburn University's James E. Foy Hall turned raucous before Richard Spencer spoke there Tuesday night. The speech was a lightning rod for controversy both on campus and online, as the "alt-right" leader's past white supremacist rhetoric proved divisive enough to cause Auburn to cancel the event on Friday. (link)

Apr 14, 2017: Washburn University's board of regents has approved a campus concealed-carry policy. The Topeka Capital-Journal reports the board unanimously approved the gun policy without discussion Thursday. The policy requires campus housing residents to safely secure and conceal handguns from sight on themselves, in their dorm or in the trunk of their car. A student will be subject to criminal charges if the weapon is used improperly. A Kansas law passed in 2013 allows for keeping concealed guns out of public college and university buildings as long as security is installed at entrances. Washburn officials say making those security enhancements is too costly. (link)

Apr 11, 2017: Maybe you went to a candidate rally on a Colorado university campus this campaign season and spotted a sign with an arrow directing you to a designated "free speech area." As of the fall semester, on Colorado's public university campuses, those areas roping off the First Amendment will be no more. Colorado's Democratic governor, John Hickenlooper, just signed a bipartisan law granting free speech rights across all campuses -- not restricted to particular areas, which has been the current practice. (link)

Apr 10, 2017: A Christian student was suspended because of comments he made on social media to another student -- not after he clashed with his Muslim professor, Rollins College's president said Monday. Nevertheless, the professor, Areej Zufari, has resigned, President Grant Cornwell said in an interview with the Orlando Sentinel. Reports on conservative websites and Fox News set off a firestorm after Marshall Polston, 20, of Orlando, said he stood up to adjunct professor Zufari for attacking Christianity in her humanities class. (link)

Apr 10, 2017: Fresno State released a new statement on Monday regarding a professor's comments that "Trump must hang" -- vowing to cooperate in any potential federal investigation. Lars Maischak, a history professor, made national headlines after he tweeted that "to save American democracy, Trump must hang. The sooner and the higher, the better." "The review of these and any other statements will be conducted in the context of rights of free expression, but also for potential direct threats of violence that may violate the law," Fresno State President Joseph Castro said. (link)

Apr 06, 2017: A criminal investigation report obtained from Coastal Carolina University alleges that some members of the CCU cheer team worked as strippers and escorts. The entire cheer team has been suspended from cheering due to a pending conduct investigation, but are still permitted to attend class. According to the investigation report obtained by The Sun News through a Freedom of Information request, cheerleaders involved in the escort services were paid between $100 and $1,500 per date. (link)

Mar 30, 2017: Penn State University on Thursday permanently banned a fraternity where a student died last month and announced new policies aimed at preventing underage drinking and hazing. The school revoked recognition of its chapter of Beta Theta Pi after it said an investigation found a "persistent pattern" of alcohol abuse, hazing, and drug use and sales. The probe into 19-year-old Timothy Piazza's death is ongoing, but State College Police have said he was injured in a fall down a set of stairs while pledging the frat, and that alcohol may have played a role in his death, according to CBS News. (link)

Other News & Events

If you have any suggestions, questions or feedback, please e-mail me at robinmk@auburn.edu. We hope you find this information useful and would appreciate hearing your thoughts. Feel free to forward this email to your direct reports, colleagues, employees or others who might find it of value. Back issues of this newsletter are available on our web site at https://www.auburn.edu/administration/oacp.

If you have any suggestions for items to include in future newsletters, please e-mail Robert Gottesman at gotterw@auburn.edu.

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Office of Audit, Compliance & Privacy
Auburn University
304 Samford Hall
M. Kevin Robinson, Assoc. VP

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