Wednesday, January 14, 2009

Universities And Other Scoundrels Reach Late Deals With Bushies

As the Bush Administration comes to a merciful close, corporate fraudsters are scrambling to reach last-minutes settlements before the Obama crowd takes over.

Fraudsters trying to cut sweetheart deals are not limited to business types. Universities also are trying to get in on the action, which seems appropriate because we've already reported on a case here in Birmingham where a university received a light wrist slap for widespread research fraud.

Turns out my former employer, the University of Alabama at Birmingham (UAB), was ahead of the game when it cut a stunningly favorable deal with the Bush Justice Department in 2005.

Among those waiting until the last minute, according to a report by Carrie Johnson of the Washington Post, is Yale University.

Yale recently agreed to pay $7.6 million to settle claims that its researchers overbilled on federally funded research grant. The Associated Press article mentions similar settlements have been reached at other institutions, including Northwestern, Johns Hopkins, Cornell, University of Connecticut, and UAB.

That list only scratches the surface of the problem. Other institutions that have had problems with research fraud include Harvard, University of Chicago, Duke, Stanford, University of Washington, University of Mississippi, University of Minnesota, University of Texas, New York University and . . . well, you get the idea; the problem is widespread.

Here is a question I have yet to see asked in the mainstream media: Do the settlements reached in these cases reflect the actual amount of fraud involved? In other words, does the punishment fit the crime?

Based on my research of the UAB case, the answers are a resounding no and no.

As we noted in a recent post, one of two whistleblowers in the UAB case alleged the total fraud at the Birmingham campus over a 10-year period reached at least $300 million and went perhaps as high as $600 million. And this whistleblower, Thomas Gober, had reason to know what he was talking about. He was UAB's research compliance officer, and he is a specialist in forensic accounting. In fact, he has served as a government witness in a number of major business-fraud cases.

How were taxpayers served by UAB's leadership and the lax Bush Justice Department, which was busy prosecuting people like Don Siegelman for crimes they did not commit?

Well, let's take a conservative estimate and say UAB actually committed $300 million of research fraud. In its settlement, the university paid the government $3.39 million.

So if my math is correct, UAB paid roughly 1/100th of the fraud it actually committed. And if Gober's higher estimates were correct, the university got away with an even more grotesque case of "financial murder."

No wonder UAB President Carol Garrison characterized the settlement as a "very positive outcome."

Was it a positive outcome for taxpayers? Does Carol Garrison care about blatant mismanagement of your federal tax dollars? What about other university presidents and corporate titans who are getting sweetheart deals from the Bush administration?

On an issue that hits close to home here at Legal Schnauzer, do you think it's possible that Carol Garrison felt like she "owed one" to Alice Martin for signing off on this sweetheart deal for UAB? And could Garrison have returned the favor by "firing" a certain UAB employee who was writing uncomfortable truths about Martin and other loyal Bushies on his personal blog?

Here is an even more important question: Why are American taxpayers unaware of how badly they are being cheated by universities and corporations? Why has the mainstream media not reported on this story?

One reason, I suspect, is that whistleblower cases usually are sealed early on. My guess is that many of the cases never are unsealed, and under settlement agreements, participants are sworn to confidentiality.

I only obtained key documents in the UAB case because, at some point, it was unsealed. And even then, I had to do some extra searching because the whistleblower complaints were not available on the public computers at the federal courthouse in Birmingham. I had to ask clerks for hard copies, which were stored in file folders. I suspect it was not an accident that the documents were hard to find.

There is hope for taxpayers. Under the settlement agreement in the UAB case, the government can reopen the case at any time, initiating a civil, administrative, or criminal investigation. This is the proverbial gun that Alice Martin has had cocked at UAB's head for three-plus years now.

Settlement agreements in other cases probably contain similar language. I would suggest that an Obama Justice Department should revisit these corporate and academic fraud cases and make sure the perpetrators are punished in a way that is commensurate with their misdeeds.

Meanwhile, you might not read "the rest of the story" about academic research fraud in the mainstream press. But you will be reading the whole story of the UAB case here at Legal Schnauzer.


Anonymous said...


legalschnauzer said...

Thanks for catching my spelling gaffe. I've made the correction.