Case In Point: Lessons for the proactive manager

Volume 14 Number 07 | July 2022

Quotable .....

“In the end you should always do the right thing even if it's hard.”

-- Nicholas Sparks

For the past several years I’ve had the privilege of teaching a summer mini-semester class in our School of Accountancy. It's one of the highlights of my year, and I'm amazed at the quality of students I encounter. These students will soon leave and assume various roles in the accounting industry. Many will eventually become chief financial officers and controllers, or hold other high-level positions of authority in various industries.

While my course is titled ''Fraud Examination,'' it covers a great deal more than that. One of my goals for this course is to prepare my students for ethical decision making in the dilemmas they will encounter in their career. I have no doubt they will encounter many difficult choices in the years ahead, and I want them to be ready. I joke that I don’t want a former student to be one of the fraud cases we review in future classes.

Because the past several weeks have been highly focused on ethical behavior (and much of my ''regular job'' also deals with ethical issues), I wanted to remind our readers of just how important ethical decision making is in our industry. We are watched by media, stakeholders, regulators, and others now more than ever and have a duty to do things in an ethical manner.

As I look back at prior Case in Point stories over the past year, I'd argue that most include an ethical component in some way. It's vitally important that we make our ethical decisions a result of our character, not just to satisfy a donor, vendor, board member, or other powerful stakeholder. Otherwise, we risk becoming the Case in Point story—something I also don’t want our readers to become.

It's hard to believe that we are winding down summer and about to gear up for a new academic year. Fall semester is an exciting time for college campuses as new freshmen arrive with much energy and eagerness. While the anticipation of fall is high, the various risks remain for our industry. We again invite you to review the issues across higher education with a view toward proactive risk management.

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

Jul 22: Ransomware: “You can collect that money in a couple of hours,” a ransomware hacker's representative wrote in a secure June 2020 chat with a University of California, San Francisco, negotiator about the $3 million ransom demanded. “You need to take us seriously. If we'll release on our blog student records/data, I'm 100% sure you will lose more than our price what we ask.” The university later paid $1.14 million to gain access to the decryption key. Colleges and universities worldwide experienced a surge in ransomware attacks in 2021, and those attacks had significant operational and financial costs, according to a new report from Sophos, a global cybersecurity leader. (link)

Jul 14: HIPAA Settlement: Oklahoma State University – Center for Health Sciences (OSU-CHS) has paid $875,000 to the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) and agreed to implement a corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act (HIPAA) Privacy, Security, and Breach Notification Rules. On January 5, 2018, OSU-CHS filed a breach report stating that an unauthorized third party gained access to a web server that contained electronic protected health information (ePHI). The hacker installed malware that resulted in the disclosure of the ePHI of 279,865 individuals, including their names, Medicaid numbers, healthcare provider names, dates of service, dates of birth, addresses, and treatment information. (link)

Jul 06: Data Breach: Soap operas are almost always long-running. Privacy breaches should not be, and 16 years is a very long time for a problem to go undetected. But it appears that's what happened to the Virginia Commonwealth University Health System ("VCU Health"). Last month, VCU Health disclosed that they had recently learned that beginning as early as January 4, 2006, information about transplant donors had accidentally been included in files for their transplant recipients and vice versa. The information was not available to the general public but could be viewed by transplant recipients, donors, and/or their representatives when they logged into the recipient's and/or donor's patient portal. (link)

Fraud & Ethics Related Events

Jul 21: Scientific Misconduct: In August 2021, Matthew Schrag, a neuroscientist and physician at Vanderbilt University, got a call that would plunge him into a maelstrom of possible scientific misconduct. A colleague wanted to connect him with an attorney investigating an experimental drug for Alzheimer's disease called Simufilam. The drug's developer, Cassava Sciences, claimed it improved cognition, partly by repairing a protein that can block sticky brain deposits of the protein amyloid beta (Aβ), a hallmark of Alzheimer's. The attorney's clients—two prominent neuroscientists who are also short sellers who profit if the company's stock falls—believed some research related to Simufilam may have been “fraudulent,” according to a petition later filed on their behalf with the U.S. Food and Drug Administration (FDA). (link)

Jul 20: Occupational Fraud: Reynolds Community College's former financial aid director was sentenced to more than five years in prison in connection to an eight-year scheme she orchestrated in which she defrauded Virginia and the U.S. Department of Education of nearly $380,000 in student financial aid funds. From 2011 through 2017, court documents state that the woman used her financial aid office access to manufacture or boost financial aid eligibility for individuals, often her family members, who were not in fact eligible for financial aid. She then directed at least four of those co-conspirators to send her the majority of the illegally obtained money. (link)

Jul 02: Admissions Scandal: A former Georgetown University tennis coach who once coached former President Barack Obama's family was sentenced Friday to 2 1/2 years in prison for pocketing more than $3 million in bribes in exchange for helping wealthy parents cheat their kids' way into the school. The sentence for the coach is by far the toughest punishment handed down so far in the sprawling college admissions bribery scandal that shined a light on the lengths some rich parents will go to get their kids into the nation's most selective schools. (link)

Jul 01: Corruption: The former San Mateo County Community College District Chancellor pleaded not guilty to all corruption charges leveled against him on Thursday, June 30, according to San Mateo County District Attorney Steve Wagstaffe. On April 7, the DA announced felony charges against the chancellor, including that he allegedly fraudulently reported a $10,000 charitable donation to the Santa Rosa Junior College Foundation Fire Relief Fund on his 2017 taxes that was actually a donation made by the San Mateo Community College District Foundation. He is also charged with allegedly awarding construction projects to vendors from whom he received "multiple valuable gifts," including tickets to concerts and sporting events, and international travel. (link)

Jul 01: Occupational Fraud: MU officials announced the firing of three College of Engineering staff members Thursday after an internal audit found financial mismanagement in the school. The audit discovered direct evidence that the then-director of financial services at the College of Engineering, stole at least $30,700 from MU in electronics and unauthorized credit card purchases. The report also said two other administrators were significantly involved in the scheme and that they were dismissed in early February. These employees included an associate dean and an associate director of finance at the college. (link)

Compliance/Regulatory & Legal Events

Jul 26: Title IX: After a few alcoholic drinks at a pizza joint near campus, a professor in the psychology department at Cal State San Marcos allegedly insinuated to a female student that he was turned on and started kissing her neck. In the chemistry department, a professor pinned a female student's arms to her side, lowered his hands to her back and pressed his groin against her hips, she said. Both professors denied the claims but investigations conducted by the campus Title IX office concluded the professors had engaged in egregious sexual harassment and misconduct in violation of university policy. The professors' accounts of the events were found to be not credible. (link)

Jul 27: Title VI Investigation: The University of Southern California is facing a federal probe over its handling of a high-profile case involving a Jewish student who resigned from student government, citing anti-Semitic harassment. The Department of Education's Office for Civil Rights opened an investigation on July 15 into a complaint filed by the Louis D. Brandeis Center for Human Rights Under Law on behalf of Rose Ritch, who stepped down as Undergraduate Student Government vice president in August 2020. Ms. Ritch faced a “concerted campaign of anti-Semitic harassment” over her support for Israel and her Jewish identity by students who were “determined to rid the USG of all Jewish Zionists,” according to the complaint filed in November 2020. (link)

Jul 25: Discrimination Lawsuit: Already facing several lawsuits, Collin College has yet again been sued by a former employee. Administrator Linda Wee resigned from the school in fall 2021, claiming race-based discrimination. Earlier this month, she named Collin College in a lawsuit alleging that she faced harassment and retaliation while working there. The suit claims that Collin College violated Wee's rights in one instance of a broader “custom” of discrimination against minorities. It also claims that retaliation against “employees who speak out against civil rights violations is widespread and established within the College.” (link)

Jul 22: NCAA Violations: The NCAA delivered its official notice of allegations to Tennessee on Friday regarding violations that allegedly occurred under a former coach, according to a document obtained by the Knoxville News-Sentinel. There are a total of 18 violations in the letter, all of which are Level I -- the most serious in the NCAA's scale of infractions. Tennessee players and their families allegedly received approximately $60,000 in cash and gifts provided by the coach, his wife, assistant coaches and others associated with the school. The coach is accused of failing to promote an atmosphere of compliance and monitor football staff from 2018-21, and the university is accused of failing to monitor its recruiting plans. (link)

Jul 19: Abortion Laws: If a University of Michigan student walks into the school's Ann Arbor health center and learns they're pregnant, the health worker's response is never exactly the same. "It's easy to list: 'Well, you can continue a pregnancy, or you can consider a medication abortion or ... a surgical procedure,'" says Dr. Susan Dwyer Ernst, chief of gynecology at the University Health Service. In the wake of the U.S. Supreme Court's overturning of Roe v. Wade, Ernst has been thinking a lot about how those conversations with students will change. (link)

Jul 16: Title IX: A federal judge temporarily blocked the Education Department's Title IX guidance, which prohibits discrimination based on gender identity and sexual orientation. Eastern District of Tennessee Judge Charles Atchley in an order late Friday said the agency's guidance “directly interferes with and threatens Plaintiff States' ability to continue enforcing their state laws” that restrict transgender people from playing on sports teams and using bathrooms that match their gender identity. (link)

Jul 15: Tenure Settlement: The University of North Carolina at Chapel Hill has reached a settlement with journalist Nikole Hannah-Jones following the months-long battle last year over her initially not being offered tenure at the university. The settlement was for less than $75,000 and was approved by Chancellor Kevin Guskiewicz, Boliek said. Attorneys representing Hannah-Jones, including the NAACP Legal Defense & Educational Fund, Inc., last year threatened to take legal action, including filing a federal discrimination lawsuit, against UNC-Chapel Hill and its Board of Trustees over the failure to give her tenure, The N&O previously reported. (link)

Jul 13: Whistleblower Lawsuit: A whistleblower lawsuit filed by a former attorney at the University of Louisville alleges she was demoted and punished for reporting an assistant basketball coach for attempted extortion, and that she experienced pushback from the then-President for doing so. Amy Shoemaker, an associate general council for the University of Louisville and associate athletic director, alleges in the lawsuit that she was effectively “frozen out” of her job after she reported then-assistant basketball coach's efforts at extortion to police. (link)

Jul 13: Libel Lawsuit: Oberlin College in Ohio racked up more than $4 million in interest after not paying the more than $30 million in libel damages to a local family-run bakery over false racism allegations made in 2016. Gibson's Bakery was awarded $31.6 million in July of 2019 after students and a college official were found guilty of libeling the establishment as "racist" following an altercation a store employee had with three Black students. The judgment now stands at more than $36 million after the school accumulated $4,300 daily in interest over the more than 1,000 days it went unpaid, local outlet The Chronicle reported last month. (link)

Jul 09: Breach of Contract Lawsuit: A jury in Oregon awarded roughly $1.7 million in damages to a woman who claimed a local community college used her past work in pornographic films as a means to discriminate against her and ultimately force her out of the school's competitive nursing program. Nicole Gililland had attempted to sue Southwestern Oregon Community College (SWOCC), located in the coastal town of Coos Bay, for both breach of contract and for violating Title IX, which prohibits schools that receive federal funding from sex-based discrimination — likely making it the first case in which a student invoked Title IX based upon their involvement in sex work. (link)

Jul 07: A former University of New Brunswick student is ready to take the next step in her class-action suit after 14 other students contacted her lawyer with identical allegations of sexual assault. In April 2021, Morgan Wilcox filed a suit against the university and a psychiatrist. She alleges the doctor sexually assaulted her at appointments at the Student Health Centre in Fredericton and that UNB failed to protect her from that. On Thursday, her lawyer officially requested the judge to certify the lawsuit as a class action. (link)

Jul 07: Racial Profiling Lawsuit: Navarro College, the southeast Texas junior college that gained international attention as home of the Netflix documentary series "Cheer," is facing a civil racial profiling lawsuit in federal court due to the actions of a campus officer. The suit, which was originally filed in March, alleges that a Black former Navarro College football player was racially profiled by a Navarro College officer who's also named in the suit. According to court documents, the officer accused the player and a friend of smoking marijuana while they were hanging out in a grassy area near an off-campus apartment complex in late-March 2020. (link)

Jul 06: Breach of Contract Lawsuit: A state appeals court this month will wade into a dispute about whether the University of Florida should refund fees to students who were forced to switch to remote learning in 2020 during the onset of the COVID-19 pandemic. A panel of the 1st District Court of Appeal is scheduled to hear arguments July 20 after an Alachua County circuit judge last year refused to dismiss the potential class-action lawsuit. At least two other state appellate courts have taken up similar cases from other schools -- and reached different conclusions. A key issue in the cases is whether schools breached contracts by not providing on-campus services in 2020 after students had paid fees. (link)

Jul 01: Sexual Misconduct: The Washington State Department of Health has taken disciplinary actions against a professor at Pacific Northwest University in Yakima. According to a statement of charges, the professor engaged in sexually inappropriate comments and behaviors with students that were demeaning, humiliating and embarrassing. He had active credentials in Washington since 1977. He was charged in May 2022 by the Board of Osteopathic Medicine and Surgery with unprofessional conduct for sexually inappropriate behavior and comments toward students. (link)

Jul 01: Sexual Harassment: A Harvard professor is facing new allegations of sexual harassment in an amended lawsuit that includes accounts of unwanted touching, kissing, and sexual remarks during his three decades as a faculty member at the University of Chicago, where he allegedly engaged in multiple sexual relationships with students. The new allegations come as part of a lawsuit first filed against Harvard in February by three Anthropology graduate students who say the University ignored years of sexual harassment and retaliation by the professor. (link)

Jul 01: Fetal Tissue in Research: A proxy fight over abortion led by state House Republicans jeopardizes hundreds of millions of dollars in tuition assistance for Pennsylvania college students. At issue is public funding for Pennsylvania's four state-related universities -- Lincoln University, Penn State University, Temple University, and the University of Pittsburgh. On Monday, the state House voted 108-92 to approve an amendment that would require the schools to swear under oath they do not "engage in research or experimentation using fetal tissue obtained from an elective abortion" to receive state funding. (link)

Campus Life & Safety Events

Jul 27: The Alabama Law Enforcement Agency has released a statement following more than a dozen bomb threats that were called in to various colleges across the state on Wednesday. ALEA's statement reads: “The Alabama Law Enforcement Agency (ALEA) is aware of the most recent bomb threats made against universities and colleges around the country, which includes schools located in Alabama. ALEA's State Bureau of Investigation (SBI) and the Alabama Fusion Center (AFC), in-conjunction with local and federal partners, are currently monitoring the situation to ensure the safety of all students, faculty and staff. All collegiate schools that received threats within Alabama on Wednesday, July 27, have been cleared and classes have been deemed safe to resume. No further details are available at this time.” (link)

Jul 19: Arson: A University of Maryland, Baltimore County police officer was arrested Tuesday on allegations that he set several on-campus fires in recent months while on duty, authorities said. The officer was taken into custody on campus on an arrest warrant charging him with a list of offenses, including three felony counts of second-degree arson, the Office of the State Fire Marshal said. (link)

Jul 15: Housing: About 440 UNC Charlotte students still need university-run housing ahead of the start of the new semester that begins next month, university officials said Thursday. “It's an unexpected number” that still require such housing this time of year, said Christy Jackson, the university's senior director of communications. She said more students who applied for housing decided to stick with it than the university had anticipated. The university has about 6,000 beds and about 8,000 housing applicants, she said. (link)

Jul 15: Threat: Law enforcement officials have arrested an 18-year-old man after he allegedly threatened to go on a shooting rampage at Salisbury University in Eastern Maryland, authorities said. Notifications were made to Salisbury University and the Wicomico Sheriff's Office after the threats surfaced, according to authorities. (link)

Jul 16: Burglary: Two men are in Franklin County jail after being arrested in connection with a burglary from an Ohio State University residence hall last week. The university issued a safety alert Tuesday after the burglary, which happened at the Neil Building Hall Complex on the 1500 block of Neil Avenue. According to the alert, the suspects followed a resident into the building, then allegedly entered an unlocked residence hall suite and began taking items. (link)

Jul 15: Extortion: Two unnamed Penn State student-athletes told police they were extorted in the fall by a woman who convinced them — and other athletes across the country — to send sexually explicit images and threatened to publish them online, according to search warrants made public Friday. More than two dozen videos and photos were sent to the woman. That included videos of group sex and videos recorded in the Penn State football locker room depicting athletes in various stages of undress, university police wrote in the warrants. (link)

Jul 13: Free Speech: When Professor Stuart Reges challenged the University of Washington's position on land acknowledgements, administrators punished him, undermining his academic freedom. Today, backed by the Foundation for Individual Rights and Expression, Reges sued the university to vindicate his First Amendment right to express his opinion — even if it differs from the party line. (link)

Jul 12: Sexual Assault: Changes are coming to Western University's orientation week and its system of upper-year student volunteers who help newcomers get settled following high-profile controversies last year. About 10,000 students walked out of classes last fall to protest following allegations of sexual assault and the alleged druggings of young women at one of the school's residences, Medway-Sydenham. That was part of the fallout that prompted school officials to start overhauling their so-called OWeek – including adding two more weeks of paid training for so-called sophs, the upper-year students who help run events and greet first-year students upon their arrival to campus. (link)

Jul 12: Abuse allegations: The longtime Director of Cross-country and Track at Jacksonville University has stepped down after 20 years at the head of the programs. His departure comes days after several of his former players alleged he verbally abused them. "Over the past few days, there has been some very concerning information shared online regarding the personal experiences of some of our student-athletes while at Jacksonville University," JU Athletic Director, Alex Ricker-Gilbert, said. "The posts and comments have been difficult to read, and they have deeply impacted me and our Dolphin family." (link)

Jul 04: Lewdness: A man suspected of lewdness and placing “pornographic” images on vehicles parked at Utah State University was arrested Sunday, according to authorities. The man was booked into the Cache County Jail on suspicion of third-degree possession of a firearm by a restricted person as well as misdemeanor counts of lewdness and distribution of an intimate image. USU police released a statement on June 29 asking the public for help in identifying a man who was suspected of attaching “pornographic material” to vehicles with tape and exposing himself on campus. (link)

Jul 01: Free Speech: A federal court ruled Thursday that three Christian law students are likely to prevail in their case against the University of Idaho and are therefore free to speak in a manner consistent with their religious beliefs while their lawsuit proceeds. Alliance Defending Freedom attorneys represent Peter Perlot, Mark Miller, and Ryan Alexander, members of the Christian Legal Society chapter at the university. ADF attorneys asked the court to order university officials to rescind unlawful no-contact orders that they issued against the students because of the religious content and viewpoint of their speech. The court's preliminary injunction order requires the university to rescind the no-contact orders and refrain from enforcing the policy that allowed university officials to impose the orders based on the students' speech while the case, Perlot v. Green, continues. (link)

Jul 01: Vandalism: An investigation into several instances of racist vandalism and graffiti on a Massachusetts college campus during the last semester has led to the termination of an employee, the school said. The vandalism at Curry College that included swastikas and antisemitic graffiti, and messages threatening to Black students appeared to be the work of one person, school President Kenneth Quigley said in a message to the campus community on Wednesday. (link)

Other

Jul 02: Athletics: College sports experienced another seismic shift Thursday when the Big Ten announced that it was adding USC and UCLA to its ranks, starting in 2024. A conference that once was the domain of flinty Midwesterners will soon become a bicoastal affair, and the aftershocks of such a move are nowhere close to being over. Here, we attempt to explain the basics of USC and UCLA's move to the Big Ten, along with what it means for the entirety of college sports. (link)

If you have any suggestions, questions or feedback, please e-mail Kevin Robinson at robinmk@auburn.edu or Robert Gottesman at gotterw@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.