Case In Point: Lessons for the proactive manager

Volume 16 Number 03 | March 2024

Quotable .....

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

-- Nicholas Sparks

This month we continue our review of the events of 2023 with a focus on the Fraud & Ethics Category. This category has historically been dominated by occupational fraud – situations where employees use their position to commit misappropriation. Occupational fraud continues to lead the way in 2023; however, research misconduct was second by a substantial margin. If I had to speculate as to the reason research misconduct increased, my guess is increased scrutiny from federal regulators and possibly the addition of AI related tools in their fight against fraud.

2023 Most Frequent Topics for the Fraud & Ethics Category

Occupational Fraud
Research Misconduct
Theft
Conflict of Interest/Ethics
Academic Fraud

So why does occupational fraud always lead this category? The short answer is because anyone employed by the institution can commit it. As we have mentioned before, there are three factors present in most cases of occupational fraud (often referred to as the Fraud Triangle):

Pressure – Historically, the biggest pressure has been financial pressure (generally debt). This is one area to keep an eye on as reports indicate that credit card debt has reached an all-time high. This will create pressure for employees in all industries.

Opportunity – This factor comes in many forms from simply taking home an institutional asset, to padding a travel expense, or misusing a credit card to make personal purchases. Those are examples of just how easy it can be for fraud to occur.

Rationalization – The most common rationalization we hear is that an employee is ''borrowing'' the funds and plans to repay them; however, repayment never happens as the pressures on the employee continue into the next month in virtually every case of occupational fraud.

The best way to prevent occupational fraud is through strong internal controls. The greatest internal control you can implement in your institution is maintaining proper oversight and knowing what is going on. Oversight and segregating certain duties are musts as internal controls.

Every two years the Association of Certified Fraud Examiners publishes a report. Their latest, Occupational Fraud 2024: A Report to the Nations, was just issued on March 21, 2024. We will be analyzing their findings regarding our industry in a future column.

As always, there are a multitude of risks facing our industry, and we invite you to review this month's news stories with a view toward proactively managing risk in your sphere of influence. We welcome your comments and suggestions.

M. Kevin Robinson, CIA, CFE
Vice President
Institutional Compliance & Security& Privacy
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Information Security & Technology Events

Mar 26: Cyberattack: Weeks before exams are set to begin, students and faculty at one of Manitoba's largest universities are scrambling to access academic files after a weekend “cyber incident” knocked out network access and forced the institution to cancel classes. Lessons at the University of Winnipeg resumed Tuesday after a one-day hiatus, but many educational services remain unavailable, including Nexus — the school's learning-management system, in which many professors store and disseminate the bulk of their curriculum.(link)

Mar 11: Data Breach: Nearly 2,100 people at UT Southwestern Medical Center have been affected by a data security breach that included medical and health insurance information, addresses and dates of birth. The academic hospital reported the breach to the office of the attorney general on March 7. It has not yet contacted customers regarding the information that may have been accessed, according to the report. ''We are assessing the data to prepare notifications to those impacted in accordance with federal regulations. The incident involved internal use of unapproved software and did not involve a cyberattack or external exposure of data,'' a UT Southwestern spokesperson said in a statement. (link)

Mar 06: Data Breach: A hacker operating on the dark web has asserted possession of data from prestigious educational institutions in the United States. Among the institutions mentioned are the University of Chicago, Duke University, Princeton University, and Stanford University. The leaked information, covering the period from 2021 to 2024, comprises email addresses and names of individuals allegedly affiliated with these renowned universities. The full extent of the data breach is yet to be determined, leaving university administrators and cybersecurity experts on high alert. Despite the alarming claims made by the threat actor, investigations into the matter have yielded conflicting results. (link)

Fraud & Ethics Related Events

Mar 21: Research Integrity: A Stanford University professor considered one of the most influential people in K-12 mathematics is accused of ''reckless disregard for accuracy'' in her work, The Chronicle of Higher Education reported. An anonymous complaint was reportedly filed Wednesday with Stanford citing 52 instances in which the professor allegedly included incorrect information about outside studies in learning, neuroscience and math education in her articles, lectures and books, according to The Chronicle of Higher Education. Several examples were in a draft of the California K-12 math framework, a guidance document about best practices in teaching math that the professor co-authored. The complaint also argues that wrong information was cited in early versions of the math framework but then removed, according to the report. (link)

Mar 08: Research Fraud: In 2020, [a physicist] was an up-and-coming star of the physics world. A researcher at the University of Rochester in New York, he achieved widespread recognition for his claim to have discovered the first room-temperature superconductor, a material that conducts electricity without resistance at ambient temperatures. [The physicist] published that finding in a landmark Nature paper. Nearly two years later, that paper was retracted. But not long after, he announced an even bigger result, also published in Nature: another room-temperature superconductor2. Unlike the previous material, the latest one supposedly worked at relatively modest pressures, raising the enticing possibility of applications such as superconducting magnets for medical imaging and powerful computer chips. (link)

Mar 02: Research Ethics: University of Houston-Victoria Faculty Council members unanimously said in a document on Friday they wanted an interim provost appointed after questions arose about potential conflicts of interest, double standards and a research grant proposal by the provost. The document signifies the climax of an ongoing saga concerning the provost’s use of campus space and funds for research, among other things, now conducted by his private company. The unanimously approved resolution also underscores allegations of inaccuracies in a federal grant application believed to have been completed for personal benefit. (link)

Compliance/Regulatory & Legal Events

Mar 25: Employee Conduct: A high-level member of Montana Tech's athletic department is facing several felony charges related to illegal drug distribution here in Butte. The Executive Associate Athletic Director was charged in Butte Justice Court recently with five counts of criminal possession of dangerous drugs with intent to distribute. He is also charged with two counts of being in possession of methamphetamine and crack cocaine. He was jailed on $500,000 bond. Charging documents allege that he intended to distribute MDMA, otherwise known as molly or ecstasy, LSD, ketamine, and cocaine on March 20 in the 1100 block of West Gold Street, about two blocks away from the Montana Tech campus. (link)

Mar 22: Discrimination Lawsuit: This afternoon a St. Louis jury sided with a former Harris-Stowe State University professor, determining that she had endured a hostile work environment and was owed $750,000 in compensatory damages. Beverly Buck Brennan, who is the daughter of Jack Buck and sister of Joe Buck, taught speech and theater classes at the historically Black university from 1993 until 2017. She directed the Missouri state school's speech and theater program, describing much of her time there as a dream job. Brennan, who is white, alleged that she was discriminated against based on race and sex. She also claimed she was retaliated against when she complained of her treatment. (link)

Mar 21: Discrimination: Providence College students, faculty and alumni are making public allegations of exclusionary attitudes toward LGBTQ+ students and employees on campus. It began with the recent resignation of a key staffer dedicated to inclusion and has since boiled over into a denunciation of the administration, signed by more than 500 faculty, students and alumni. The anonymously authored open letter to the college's president, the Rev. Kenneth R. Sicard, accuses the school of ''hypocrisy toward and systemic oppression of LGBTQ+ people at PC.'' Dated March 18, the online Google document states that PC has prohibited pride flags and the word "pride" when discussing sexuality or gender. (link)

Mar 20: State Law: Alabama Gov. Kay Ivey signed a bill Wednesday that bans state funding of diversity, equity and inclusion programs in schools, public colleges and state agencies, joining a wave of Republican-led efforts to quash DEI initiatives. The new law will impose restrictions around what it calls eight ''divisive concepts'' dealing with race and personal identity. It also requires public colleges to designate bathrooms ''for use by individuals based on their biological sex.'' Ivey signed the bill one day after the state House and Senate gave final approval to the measure, SB 129. It will take effect on Oct. 1. College students who oppose the bill have organized protests against it, including a large rally at the State House earlier this month, member station WBHM reports. (link)

Mar 19: DEI Lawsuit: The Goldwater Institute is suing the Arizona Board of Regents on behalf of Owen Anderson, a professor of philosophy and religious studies, and state resident D. Ladd Gustafson over the mandatory diversity, equity, and inclusion training for ASU employees. The lawsuit was filed with the Maricopa County Superior Court on March 19, and ASU was named specifically as being in violation of state law. The lawsuit seeks the Court to declare the DEI training requirement "unconstitutional" and permanently enjoin ABOR from using public money ''to impose, implement, administer, require, or grade the Inclusive Communities training that presents any form of blame or judgment.'' The lawsuit claims the training is ''in violation of state law'' because it uses taxpayer funds to mandate diversity training. Anderson has refused to participate in the training. (link)

Mar 18: Title IX: Federal investigators identified allegations of sexual assault involving a former coach on a college swim team that went unanswered. A Department of Justice investigation claims the former head swimming and diving team coach at the University of Maryland-Baltimore County sexually abused student-athletes and discriminated against others. The DOJ also claimed some of the student-athletes violently assaulted other athletes. A DOJ letter sent to the UMBC community states the school was told about the allegations from 2015 to 2020 and did not stop it. (link)

Mar 15: State Law: State lawmakers approved a slew of new laws affecting Indiana's colleges and universities during the 2024 legislative session -- but questions remain about how some of those measures will be implemented. The newest provisions -- including several dealing with hot-button issues -- were outlined during the Indiana Commission for Higher Education's (CHE) meeting on Thursday. Among those are laws to affect tenure and promotion requirements for college faculty, reform high school diploma requirements and expand scholarships and work-based learning opportunities for students. (link)

Mar 15: Free Speech Lawsuit: Several fraternities at the University of Maryland College Park are suing the school and demanding a temporary restraining order against policies that have banned recruitment and social events with alcohol. They claim their freedom of speech is being violated. The fraternities also say the allegations, which the university has not laid out in detail, are vague and claim the social ban violates their due process. A coalition of fraternities is also accusing the school of illegally searching students' phones--going through their texts--and not allowing students' requests for lawyers to be present. (link)

Mar 12: Student Groups Lawsuit: The New York Civil Liberties Union has filed a lawsuit in Manhattan on behalf of a pair of pro-Palestinian student groups that were suspended last fall after their protests pushing for a cease-fire in Gaza allegedly violated university policy--as tension over the Israel-Hamas war spills onto campuses and causes some donors to withdraw support of legacy schools. The lawsuit--filed by the NYCLU and Palestine Legal against Columbia, university president Minouche Shafik and senior executive vice president Gerald Rosberg--asks the school to reverse the suspension of Students for Justice in Palestine and Columbia-Barnard Jewish Voice for Peace, which it says were punished after holding a "peaceful student demonstration and temporary art installation" on Nov. 9. (link)

Mar 11: Academic Freedom Lawsuit: A group of Penn professors filed a lawsuit against the University, alleging a pattern of "McCarthyism" for preventing speech in opposition to Israel and seeking to stop the University from submitting documents to Congress. The lawsuit was filed on March 9 by associate professor of Arabic literature Huda Fakhreddine and history and Africana studies professor Eve Troutt Powell in conjunction with Penn Faculty for Justice in Palestine, a collective of Penn faculty who say they are standing in solidarity with Palestinians. The complaint alleges that efforts to investigate the University over alleged antisemitism on campus have threatened professors' academic freedom. (link)

Mar 05: Liberty University has agreed to pay an unprecedented $14 million fine for the Christian school's failure to disclose information about crimes on its campus and for its treatment of sexual assault survivors, the U.S. Department of Education announced Tuesday. The fine is by far the largest ever levied under the Clery Act, a law that requires colleges and universities that receive federal funding to collect data on campus crime and notify students of threats. Schools must disseminate an annual security report that includes crime reports and information on efforts to improve campus safety. (link)

Mar 01: State DEI Law: A UT Tyler employee is on leave after a hidden-camera recording about DEI law caused a wide-spread stir, Dallas Morning News reported. According to the DMN article, a YouTube video by a group called Accuracy in Media compiled recordings of university employees discussing non-compliance with DEI or critical race theory bans that went into effect on Jan. 1, 2024. One employee seen in the video is the Director of Student Belonging at UT Tyler. In the video, the employee is asked about DEI programs no longer being legal, to which she replied, "No, you can still do it, you just have to be... creative." When asked how the alleged workaround will continue to circumvent the law, she said, ''We carry on. We do the work. I plot and plan.'' (link)

Campus Life & Safety Events

Mar 27: Campus Protest: A group of Vanderbilt University students were suspended from the school Wednesday after attacking a police officer during a pro-Palestine sit-in event, a university spokesperson told The National Desk (TND). Early Wednesday, students entered the university's Kirkland Hall, which was closed for construction. The sit-in was organized to demand the university allow students to vote on an amendment to the Vanderbilt Student Government (VSG) Constitution, according to campus paper The Vanderbilt Hustler. The amendment seeks to prevent any VSG funds from going to organizations disapproved of by the Boycott, Divestment and Sanctions (BDS) movement. Some of the students at the sit-in "physically assaulted" a "Community Service Officer" who confronted them, the spokesperson said. Campus staff then asked students to leave the building, which they allegedly refused. (link)

Mar 18: Hazing: The University of Maryland College Park on Friday lifted a blanket suspension on most fraternities and sororities and a ban on their social activities involving alcohol and new recruitment. The campus update came as many students left for Spring Break and as the school faced a new lawsuit over the suspension. The university has not detailed exact allegations, but said five chapters remain under investigation. A response filed by the state late Friday mentioned hazing and underage drinking incidents and a resident director finding drug paraphernalia in one chapter house. Specific complaints included a parent telling the university their child was forced to stand in the cold and later was treated at the University Health Center for suspected hypothermia. (link)

Mar 06: Campus Speech: Students at a university in the Texas Panhandle have asked the Supreme Court to rule that they have a First Amendment right to hold a charity drag show on campus, an emergency request they hope will allow them to put on the show this month. It's another side of the roiling debate over campus speech that has included challenges from the right about whether efforts to confront bias on campus intimidate students who want to speak their mind. In this challenge from the left, students have been fighting with officials at West Texas A&M University since the school's president canceled last year's planned drag show. (link)

Mar 05: Campus Safety: Yik Yak, the social media platform which allows users to post anonymously in a location-based public forum, was popular at high schools and colleges throughout the mid-2010s before it shut down in 2017. Though the platform sometimes made for lighthearted laughs about situations or events on campuses, its anonymity also allowed for cyberbullying and threats to be made, often with little consequence for the "yakkers," or users, who posted the content. Well, after relaunching in 2021, the app is now back on campuses. And, along with other similar platforms, it's contributing to ''a reckless disregard for the well-being of young people and an outright indifference to bullying and bad behavior,'' according to UNC System President Peter Hans. That's why he's hoping to block the platforms from campus IT networks across the 17-institution public university system. (link)

Mar 05: Athletics: The Dartmouth College men's basketball team voted 13-2 Tuesday afternoon to become the first labor union for college athletes. The vote could mean a huge shakeup for the NCAA's model, which allows college athletes to financially benefit from their role on teams only through their names, images and likenesses. Dartmouth players Cade Haskins and Romeo Myrthil began the initial push for unionization via a petition in September. They celebrated the results of the historic election in a statement. The Dartmouth team voted to join SEIU Local 560, which represents service employees in Hanover, New Hampshire. The union's local and international presidents congratulated the team on its vote. (link)

Mar 04: Campus Speech: The Supreme Court on Monday sidestepped a challenge to college ''bias response teams,'' which critics say are a form of speech police that chill freedom of expression. The court said the dispute over the practice at Virginia Tech, whereby students could report incidents of alleged bias on campus, is moot, most likely because the policy has since been discontinued. Other colleges have similar programs. Justices Samuel Alito and Clarence Thomas, both conservatives, said the court should have taken up the issue. In deciding the case was moot, the court tossed out an appeals court ruling in favor of the university. (link)

Mar 04: Campus Speech: Texas Tech University placed a faculty member on paid leave Monday after university leaders found the professor had posted a series of comments on social media that officials described as ''hateful, antisemitic, and unacceptable.'' According to a joint statement from Texas Tech President Lawrence Schovanec and Texas Tech University System Chancellor Tedd Mitchell, comments allegedly made by an assistant professor on social media were "antithetical" to the university's values, according to its ethical code of conduct. The university system's Office of Equal Opportunity is now investigating whether he made similar comments in the classroom or work environment. (link)

Mar 03: Hazing: Program activities of fraternities and sororities at the University of Maryland have been suspended indefinitely, the university announced. The University of Maryland's decision comes after the University of Virginia suspended its Kappa Sigma chapter and all fraternity events following an alleged hazing incident last month that left a student injured. The university, which did not elaborate on the alleged activities, said that an emergency meeting was held on Thursday between all fraternity and sorority life councils during which the groups were notified that further allegations of misconduct may result in a cease-and-desist activities. However, despite the warning, further incidents were reported on Friday, the university said. As a result, all new member program activities have been indefinitely suspended, ''pending the results of a thorough investigation'', the statement announced. (link)

Mar 01: Campus Protest: Timothy Snyder evacuated his ''Hitler, Stalin, and Us'' lecture on Thursday afternoon after a Communist activist group entered the classroom and would not leave. Around 10 demonstrators affiliated with the Revolutionary Communist Party showed up at the classroom in William Harkness Hall five minutes after the start of class and began shouting at Snyder while holding up signs and recording students. After five minutes of shouting, students and Snyder began filing out of the classroom. Shortly after, Lotta and his group were escorted out of the building by Yale security. (link)

Mar 01: Hazing: A disturbing video that leaked online appears to depict members of the Sigma Alpha Epsilon fraternity at the University of Miami engaging in a troubling act of hazing within their fraternity house. The video, which has garnered attention on social media, shows one student crouching inside a trash can while others surrounding him chug large amounts of milk. The person capturing the footage seems to be located in a nearby apartment rather than within the fraternity. However, it's not all fun and games. The incident may have legal consequences beyond university disciplinary actions. Under the Florida Anti-Hazing Law, also known as the Chad Meredith Act, hazing might be considered a felony if it recklessly or intentionally endangers the mental or physical health or safety of a student. (link)

Mar 01: Hazing: The University of Virginia's 30 fraternities have suspended recruitment activities for the next three weeks after a pledge was injured after an alleged hazing incident. The school's Inter-Fraternity Council shared a statement on Feb. 27, announcing the suspension after the alleged hazing incident from the Kappa Sigma Fraternity chapter that occurred on Feb. 21. UVA spokesperson Bethanie Glover also confirmed with PEOPLE that ''UVA has recently suspended the University's recognition of the Kappa Sigma fraternity as University Police investigate allegations that hazing led to the injury of one student.'' (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.