Mad River Union
HSU – An independent audit has given a clean bill of health to the handling of sports scholarships by Humboldt State University’s Department of Athletics, which is the subject of a pending ex-employee lawsuit alleging fraud.
The audit by accountant CliftonLarsonAllen LLP of Bellevue, Wash., challenges allegations by a former Athletics employee, Dan Pambianco, of illicit diversions of student scholarship funds and travel expenses for the personal use of Athletic Director Dan Collen and Associate Athletic Director of External Affairs Tom Trepiak.
University President Lisa Rossbacher informed administration officials and staff in a March 9 memo, “I am gratified, and I am sure our donors will be as well, by the auditors’ finding that scholarship funds have been used for the intended purpose.”
A companion news release stated, “The report by CliftonLarsonAllen reinforces the university’s position that the allegations in the lawsuit are without merit. It also supports the results of many years of annual audits of Athletics.”
Both Collen and Trepiak vigorously denied Pambianco’s charges when they became public last fall in the student newspaper. Asked for comment last week about the new audit, Collen said in an email that the review spoke for itself.
Trepiak emailed, “I am happy – along with the Department of Athletics and HSU – that the results of the audit confirmed our position as it relates to the pending litigation and our commitment to our donors and our students.”
But Pambianco’s Eureka attorney, Peter Martin, says CliftonLarsonAllen missed the main point. He claims the audit was limited to HSU’s athletic scholarship accounts, but the alleged misconduct compromised the department’s administrative and travel accounts.
“The audit is limited in scope so as to procure the ‘whitewash’ HSU is seeking,” Martin charged in an email. In a prior telephone interview, he said the California Public Records Act request he filed for university financial records greatly exceeds the scope of the audit and that HSU has missed the legal deadline for providing some 5,000 pages of documents relevant to the lawsuit. “The audit doesn’t begin to cover what it should,” he declared. “My view of the situation is, ‘Garbage in, garbage out.’”
Nancy Jones, a CliftonLarsonAllen certified public accountant, stated in a Feb. 23 letter to the university, “Athletic scholarships tested were awarded in accordance with HSU policies” and properly credited to student accounts.
Jones called “appropriate” the procedures for awarding and disbursing such scholarships.
Regarding travel expenditures, Jones’ letter states, “All travel is pre-approved, budgeted and requires documentation of actual expense and evidence of distribution to students, when applicable, and limits are imposed through the budget process.” She summarized, “Disbursement of HSU Athletics Department funds is monitored appropriately.”
Procedures for handling cash and cash receipts are “properly designed through the use of HSU cashiering staff for recording fundraising, concessions and mailed cash donations,” according to Jones’ letter. She made these related points:
• “Cash, except that received at [sports] banquets, is handled by cashiers with appropriate training and policies.”
• Athletic donations are administered by the school’s Advancement (fundraising) Foundation for receipt and recording.
• The Athletics Department’s “key personnel expressed compliance with the requirement to immediately turn over checks and cash received in person to the HSU cashiering staff.”
CliftonLarsonAllen, an over 60-year-old company with 90 offices nationwide, reviewed 25 donations, an additional 25 receipt transactions and the two largest athletic scholarships per Humboldt State sport. Auditors interviewed what they termed “21 key staff,” including administrators, accountants, Athletics personnel and Advancement officials.
“In general, all personnel provided consistent understanding of budgeting, accounting and reporting,” the audit letter concludes.
In its news release, the university noted, “As a part of HSU and the California State University system, Athletics follows state financial practices and standards. CliftonLarsonAllen’s review was conducted in accordance with the Statement on Standards for Consulting Services No. 1 of the American Institute of Certified Public Accountants. The firm reviewed general ledger detail and donation record detail.”
The school characterized the audit as broad and said CliftonLarsonAllen was given “access to all records [it] requested.”
Regarding the sports teams themselves, budgeting “is generally strong,” Jones wrote. “All budgets are determined by the coaches and approved by the Athletic Director [Dan Collen], and the coaches are provided weekly reports of budgeted and actual revenues and expenses for their review and discussion with the athletic director.”
Attorney Martin rebuffed that finding. “The list of interview subjects only includes those who would either benefit from keeping the misappropriations hidden or would be threatened if the truth came out,” he said. “That includes all of the head coaches, who would surely have scholarship funding cut if they divulged the truth. That’s what happened to others who raised issues previously. Notably missing from the list of interview subjects are past employees and personnel from the budget office who would be following the money channels. I don’t want to name them by name for obvious reasons.”
Martin also alleged:
• The audit was restricted to scholarship donations, “only because that is the easiest route to justify what’s being done. In a given year, Collen can cut or add scholarships to a particular program on a moment’s notice.”
• “There are many donations that were inappropriately channeled into the administrative account. They don’t appear to be tracking those in the audit. Those donations weren’t intended for Collen’s travel.”
• Also missing is any tracking of expenses financed by student fees. Students would be “in an uproar if they knew how much money was wasted on the extravagant travel and spent on parties, luncheons, etc.”
• HSU’s annual sports auction “needs to be looked at, and it does not appear the audit did this.”
Pambianco’s lawsuit accuses Collen of stealing or embezzling public monies from Humboldt State or “misdirecting” funds expressly earmarked for student scholarships.
Pambianco alleges in one instance that Collen “purchased” a junket to Alaska donated by booster Steve Brown that was auctioned at the 2013 HSU Athletics Sports Auction.
Collen took the trip with three friends in June 2013 and did not pay for it, according to Pambianco, the former sports information director who was transferred 15 months ago over his protests to the university’s marketing office.
His lawsuit claims “misdirected” scholarship money went into an unspecified administrative account to finance “lavish” athletics travel, including large – but unspecified – amounts of money for meals and hotels.
“Many of these trips have little or no public benefit and have the main purpose of unlawfully enriching Collen and his cronies at the taxpayer’s expense. Collen has gone to great lengths to hide these transactions from others,” Pambianco alleges.
Rossbacher acknowledged that the audit faulted interdepartmental communication between the Department of Athletics and the Advancement Foundation, the university fundraising unit that administers charitable gifts and donations. The two branches should use consistent accounting and fundraising terminology and standards, according to the audit.
It also called for the two to reconcile their total annual contributions and share full details of all corporate sponsorships, based on standard procedures.
Rossbacher said she directed Vice Presidents Joyce Lopes (Administrative Affairs) and Craig Wruck (Advancement) to carry out the remedial measures within six months.