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Regents probe concludes poor judgment to blame in debacle

By Craig Gima

LAST UPDATED: 02:20 p.m. HST, Nov 15, 2012

KAHULUI >> A University of Hawaii Board of Regents task group that examined the Stevie Wonder concert debacle determined that then-Athletic Director Jim Donovan, Associate Athletic Director Carl Clapp, Stan Sheriff Center manager Rich Sheriff and Assistant Athletic Director for Business Tiffany Kuraoka acted with good intentions, but ultimately used poor judgment that resulted in the university's loss of $200,000 in a scam.

The report also said it is not clear who authorized the athletic department to begin selling tickets to the concert before liability and cancelation insurance had been obtained.

The report from the accounting firm of KMH LLP and a group of business leaders was released today at the regents meeting at the UH-Maui College campus in Kahului. The report said the authority to approve the concert should have come from then-UH Manoa Chancellor Virginia Hinshaw, but was instead assumed by Donovan.

The task group also said that Sheriff, Clapp and Kuraoka should have made sure liability and  cancellation insurance policy was in place, as required by the contract with promoter Bob Peyton, before ticket sales began and the $200,000 was wired to a Florida bank account. The contract also did not include a deposit for the use of the center, which is required by university policies.

FBI investigators said the university was told it was an escrow account, but two men arrested for allegedly scamming the university withdrew the funds and spent it on personal expenses.

Sheriff knew the insurance hadn't been obtained but did not stop the ticket sales, the report said.

KMH LLP said the total loss to the university was $211,970 because of the additional cost to print and sell tickets.

The auditors couldn't determine who authorized the printing and sale of the tickets before insurance was in place. The ticket office manager indicated Sheriff verbally authorized the sales to begin. But Sheriff denied approving the sale, saying the authorizations "must have come from higher ups."

Larry Rodriguez, a business consultant and the chairman of the task group, said the group recommends the university develop policies and clear authority for the use of the Stan Sheriff Center and for the printing, sale and distribution of tickets for non-university events.

Rodriguez told the regents' audit committee this morning that existing policies give the authority to sign a contract for the use of the center to the UH Manoa Chancellor. But that Donovan assumed responsibility and signed the contract instead.

Donovan delegated the authority to negotiate the contract to Sheriff and the financial approval authority to Clapp and Kuraoka.

They should have made sure liability and cancellation insurance policies were in place before funds were wired and the contract should have included a deposit for the use of the center as required by university policies, Rodriguez said.

The report also notes that the Athletic Department did not adequately investigate promoter Bob Peyton and his  company BPE before signing the contract to put on the concert. If they had done so, it would have raised several "red flags," the repair said.

"It (the report) shows that the athletic director wanted to do something good, but ultimately they should have sought the opinion of the chancellor, they should have consulted with the upper campus," said James Lee, the chairman of the regents' audit committee. "I think they had a duty to follow the terms of the contract (and made sure the cancellation insurance was in place)."

The task group also determined that the wire payment of the $200,000 was approved according to policies before it was sent out. They noted that it is not unusual for the university dispersing department to wire funds, although it was unusual for the athletic department to do so. Rodriguez said that UH Chief Financial Officer Howard Todo has already started tightening fiscal controls at the university.

"We did not find a pervasive lack of controls in the athletic department, but we did see multiple situations where policies and procedures weren't followed or there weren't polices or procedures," Rodriguez said.

The regents paid KMH LLP $50,000 for its services in preparing the report. 

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cojef wrote:
The accounting firm report says it all. The then Chancellor should have approved the expenditure, not Donovan, which Indicate a failure to follow protocol. Yet, although procedures were breached by Donovan, he was given a new contract. Something stinks in Denmark.
on November 15,2012 | 10:01AM
OldDiver wrote:
What stinks is the fiscal office sent $200,000 to an assumed escrow account. The escrow account is the last defense against a scam. It was made clear earlier that cancelation insurance does not apply to a scam. Either this article is lacking in facts or the BOR is made up of a bunch of idiots.
on November 15,2012 | 10:36AM
Spikette wrote:
Something smells beside lack of facts in the key information in the article. If Donovan exceeded his authority by approving the expenditure, he would have been promptly fired with cause as well as all the other persons who had a hand in approving the and dispersing the monies if Donovan was not authorize as the article appears to allude to. Someone higher up must have reviewed, authorize, and gave Donovan the go ahead and authorize Donovan to approve the expenditure.
on November 15,2012 | 11:10AM
KeithHaugen wrote:
The BOR is limited by a legally binding agreement with Donovan and may not tell the truth about what he knew and why he let it happen. Donovan may be guilty of screwing up, but he is smart enough to hire a lawyer, threaten to sue, and secure an agreement that prohibits the UH from telling us how he got away with this scam.
on November 15,2012 | 12:15PM
KeithHaugen wrote:
Probably the latter.
on November 15,2012 | 01:50PM
Sunny wrote:
The BOR hires an accounting firm to investigate and come up with recommendations to tighten fiscal controls at the UH. I'm not sure why we needed to hire an outside firm at $50K when the UH CFO is a CPA and former partner of a prominent CPA firm in Hawaii. Isn't he doing his job?
on November 15,2012 | 11:42AM
csdhawaii wrote:
It didn't say she should approve the expenditure. It said she should have been the one to sign the contract for the concert. They are two separate things. It says proper procedures were followed for the wire transfer; but not for negotiating the contract. And certainly not for providing cancellation insurance before they sent the $200K. And of course, a little googling would have gone a long way to avoiding all this.
on November 15,2012 | 12:30PM
KeithHaugen wrote:
Do we now know that it was Donovan who was responsible?
on November 15,2012 | 01:49PM
rgy888 wrote:
no stevie wonder is to blame. he should have just done the concert
on November 15,2012 | 02:25PM
livinginhawaii wrote:
After this was booked a simple 1 minute phone call to Wonder's Agent to confirm this would have prevented all of this from happening. Yes, being too lazy to make a 1 minute phone call is indeed extremely poor in judgement. Failure to have made this phone call now has resulted in costs exceeding $1mm. Very sad...
on November 15,2012 | 10:09AM
kainalu wrote:
... and a simple google of Marc Hubbard in association with Epic Talent would have revealed that the dude was shady. His name was on the documents provided. Unbelievable, as you posted, lazy.
on November 15,2012 | 10:25AM
kiheilocal wrote:
I still cant understand why nobody talked to Wonders "people". Even somebody outside of the UH, when it was first announced he would be singing. Strange.
on November 15,2012 | 01:50PM
saywhatyouthink wrote:
They thought they were negotiating with "Wonders people". Too bad no one thought to confirm whether they were telling the truth. Apparently, Mark Hubbard does this type of scam for a living.
on November 15,2012 | 04:36PM
Highinthesierras wrote:
on November 15,2012 | 10:32AM
lee1957 wrote:
Wow! The Regents have finally got to the bottom of this mess. Where do find such competent people?
on November 15,2012 | 10:40AM
Maneki_Neko wrote:
Thank God for the BOR. Without them we would never have been able to conclude that overpaid UH admin people scroo'd up. Too bad they couldn't figure out where specifically to place blame. But, what the hey, the intentions were good. The money....pshaw....there's plenty more where that came from. Well done, BOR, well done.
on November 15,2012 | 11:02AM
harley1 wrote:
on November 15,2012 | 11:02AM
allie wrote:
BOR has said the obvious weeks after the debacle!
on November 15,2012 | 11:08AM
KeithHaugen wrote:
I have a suggestion for our BOR. Those who were on the board when they failed to properly vet Greenwood and hired her for the UH job, should resign post haste. Those who were on the board when they hired Apple without probably vetting him, should also resign. And those who believe that not knowing what is going on in the UH, Manoa Campus, or the Athletic Department and who voted to create a new job for Donovan, whose AD contract was about to expire, should also resign. Does that leave anyone left on the BOR? No? Then we will be able to start the rebuilding of an institution of higher learning. And we can begin by telling the people of Hawai`i how it is possible that Greenwood, Apple and Donovan could all not know that someone subordinate to them could give away $200,000 to FL crooks....and who it is. If none of those three is responsible (all irresponsible?) then it must be some underling at the AD. We have a right to know, NOW!
on November 15,2012 | 12:09PM
allie wrote:
true...SA needs to investigate how the inept BOR was chosen in the first place. Their incompetence is costing the tax payer big time!
on November 15,2012 | 12:32PM
hikine wrote:
No one at UH checked the legitimacy of this offer. For a higher learning institution it gets an 'F' in common sense.
on November 15,2012 | 11:07AM
allie wrote:
lousy administration!
on November 15,2012 | 11:08AM
KeithHaugen wrote:
Who is the "no one" who should have checked? Donovan? Apple? Greenwood? the janitor?
on November 15,2012 | 12:10PM
allie wrote:
yup..who is the power behind the thrown?
on November 15,2012 | 12:32PM
turbolink wrote:
Hmmm...UH student can't find the right throne to spell? Come on Allie, you've been outed again. Time to get a new name to hide behind.
on November 15,2012 | 12:52PM
Lchar004 wrote:
UH is going down hill fast. They keep having to pay people to not work at the University. Why can't they hire the right people?
on November 15,2012 | 11:08AM
gsc wrote:
Tom Apple said on the radio " The University of Hawaii is a Billion dollar Institution " so Two Hundred Thousand is PEANUTS ...
on November 15,2012 | 11:09AM
KeithHaugen wrote:
He doesn't understand and can't be trusted. That's why the UH Athletic Department lost local attorney Bert Kobayashi, a mover and shaker and huge supporter of athletics at UH. He said he could not believe or trust Apple.
on November 15,2012 | 12:11PM
willman wrote:
I wonder if any consequences will result for the people responsible in the loss of $200,000 plus of the tax payers money? If so I am sure that the University will not be able to reveal any information about it. It is unfortunate that with all the attorneys fees the cost of this mess has exceeded over one million dollars. I am sure that those responsible acted out of good intentions and feel sorry for their careless mistakes. I hope that they are not transferred to other high paying positions at UH or in government. These people responsible require close supervision and scrutiny. Investigation should also be made into their past activities to determine if they have made other mistakes in dealing with past matters.
on November 15,2012 | 11:36AM
islandsun wrote:
Thats obvious. In fact Donovan wasnt even aware that the money was being wired. What kind of boss just lets his employees spend without knowing?
on November 15,2012 | 11:38AM
KeithHaugen wrote:
Donovan probably knew, but does not want to admit to that fact. Makes him look bad right at a time when is applying for a new AD job elsewhere. He';d rather lie.
on November 15,2012 | 12:12PM
Nevadan wrote:
He inevitably authorized it.
on November 15,2012 | 06:11PM
paulokada wrote:
One Blunder after another. What is the lesson here? You Flunk.
on November 15,2012 | 11:40AM
pgkemp wrote:
and now dumbovan is in a running for a california college ad job, good riddens............
on November 15,2012 | 11:43AM
DAGR81 wrote:
Why was Larry Rodriguez hired to investigate and objectively evaluate his former partner, Howard Todo? Did he disclose a possible conflict of interest to the Board of Regents?
on November 15,2012 | 11:53AM
serious wrote:
This is a Democratic State. Nobody has any hands on business experience. No one is in charge--we need adult supervision. Governor?? Has he ever done anything but be on the government dole? Same as most union run states. Tax and spend!!!
on November 15,2012 | 12:02PM
topgun wrote:
No worries, just increase the tuition and beg for more donations. If that dont work, increase taxes and take from the huricane fund. Now if that still don't work, they can always decrease the educaiton funding and stop assistance for the poor and disabled. This state has lots of money.
on November 15,2012 | 12:24PM
allie wrote:
we students already pay way to much for the quality we get..or don't get.
on November 15,2012 | 12:33PM
turbolink wrote:
We sympathize with the students...which you aren't.
on November 15,2012 | 12:52PM
from_da_cheapseats wrote:
Duh. Was obvious when the news broke. We need to remember who acted stupid. Who acted to gain advantage. Etc. The scam was the publicity, and the political advantage. That was mean spirited
on November 15,2012 | 12:34PM
KeithHaugen wrote:
Poor judgment? Donovan was rewarded for his poor judgment with a $600,000 contract. What is the reward for Apple and Greenwood? the BOR?
on November 15,2012 | 01:49PM
Iuki wrote:
Oh, please! UH had to pay someone $50,000 to tell them poor judgement was used in the Wonder Blunder! Hard to believe another university is even considering hiring Donovan as its athletic director. He has no common sense.
on November 15,2012 | 02:12PM
false wrote:
Yeah and Murder , theft and Abuse are just poor judgement.
on November 15,2012 | 02:16PM
ohelo wrote:
The BoR, Greenwood, Donovan, et al exercised poor judgement. Greenwood is now trying to emulate Donovan to keep her job or at least get "paid off." The BoR screwed up by giving Greenwood an "Exceptional" performance evaluation. Good thing Lingle lost her election, since she also used poor judgement in appointing the aforementioned BoR.
on November 15,2012 | 02:45PM
Maneki_Neko wrote:
Obviously the answer is big raises all around.
on November 15,2012 | 02:52PM
false wrote:
Just shows that with these people with all their advance degrees lack what is most important called common sense. LOL
on November 15,2012 | 03:27PM
saywhatyouthink wrote:
The task group also determined that the wire payment of the $200,000 was approved according to policies before it was sent out. Who approved it? Todo? if so, he's just a responsible for this fiasco. He should have check out who he was doing business with. They seem to want to blame the whole thing on the athletic department when the general counsel and CFO were involved in approving this deal too. Classic cover up, pay off the patsy and blame everything on his department.
on November 15,2012 | 04:34PM
Hilofrank wrote:
Now let's see Sen. Kim's revisionist take on this when she practically frenched kissed Donovan and Sheriff at the hearings. I mean at the "circus."
on November 15,2012 | 04:40PM
saywhatyouthink wrote:
Isn't it strange that Clapp and Kurioka didn't get suspended too when this all went down. Maybe they will now? If they all knew there wasn't any insurance in place but continued to sell tickets then they're all guilty, Sherrif included. These are all highly paid state employees, this should be unacceptable and cause for termination.
on November 15,2012 | 04:41PM
rytsuru wrote:
You need all of those degrees and credentials to come up with this kind of answer? An accounting firm and legal corporation to say "poor judgment, but no one is to blame"? Kiss the $200k goodbye along with the rest of the money thrown at consultants, investigators, pr people....to come up with a non-answer...wow. It does pay to go to college kids...but if you got your degree from UH, you aren't good enough to administer there, they only want real degrees from the mainland.
on November 15,2012 | 11:10PM
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