Tuesday, April 29, 2014

Prosecutor clears UA administrator for statements about financial problems

Posted By on Tue, Apr 29, 2014 at 5:26 PM

click to enlarge CLEARED: UA Vice Chancellor Donald Pederson.
  • CLEARED: UA Vice Chancellor Donald Pederson.
Washington County Deputy Prosecutor David Bercaw has cleared UA Vice Chancellor Donald Pederson of any criminal wrongdoing in statements and documents to legislative auditors about the financial problems in the UA Advancement Division.

The university issued a news release announcing the decision and released the prosecutor's six-page letter to the Arkansas House on his decision.. The prosecutor's review was prompted by a letter to the local prosecutor from 14 legislators.

Pederson had told auditors in a letter in June 2012 he had no knowledge of fraud by division management. Pederson also mentioned no problems to auditors in an interview in Oct. 25, 2012, though Treasurer Jean Schook had mentioned allegations of fraud in a letter to him six days earlier. But UA statements since have indicated that Pederson viewed fraud as meaning acts aimed at personal gain. 

Bercaw wrote that Schook had found "risk factors" for fraud, but not evidence of criminal activity. "Saying that risk factors for fraud were present is different from saying that fraud was alleged or that fraud was suspected," he wrote. He added that Schook and Pederson knew there had been a breakdown in internal accounting controls, but not that there had been fraud. "Within the plain meaning of words set out in the management representation letter," Bercaw said he believed Pederson had not made false representations to Legislative Audit.

Rep. Nate Bell was the lead signer of the letter requesting the review. Citing Pederson's statement to auditors, he had written: “Based on the evidence presented to us in the audit, a crime apparently occurred, and I would like the prosecuting attorney to review it and decide what action they feel is appropriate if any.”

This could be the last gasp of a story that has been through an audit review, multiple legislative hearings, an earlier prosecutorial review, a mountain of news articles, a shakeup of UA administration and the firing of a university spokesman who faulted the UA for not being transparent enough about deficits in the Advancement Division. Chancellor David Gearhart has since been given a vote of confidence by the University of Arkansas Board of Trustees.

The release quoted Pederson:

“I appreciate the careful attention to this matter made by the prosecuting attorney’s office and agree completely with the findings of this review. The report speaks for itself,” said Pederson, who has led the university’s division of finance and administration for nearly 16 years.

Also Gearhart:

“We are most appreciative of the due diligence by Mr. Bercaw that led to this outcome,” said U of A Chancellor G. David Gearhart. “We believe this is the appropriate conclusion. At this point, we are actively engaged in moving forward toward our goal of being nationally recognized as a top 50 public research university and planning our next capital campaign.”

And if Gearhart hires Republican Sen. Johnny Key as the UA's next lobbyist, maybe he can work the campus back into the good graces of the Republican legislative majority.

CORRECTION: I forgot that Pulaski Prosecutor Larry Jegley is still reviewing allegations that Chancellor Gearhart ordered document destruction during the advancement mess. He's denied the charge from fired administrator John Diamond.

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