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Trustee accused of crime for rejecting dodgy accounting

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Part 6 of 33 in the series Trouble in Texas

 

GROUNDS FOR IMPEACHMENT? Ferdinand Frank Fischer III says Wallace Hall’s failure to tolerate accounting fraud is grounds for impeachment.

By Jon Cassidy | Watchdog.org

AUSTIN – State Rep. Ferdinand “Trey” Fischer on Wednesday said Regent Wallace Hall broke the law by questioning $215.3 million in phantom fundraising for the University of Texas.

During a second day of testimony before a House committee considering whether to recommend Hall be impeached, Fischer accused Hall of damaging the UT system by refusing to go along with the University of Texas’ insistence in counting $215.3 million in phantom capital, contrary to national accounting standards.

Hall’s prodding helped uncover $215.3 million in inflated fundraising figures. After the university was caught in a systemwide audit, it spent $68,000 to persuade national authorities to rewrite rules that prohibited universities from counting software licensing agreements as fundraising capital.

Fischer says Hall’s actions are not only grounds for impeachment, but contrary to state law.

“Is he preserving the institution when he does that,” Fischer asked. “It’s contrary to the independent thinking of the university.”

There was never any real question about the accounting rules,established by the Council for the Advancement and Support of Education, by which all UT System schools are expected to abide. CASE rule 1.2.5 says prohibits treating a temporary software license like cash gifts.

In July 2012, Hall asked the UT System to look into UT’s method for valuing non-monetary gifts. That led to a UT System audit published in May 2013 that examined “a sample of 91 non-monetary and 20 monetary gifts” to the University of Texas going back to 2007.

The audit found “(a)pproximately seventy-six percent of the non-monetary gifts sampled either were not countable as charitable gifts according to CASE standards or need additional documentation. This represented twelve percent of the total capital campaign since FY 2007.”

UT was told three times last fall to stop counting software agreements toward its fundraising totals: on Aug. 14 and Sept. 5 by the UT System, according to the audit, and on Oct. 29, by the president of CASE after a hearing in Washington, D.C.

Yet two weeks later, UT again submitted inflated figures for national publication, as well as its year-end financial statements, and didn’t correct it until the UT System caught the error.

UT President Bill Powers is entering the last year of an eight-year campaign to raise $3 billion, and the restated figures set him back to $1.5 billion as of the end of 2012.

In April 2013, Powers’ two leading fundraisers sent a letter to the chairman of the Board of Regents asking that they vote to allow the school to keep two sets of fundraising ledgers: one for national reporting and another for the public that would include the inflated figures.

The regents rejected the request.

According to a timeline accompanying the audit, the effort to bring fundraising figures into compliance for the UT system was handled by Chancellor Francisco Cigarroa, three vice chancellors and the general counsel for the UT system. The only mention of Hall after his initial request is a reference to him attending the Oct. 29 meeting with CASE in Washington, D.C.

The selective questioning of hostile witnesses by members of the House Select Committee on Transparency in State Operations Wednesday, however, portrayed Hall as a lone wolf agitating for the changes.

“Isn’t that something that Hall could have taken to the entire board, instead of going out alone?” committee Chair Carol Alvarado asked at one point.

Citing a witness, Fischer has claimed 1,200 of some 1,278 public records requests handled by the university last year were for Hall. The actual statement of the witness is that “1,200 of them were produced to Regent Hall in his regent capacity,” meaning he got copies of records requested by others.

Fischer argued that Hall has been dishonest about his interest in reforming how the university handles public records. Surely, Hall would have produced some report by now on public records compliance, Fischer said.

“What if I said I haven’t seen one line item on the agenda of a UT Board of Regents meeting,” Fischer asked rhetorically at one point.

If  Fischer had looked at all, he might have found agenda item six from the board’s meeting on Aug. 22: “U.T. System: Report and recommendations on review of U. T. System compliance with the Texas Public Information Act.”

Contact Jon Cassidy at jon@watchdog.org or @jpcassidy000.

Part of 33 in the series Trouble in Texas
  1. Texas’ Rep. Pitts announces retirement after improper influence story
  2. University of Texas regents show support for Wallace Hall
  3. Case against UT regent Wallace Hall is a sham — here’s proof
  4. Texas senator got $477k for supposed ‘cameo’ appearance in Wallace Hall lawsuit
  5. Lawmaker admits pulling strings on UT admissions
  6. Trustee accused of crime for rejecting dodgy accounting
  7. Longhorns: Senator used clout in UT law school admissions
  8. Children of Texas lawmakers get into UT School of Law, but struggle to pass bar exam
  9. Chancellor is probing favoritism in UT admissions
  10. UT report: Charge against Hall is legally ‘absurd’
  11. Attorney in UT case hides six-figure charges despite terms of contract
  12. University of Texas clout scandal grows as new e-mails surface
  13. Four more get into UT Law despite low LSATs
  14. Reports on UT favoritism, impeachment expected soon
  15. Attorney: Secret tape covered up by lawmakers proves regent’s innocence
  16. Dozens of UT Law’s least qualified students are connected politically
  17. University of Texas uncovers admissions corruption, halts investigation
  18. UT admissions: Straus, Branch, Pitts pulled strings
  19. Who got the 128? UT Law admits students with bad LSAT scores
  20. Patrick’s win may doom Hall impeachment effort
  21. Chancellor promises complete investigation of UT admissions
  22. Board to decide UT president’s fate Thursday
  23. Texas politicians smarten up, ditch UT pres this time around
  24. Tribune story may have doomed UT’s Powers
  25. Academics condone the privilege they denounce
  26. Three essential stories on the UT admissions scandal
  27. Texas AG Greg Abbott embraces Roe v. Wade
  28. Roe v. Wade is AG’s new pretext for blocking Texas law school investigation
  29. Two UT regents pressed for records destruction
  30. New crime invented for Hall: assisted guesswork
  31. Texas lawmaker failed to disclose his own clout letter in UT flap
  32. Texas legislator Fischer insists on role in UT investigation
  33. Hutchison pulled strings for friends’ kids and grandkids at UT

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Jon Cassidy is the Texas bureau chief for Watchdog.org. He also writes a weekly column on politics for The American Spectator. He was formerly a reporter and editor for The Orange County Register in California and a reporter at The Hill in Washington, D.C. His work has been published by Fox News, Reason, The Federalist, Human Events, and other publications. He is a 2014 Robert Novak Journalism Fellow and a graduate of the University of Southern California. He and his wife Michelle live just outside Houston with their two children.

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