Lawrence (WIBW) - An independent audit shows a ticket scandal cost KU as much as $3 million dollars.
The university released results of the 60-day investigation Tuesday. It looked into the improper diversion of thousands of men’s basketball and football tickets.
Among its key findings is that five Kansas Athletics staff members and a consultant sold or used at least 17,609 men’s basketball game tickets, 2,181 football game tickets and a number of parking passes and Arrowhead Club passes for personal purposes.
University of Kansas Chancellor Bernadette Gray-Little and Athletics Director Lew Perkins say they will implement immediate changes to prevent future wrongdoing.
“There are many victims of this activity — our fans, donors, alumni, Kansas Athletics and the university as a whole,” said Chancellor Bernadette Gray-Little. “We sincerely regret the distress that this situation has caused our loyal fans and any loss of confidence that may have resulted."
Though not mentioned in the university's release, a report on Yahoo! Sports implicates several people outside the university. Lawrence developer David Freeman told the site that he and Roger Morningstar, father of former KU player Brady Morningstar, made thousands of dollars selling scalped tickets. Freeman faces sentencing in a separate case, where he was charged he tried to bribe Junction City officials to win housing development deals.
The investigation was conducted by Foulston Siefkin, a Wichita law firm, and BKD, a national accounting firm. It looked into KU's athletics ticket office and fundraising arm and details how a small group of individuals intentionally subverted controls and diverted thousands of basketball and football tickets for personal profit.
“The University of Kansas and Kansas Athletics will take decisive actions to restore trust, and we will pursue appropriate legal avenues to recover money from the tickets these individuals diverted,” Gray-Little said.
Gray-Little said the university and Kansas Athletics will immediately begin implementing recommendations made by investigators, as well as other safeguards to prevent future wrongdoing.
BKD forensic accountants calculated the face value of the ticket losses to total at least $1.03 million, spread out over five years (2005 to 2010), with indications that the diversions had begun years earlier. Because the six individuals took actions to hide their fraud and investigators lack subpoena power, the accountants think it is likely the losses could be in the range of $1 million to $3 million.
The six individuals, none of whom remain employees or contractors for Kansas Athletics, are Charlette Blubaugh, former associate athletics director of ticket operations; Tom Blubaugh, husband of Charlette Blubaugh and formerly a contracted consultant; Rodney Jones, former assistant athletics director for the Williams Educational Fund; Ben Kirtland, former associate athletics director of development; Brandon Simmons, former assistant athletics director of sales and marketing; and Jason Jeffries, former assistant director of ticket operations.
“These individuals used their positions for personal gain, going against the values of Kansas Athletics, violating the trust of KU fans and damaging the reputation of the entire university,” Perkins said.
The ticket scams first came to the university’s attention in December when federal agents informed Perkins that testimony in another matter had implicated Jones, an athletics employee since 1997, in a scheme to sell KU tickets to brokers.
Gray-Little and Perkins said that, to prevent future wrongdoing, the recommendations from the report and other safeguards will immediately be instituted. They include but are not limited to
— Strengthening internal controls for the handling and distribution of tickets, including: clear segregation of duties within the ticket office; a “dual key” system for access to ticket inventory; a tracking system for complimentary tickets that verifies which employee requested that complimentary tickets be distributed and who is receiving those tickets; monthly ticket reconciliation via a Total Ticket Accountability Report, reviewed by Kansas Athletics’ chief financial officer; and limiting employee access to the ticket management system to only those modules necessary for each employee’s job.
— Hiring a full-time forensic auditor to ensure financial integrity in areas including, but not limited to, donations, tickets and travel.
— Establishing a hotline for whistleblowers that is independent of Kansas Athletics and located in KU’s Office of Internal Audit.
— Enhancing transparency during Select-a-Seat events, as was implemented at the recently concluded football seat selection.
“Investigators uncovered no evidence that Williams Fund donations were either stolen or compromised,” said Jack Focht, attorney from Foulston Siefkin. “There is also no evidence that donor points in the Priority Points System were in any way manipulated.
“The unauthorized removal of tickets from the pool available to the public could mean that some season ticket holders did not have as large a choice of seating location as they otherwise would have had. However, the effect on the location of their selected seats was probably minimal.”
The university will continue to cooperate with law enforcement and has already turned over its report findings to the U.S. Attorney for the District of Kansas, the Kansas Attorney General and the Douglas County District Attorney.
No public funds were involved either in funding the investigation or in regard to the ticket losses.