Wright State University’s private nonprofit real estate corporation violated state law and improperly paid a former congressman for lobbying, an Ohio Inspector General’s investigation has found.
Double Bowler Properties Corp., an affiliated entity of WSU, was at the center of the OIG investigation that launched in 2017 and concluded with findings on Tuesday.
WSU violated state law by not getting approval from the State Controlling Board and the chancellor of the Ohio Department of Higher Education when buying property, the investigation found.
“Investigators concluded that Wright State University, through its agent Double Bowler, improperly acquired various properties for Wright State University’s use in a manner to avoid public scrutiny and transparency,” the OIG report states.
The OIG’s investigation is the latest issue for Wright State, which has been plagued by scandal, financial and legal issues for the last three years.
Years of overspending drained Wright State’s reserve fund to $31 million in fiscal year 2017 and forced the university to reduce its spending by around $53 million in FY 2018. Wright State also settled a federal investigation into H-1B visa misuse last year for $1 million and dealt with a 20-day faculty strike earlier this year.
Double Bowler was created in 2014 as a way for the university to secure property and expand its footprint south of Colonel Glenn Highway.
As a nonprofit, Double Bowler can operate quicker and with more flexibility that the university can on its own, CEO Greg Sample has said. It was also created to help keep the purchase price low by keeping Wright State’s name out of the transaction.
Double Bowler was originally funded with an $18 million university-backed line of credit form 5/3 Bank. Other universities have used similar real estate models to WSU, including Ohio State University which used the nonprofit Campus Partners to redevelop land.
Wright State and Double Bowler’s property transactions were in the “same or similar manner as other state university affiliated entities have been across the state,” WSU spokesman Seth Bauguess said in a prepared statement.
“Up until the OIG report was issued the University received no indication that its real estate property transaction processes were in violation of any state statutes,” Bauguess said. “Going forward the University will conform to state statutory requirements for real estate property transactions as determined by the state agencies responsible for administering these statutes.”
The complaint that launched the investigation of Wright State’s real estate nonprofit in the first place was over a consulting contract with former Congressman Steve Austria.
Greg Sample, CEO of Double Bowler Properties Corp., told the Ohio Attorney General’s Office in 2017 about a contract the real estate organization had with Austria, who served in the U.S. House from 2009 to 2013. Austria was hired by former Double Bowler CEO Ryan Fendley, who was fired from WSU for his role in the H-1B visa probe.
Sample told the state attorney general’s office that Austria was under contract as a consultant for lobbying services for $9,000 per month. But, Sample said that he could not determine what work Austria had performed since his contract began June 1, 2014, according to the OIG report.
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Investigators determined that Austria’s contract should have been negotiated by Double Bowler as a “time and materials” contract so that Wright State would only pay for work actually performed.
Austria said that he fully cooperated with the OIG investigation and that he supports the recommendations from the inspector’s report.
“Double Bowler never complained that the monthly invoices I submitted were insufficient…There was no work that was done without Double Bowler’s approval,” Austria said.
Despite Sample saying in the OIG report that Austria served as a lobbyist, both Austria and Wright State officials have told the Dayton Daily News he did not work as one for the school.
Austria submitted reports every month listing the activities for which he was billing the university $9,000. In his reports, Austria did not provide specific dates or times he worked but provided general statements of work performed, such as “Project update with Fairborn Mayor.”
Alongside his work for Double Bowler, Austria performed other duties for the university that the OIG described as outside the bounds of his contract.
“Austria stated that although he did not write or structure the contract, he always believed he was working on behalf of WSU,” according to the report.
The state inspector general’s office has not investigated any other university’s handling of real estate, making Wright State the first to undergo such scrutiny, said Joshua Beasley, investigative attorney with the OIG. But, this is not the first time Wright State has run into problems with over payments to local consultants.
Wright State paid tens of thousands of dollars to a former consultant when it shouldn’t have, a report released in March from the Ohio Auditor’s office stated. Ron Wine Consulting Group LLC was paid $73,750 by the university from April 2013 to July 2013 for invoices associated with a purchase order, according to the audit.
The finding was issued because the audit found that WSU did not enter into an agreement with the consulting group that would have defined the scope of services it was to perform. Wine contends he was only paid $2.2 million of the $6.7 million he was owed when his work was terminated in 2016.
Wright State will need to respond to the OIG’s report within the next 60 days.
WSU must submit a plan detailing how it will implement policies and procedures to ensure it complies with various purchasing and capital project rules and regulations from the controlling board and state law, according to the investigation. The OIG has also asked Wright State to implement a training program for employees involved in real estate purchases.
The OIG has referred its findings to the Ohio Auditor of State and the Ohio Department of Higher Education. Spokesmen for each office said that they are reviewing the report.
“Any further action concerning this matter will be determined after completion of our review,” ODHE spokesman Jeff Robinson said via email.
A spokesman for Gov. Mike DeWine declined to comment on the OIG’s report. DeWine was attorney general when the referral was made to the OIG’s office.
The state auditor has been asked by the OIG to determine if Double Bowler is a component of WSU and should be included in university audits. The OIG asked the state department of higher education to provide possible guidance on property acquisition.
The OIG does not have statutory authority to punish or fine anyone involved in the case. That decision will be left up to the state auditor and the department of higher education, Beasley said.
“It’s up to them to decide what they want to do with it,” Beasley said. “Our role is to bring things to light to try to make referrals and recommendations. We’ve done that in this report and we hope other agencies take action to help ensure that stuff like this doesn’t happen in the future.”
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