Robert Felner’s fraud brings changes at the University of Louisville. Comments by Business Ethics Speaker Chuck Gallagher

For close to two years the folks at the University of Louisville have had to deal with the repercussions of their former dean of the College of Education and Human Development, Robert Felner’s fraud.  Felner is pictured to the right in the blue stripped tie.

Not long after, University of Louisville President,  James R. Ramsey made the following statement:

The grand jury’s indictment of former dean Robert Felner confirmed our initial concern of wrongdoing in the management of federal grant funds in the College of Education and Human Development. The University of Louisville brought this information to federal authorities last spring. We continue to work with the federal agencies on this investigation and look forward to its conclusion. We have confidence that the judicial system will take the next step and reach a verdict based on the evidence.

Let me reiterate the actions the university has taken since we reported our suspicions regarding Dr. Felner’s alleged criminal behavior to the U.S. attorney’s office. These actions include:

  • Reviewing internal control processes, including an audit of the finances of the College of Education and Human Development.
  • Conducting an external audit of the university’s grants management and contracts practices.
  • Reviewing faculty grievance procedures.
  • Establishing a committee to review managerial and administrative practices at the request of the faculty, staff and student senates.
  • Reviewing the university’s policies and procedures regarding conflicts of interest.
  • Appointing a blue ribbon committee to investigate the alleged improper awarding of a doctoral degree.
  • Creating a new office to field employee concerns and grievances.
  • Visiting frequently with affected faculty and staff and updating the university weekly on actions taken.
  • Updating members of the media on a regular basis.

While the past few weeks have been difficult for the university community, we believe we have taken the necessary steps to address the issues that have surfaced and to begin the healing process on campus and in the community. We have been supported by our faculty, employees, students, donors, retirees and the many friends of the university.

FRAUD PREVENTION:

As a business ethics and fraud prevention speaker, I frequently talk about the three components of fraud – NEED, OPPORTUNITY and RATIONALIZATION.  If any of these three components are absent, the fraud can’t take place.  Notice the first item that the University President stated was a review of their internal controls.

While many scoff at the mention of internal controls, the fact remains, that in any business, effective internal controls are the number one deterrent to fraud.  Here’s a reality check, as a former fraudster (not something I am proud of), I know that had even reasonable internal controls existed, I would have had enough of an obstacle to prevent the actions I took (so many years ago).

I applaud the actions of the University President and hope that soon this ugly chapter will be behind them.

COMMENTS WELCOME

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