Monday, January 14

Part IV: Second Mile Financials Don't Add Up: Who knew?

Prosecutor Joe McGettigan, in his opening statement at the Sandusky trial, said no one at the charity knew about Sandusky's abuse, but said "maybe" people at Penn State did.  Who were they?

By Ray Blehar

In the last installment of this series, we highlighted the escalating salaries of Dr. Jack Raykovitz and Katherine Genovese.  Their salaries began rising coincident with the first allegations of abuse against Jerry Sandusky and didn't stop rising until 2009.

Salaries don't tell the only story about who may have known about Sandusky.  Donations tell an equally interesting story.

Analyses of Second Mile donor lists from its annual reports from 2005 through 2010 revealed that a number of Penn State Board of Trustee members and/or their companies had strong financial ties to the organization. The chart below shows the donation history of current BOT members and/or their companies.  USSteel (Surma), Merck (Frazier), PNC Bank (Junker), Lloyd Huck, and Paul Silvis made considerable donations over the years to the Second Mile.  Surma was elected to the BOT in 2007 and Frazier in 2009.


The red numbers indicate the years in which the news of the Sandusky scandal was shared among those with close ties to The Second Mile.  It is notable that there is a precipitious drop in the donations from USSteel, PNC Bank,  and Merck, but no such drop from Lloyd Huck or Paul Silvis.  Linda Strumpf made a considerable donation in 2010.  These donations provide insight into who may have known about the Sandusky investigation (Surma and Frazier) and who likely did not (Strumpf, Silvis,  and Huck).  

Was the drop in donations related to the investigation of Sandusky or could the drop have been related to Sandusky's 2009 retirement or to economic factors?

Sandusky's Retirement

Sandusky had told Raykovitz he was under investigation for child abuse and that he vowed to fight the charges.  In early 2009, he was indicated for child abuse and resigned from the charity.  The Second Mile Board decided to to keep silent about the abuse allegations, instead making an announcement that Sandusky had voluntarily retired.  Given that fact, Surma (USSteel) and Frazier (Merck) would not have gotten the news of the investigation through any official channel, since they were not Second Mile board members.

Economic Factors

The market crashed in late 2008, and many companies took large losses in the wake of the meltdown.  It appears that the drop in donations from USSteel could be tied to its financial performance.  The chart below shows a precipitous drop in stock price from 2008 to 2009 and it appears that John Surma is doing his level best to keep the company's stock prices low so that every American can be an owner of USSteel.  Share price closed today (1/14/13) at $24.38 -- down from about $200 per share in 2008.

Merck also had a significant drop in share price from 2008 to 2009, but nothing like that of USSteel.  Of course, Merck was not donating nearly as much as USSteel was to the Second Mile, contributing between $5000 and $10,000 per year in 2007 and 2008, before dropping the donation to between $1000 and $2000 in 2009.  In terms of percentage, however it is about an 80% drop.   Merck's stock closed at $43.34 today.

Other Than Money

PSU BOT member Ira Lubert donated $50,000 to The Second Mile back in 2002, but has not made a financial donation since, however, Lubert provided his Greenhills facility for Sandusky's camp in Reading until 2009.  Lubert also volunteered on the Board of Directors for the Southeast Region from at least 2005 to 2008  (we don't have the records from 2004).  There was no board of directors for the Southeast Region in 2003.  So is it just a coincidence that Lubert dropped off the Board and stopped letting TSM use his facilities in 2009?  Lubert was appointed to the BOT by the Governor in 2007, after serving previously from 1997 to 2000.  He was again reappointed in 2010 and his term is scheduled to end in 2013.

Freeh Investigation Does Not Reveal BOT's Relationships

Not so surprisingly, the $6.5 million dollar investigation ordered by the BOT didn't uncover any of this information.   Former FBI-Director, Louis Freeh's summation of PSU's relationship to The Second Mile consisted of two major themes:  the university's visible support of Second Mile and its provision of facilities gave Sandusky opportunities to bring young boys on campus; and, many Second Mile board members and program volunteers were alumni and students of Penn State.

At the Freeh Report Press Conference in July 2012, a suburban Philly alumna, Wendy Silverwood, asked Louis Freeh about what his "investigation" revealed about The Second Mile role in the scandal.

Freeh responded, "Well, I think you need to direct your question there.  We did as much as we could in that regard, relevant to our mandate.  Many of the people there would not speak to us. We didn't have access to their records.  We didn't have subpoena power as you know. But you raise a good question."

Clearly, Judge Freeh was dodging the question as all of his bureaucratic training prepared him to do.

As you have seen on this blog, there is plenty of information about The Second Mile in the public domain that raises serious questions.

When will we get answers?

NEXT:  Part V:  Financial Trends At Second Mile


  1. Ray, your work is so impressive. No one could be more committed and so up to the task of ferreting out this information and making sense of it for the rest of us than you. Can't thank you enough.

  2. Carole,
    You're welcome. And kudos to you for your work on Mark Dambly.


    1. Don't want to go off subject, however it sounds like Carole may have unearthed some good dirt on Mr. Dambly. I hear there is plenty out there

  3. Never knew a guy from Lickin Crick could be this smart!!...Keep it up!!...Can't WAIT to see what you come up with next, Ray!!...*high 5*...

    1. I'm really from Arch Rock, but I spent a lot of time up Lickin Crick...mostly huntin and fishin.

      So much to write little time.

    2. Arch Rock...up the old Rt. 22...I know where ur talkin...

  4. Freeh sure squirmed a lot when Wendy asked him about TSM. Didn't he gallop away from the mike instantly after replying to her?

  5. Ray - Love your tenacity and your ability to see these threads and bring them all together!

    I am completely in support of the work you are doing... And where there is smoke, there is fire (I'm convinced Rakowitz and wife are dirty!)

    I do suggest, however, that most folks who donated to Second Mile were donating to a cause that they thought was good - remember Second Mile was one of the 1,000 points of light... I took a look at the donors to the Second Mile ages ago and gave it up - because there are so many good names on the list (Anthony Lubrano being a prime example - dollars to donuts, he thought he was donating to a good cause!) Shreyer foundation, banks, auto repair places, sporting good stores, insurance companies...

    I'm much more interested in who the Second Foundation (and Rakowitz and wife and Sandusky himself) donated to! :)

    That being said - thank you, again Ray! The whole it going to be way more than the sum of its parts. LOOKING FORWARD TO FEBRUARY!!!

    1. I think we all realize that many innocent people were simply trying to help a good cause. Following the money FROM TSM, yep. Just where did all that money go? Wasn't the AG minding the store?

    2. Thanks, Dolly.

      I was a Second Mile donor as well and thought it was a great cause. Too bad, it could have done a lot more good except for a few greedy people who decided to ruin it for financial gain.

      More on that tomorrow.

  6. As always, Ray, thanks for all of your hard work! Looking forward to the truth coming out.

  7. Thanks Ray...I was so steamed at Freeh's press conference. We sat there for 45 minutes with our thumbs up our (redacted) due to the 9:05 am website "crash" ...uh huh....hmm. The room was packed with the press, with nothing to do but check their cameras and play on their laptops.

    Finally, 3 USB sticks were presented and hurriedly shared so all could download the report at 9:45 am. Of course, Twitter lit up with the Executive Summary & the world is informed of a crafted, calculated message.

    Freeh strolls out at 10 am sharp.

    Clever man...clever man. Toss the grenades, do the damage, leave others to inspect the carnage. All for the noon news cycle.

    He played that room.

  8. “We work very hard in The Second Mile and it should have no influence in it,” said Dottie Huck, a member of the organization’s state board of directors.

    Speaking personally, Huck said Sandusky has “done some wonderful things in his lifetime and we should try to help him. ... We all make little mistakes in our lives.”

    1. Lloyd and Dottie Huck are not involved in the mess at TSM. Just a couple of nice people who thought it was a great charity. Lots of people like them out there. The charity could still do a lot of good, but needs to lose some people who are rotten to the core.

  9. According to the graph. Lubrano donated for three years and then abruptly quit donating in 2005. Is there a reason fo that. Should somebody ask?

  10. Good question Steve. From personal experience, I used to give to a certain charity and then got a solicitation from them where the woman from that organization was very rude and insulting. I stopped donating immediately.

    Could be that someone from TSM rubbed him the wrong way. I'll ask.

  11. This comment has been removed by a blog administrator.

  12. I deleted Unknown's comment because it was a posting from an inaccurate news account of Paterno's business ventures. If we've learned anything from this scandal, it should be NOT to believe anything the press has written about it (see Pulitzer Prize Winner Sara Ganim's error filled articles).

    The article in question was a regurgitation about Paterno's investment in the Villages at Penn State, which contained false information that Paterno would receive 15% interest. Penn State's financial statements list all the bond issuances and no bond were even close to 15%. The most was 5.25%. So, that article is nonsense.

    And the Villages went belly up, but the dishonest writer of the article didn't tell you that until 3/4 of the way into the article.

    The investment in a bottled water company was not with anyone associated with Second Mile. A complete fabrication by unknown.

    The articles throw out the idea of Paterno investing in a "coaching website" and "a chain of convenience stores" but provide no supporting details. Unknown has also tied these investments to the Second Mile.

    So, as long as Unknown wants to come on here and post nonense, I will keep hitting the "Delete" button.

    1. I've never printed an article by Victor Thorn in my life.

      Unknown with yet another false allegation.

      NY Daily is respected? LOL.


    2. On July 30, 2012, The Seconds Mile Sandusky Scandal, YOUR WEBSITE, printed "WEB EXCLUSIVE : THE MEN WHO COVERED-UP FOR JERRY SANDUSKY" by Victor Thorn.

      Would you like apologize now?

    3. I didn't post that article. Barry Bozeman did.

      Are you really that dumb?

    4. Blame? His name is at the bottom of the article.

      It says...Posted by Barry Bozeman at 10:06 PM.

      I said you were dumb because you obviously can't read and you make a lot of false accusations. You've just made about for more. DELETE!!!

      Really, are you a paid troll or something?

    5. This comment has been removed by a blog administrator.

    6. Have the decency to explain why Victor Thorn, a Holocaust denier, is an acceptable source and Sarah Ryley is not. What is there that you (or Barry) find in Thorn's writing that sets him apart from such "hacks" as Sarah Ryley?

      By the way, when are you going to apologize to your gay readers for posting articles by Victor Thorn, the author of "JFK'S GAY SLAYERS"?

    7. Dear Mr. Surma,
      Please stop messing around here and get back to trying to run US Steel. Or better yet, resign, and let a hamster run it. The hamster would be ten times better than you.

      I didn't know your nephew was a reader here.

      Tell your brother I said "hi."


  13. This comment has been removed by a blog administrator.

  14. Again, as long as you keep posting nonsense. I'll keep deleting it.

    Did you read why I deleted that article? Sara Ryley claims Paterno was going to make 15% interest on the investment and I showed you what his maximum payback was -- 5.25%

    No support for the website or convenience stores. How did Ryley's editor let that get by?? And you made up out of whole cloth that all of this was investments with Second Mile board members.

    Again, all you have is the Villages at Penn State and Paterno probably lost money on the deal.

  15. Ray, while I certainly hold significant contempt for a lot of the people who actually did the cover-up of this whole fiasco (Corbett, Surma & PSU BOT, Freeh, etc.) I do have to say that many charitable organizations experienced a significant drop in donations after the 2008 financial crisis and recession. Many corporations reduced their donations to all kinds of charities in 2009 as a result. I believe a reason for a good portion of the decline in donations to the Second Mile were purely economical, although I do believe some would also be related to the Sandusky investigation.

    As for US Steel, the market price of steel saw a record spike in 2007 to 2008, leading to a huge jump in profits for many steel producers, which could have lead to an increase in donations to charities. But this was followed by a record price drop for steel in 2009, which created significant issues for many steel producers worldwide that they are still dealing with today.

  16. I agree that you can't rule out the economic impact of 2008...I have left this as an open question. But, I'll provide more information later this week on who knew.

    I'm not in the steel business but I have heard that some of the mills, like Nucor, have done well.

  17. Ray,

    Thanks for letting this info on the website...UnknownJanuary 15, 2013 at 6:02 PM...Was able to trace the IP address so I'll send off the complaint...