Old Main's Leaks & Confidentiality Smokescreen

In June 2012, Ken Frazier was cheerleading for the expected "leaks" to be featured on the Today Show and when they occurred, Old Main said little.

By
Ray Blehar

In the most recent round of filings over access to the Freeh Source materials, Penn State's legal team, led by William Odea, argued (at 44) hypothetically that confidentiality must be maintained because if a person applied to be President of the University, and the alumni trustees  "leak the information that that person has applied and it undermines them and that's it."

So, they're afraid "leaks" might undermine someone?  Really?

Let's flash back to June 11, 2011....

Frazier: Cheerleader For Leaks
Former Board of Trustee (BOT) member, Ken Frazier, who was the co-chair of the Special Investigations Task Force (SITF) that oversaw the Freeh investigation, was cheerleading for the leaking of grand jury information to the media.   

The email below, obtained by PSU alumnus Ryan Bagwell, shows Frazier's June 11, 2012 communique to SITF co-chair Ron Tomalis the Freeh group alerting them that the emails (gathered in response to a 2011 grand jury subpoena) might be featured on the Today Show.  

How did Frazier know that grand jury information was going to be leaked?  And who was in on the leak?  

The short list includes Old Main, the PA OAG, the Freeh group, and the NCAA.      

Old Main Stays Silent, Masser Condemns 

At the bottom of the email, it's clear that the University did not decry the leaked information, but instead stated "it cannot comment."   Ironically, it went on to state it would "cooperate" to "determine what happened and ensure personal accountability."

So, did Old Main attempt to find out who leaked the information and hold them accountable?

Of course not -- and the reason was that "elephant in the room."

Old Main and the Board needed Freeh's investigation to justify the firings of Spanier and Paterno.  The leaks helped advance their cause.

The next day, Old Main and the Board got the rest of what they were looking for when Tomalis mentioned that an article from the Philadelphia Inquirer "had the Paterno hook."  In other words, it mentioned that Paterno was referenced in the 2001 email.

At the time the emails were leaked, neither former President Graham Spanier nor the late Joe Paterno had been accused criminal conduct.  After the leaks, papers reported that Spanier (and Paterno had he been alive) could be facing criminal charges.  But there were no sentiments from Old Main about either man being "undermined" by the leaks.

Masser: Begged forgiveness for
his unauthorized statement  

Instead, then BOT vice-chair Keith Masser took the opportunity - based on excerpts of emails - to sway the court of public opinion and convict Spanier, among others, of not informing the proper authorities.

"It now appears like top administrative officials and top athletic officials were involved in making the decision to not inform the proper authorities."

 "From a board standpoint it was Judge Freeh's investigation that found these emails that relate Spanier, Curley and Schultz to the suspected cover-up."

Masser faced calls for his resignation over his statement.  PS4RS opined that Masser's  statement could be interpreted as an official position and used against Penn State in a court of law.  In another email, Frazier apparently echoed that sentiment, opining Masser's statement was "unhelpful." 

Masser later retracted his statement and apologized to the Board. 

Selective Undermining 

The engagement letter between the SITF and Freeh stated that the Freeh, Sporkin, and Sullivan (FSS) group would: "immediately report any evidence of criminality to the appropriate law enforcement authorities and provide notice to the Task Force" and  "communicate regarding its independent investigation performed hereunder with media, police agencies, governmental authorities and agencies, and any other parties as directed by the Task Force."

On April 12, 2012, SITF Co-chair Ron Tomalis sent an email to Freeh and Frazier regarding a recent media report that Graham Spanier was to begin employment in a national security position.  Tomalis sarcastically noted that "someone might not have done their homework."

Freeh responded that "we have done our job in notifying federal prosecutors."

Spanier's clearance was revoked as a result of the information passed to the federal government by Freeh.  

Rewind the clock to December 2011 and you'll see that Freeh didn't abide by the engagement letter when it was determined that Cynthia Baldwin was facing charges of contempt.

Lead Sandusky prosecutor, Frank Fina, sent a letter to then-PSU General Counsel Cynthia Baldwin castigating her for failing to comply with a subpoena concerning Sandusky's retirement information, as well as for a "lengthy history of noncompliance."   

Fina stated that the Sandusky retirement information had just been received on December 19, 2011, nearly a full year after it was originally subpoenaed. 

The December 19th letter from Fina set off a chain of emails between Frazier, Tomalis, Omar McNeil of FSS, and PSU hired attorney, Frank Guadagnino regarding what to do about Baldwin.

Frazier, Freeh and Tomalis: Torched
Spanier, but let Baldwin walk away

Frazier: "I just finished speaking with Frank. I explained why I think there are issues with the incumbent [Baldwin].  He agrees.  I believe he will be providing that advice to Surma when they meet tomorrow.

McNeil:  "any further need for Louie to follow up? I trust that Frank got a clear message from you."

Frazier:  "I think I was very direct. After hearing my position he said he was already thinking in a similar direction. No need for Louie to call." 


Frazier's coded language -- "issues with the incumbent" --  was a reference to the OAG's  "intent to pursue contempt" charges against Baldwin.

On January 16th, 2012, the board held a briefing call about "Strategic Issues Moving Forward."  

The next day, Baldwin announced her retirement.  The media reported her retirement was unrelated to the Sandusky scandal.

It's very likely that FSS asked if they needed to intervene or follow-up because Baldwin was not one of the "targets" of their investigation.  When they asked, the SITF told them to stand down. 

Conclusion

As stated in my last post and as above, the elephant in the room regarding the position of Old Main not to allow review of the Freeh Source materials is that it is all about self-interest.

The Board majority voted, without making a single statement to support their position,  to pay out untold millions of dollars to prevent the legal team of Victim 9 from accessing those documents.  

Undoubtedly, the source materials would prove what most people already know -- the Freeh Report's pre-determined conclusions weren't based on any real evidence.  Tampered evidence, maybe, but not real evidence.

Two lawsuits involving the Freeh documents pit the Board majority and Old Main against opponents who won't and can't be bought.

The smokescreen is lifting.

"Nifonged" Part 2: The Real Conspiracy of Silence

According to the Moulton Report, "the Penn State state emails" were turned over by July 7, 2011, proving a key obstruction of justice allegation was false and that Fina suppressed this evidence to charge Curley and Schultz with failure to report.   

By

Ray Blehar

In Part 1 of the series, the evidence indicated that Frank Fina's expectation that Curley and Schultz would "flip" was among the reasons behind his use of unreliable evidence.  Fina's reliance in pressing charges on flimsy evidence was much worse than that of Durham DA Mike Nifong, who was eventually disbarred over his misconduct in the Duke lacrosse case. In Part 2, the Moulton Report and a lot of other evidence reveal the misconduct on the part of Fina and then-Penn State Counsel Cynthia Baldwin during the Sandusky investigation -- in the lead up to the eventual Conspiracy of Silence case.

On November 1, 2012, the Conspiracy of Silence  (CoS) presentment levied allegations of obstruction justice against Graham Spanier, Gary Schultz, and Tim Curley.  While a long list of allegations were included in the presentment, many of which were not crimes, the key allegation of obstruction of justice was the lack of compliance with Subpoena 1179.

GJ Subpoena 1179 (Sandusky case), issued on December 29, 2010 requested:  

"Any and all records pertaining to Jerry Sandusky and incidents reported to have occurred on or about March 2002, and any other information concerning Jerry Sandusky and inappropriate contact with underage males both on and off University property. Response shall include any and all correspondence directed to or regarding Jerry Sandusky."

That allegation was blown away by the Moulton Report's timeline, specifically:

"July 7, 2011. Tpr. Rossman receives a thumb drive containing Penn State emails."

Trooper Scott Rossman and OAG Agent Anthony Sassano were the two investigators assigned to the case in July 2011.  Obviously, Rossman's receipt of the Penn State emails proves the charge of a "total lack of compliance" was false. 

Additionally, the notebook of former PSU President Rodney Erickson appears to confirm that Penn State had Schultz's notes by at least January 31, 2012 -- a little under a year before the obstruction charges were filed.

The analysis performed by Eileen Morgan made a very strong case that Penn State provided the OAG with the Schultz file in early January 2011 and that Fina utilized it in the grand jury examinations of Curley and Schultz.

However, the falsity of the obstruction charges doesn't stop there.  Not by a long-shot.

Smoke and Mirrors

PSU Policy AD49, effective July 19, 2010, clearly states that the General Counsel (Baldwin) was responsible for answering subpoenas: 

"LEGAL DOCUMENTS INCLUDING SUBPOENAS:

Baldwin "stonewalled" the PSU Three

All legal documents including subpoenas are to be referred to or routed through The Office of General Counsel. The Office has the prerogative to send them to other parties after receipt. The Office of General Counsel shall establish all procedures for handling and addressing legal documents."

The entire obstruction of justice and criminal conspiracy ruse is based on the assumption that Baldwin followed through on her responsibilities.  

Baldwin's grand jury testimony (pages 16-21) was clear that she met with each man one-on-one to discuss the subpoena.  

The evidence tells a different story.

Baldwin not only stonewalled the PSU Three about the subpoena, but of all of her knowledge of the evidence relevant to the Sandusky case.  

The Baldwin Stonewall

1998 Incident:  According to the Freeh Report (page 83), Baldwin obtained a copy of the 1998 police report on January 4, 2011.  Based on the consistent lack of recall of the 1998 incident by Paterno, Curley, and Schultz, it is quite obvious she didn't share the report to help prepare them for their appearance. Similarly, Spanier recalled almost nothing about the 1998 incident when he appeared at the grand jury in April 2011. 

2002 Incident:  Subpoena 1179 clearly identified 2002 as the date of the McQueary incident, but when under questioning at their pre-grand jury interviews, neither Curley nor Schultz got the date correct. Curley guessed 2000, while Schultz believed the incident was in 2003.  At Spanier's April 2011 grand jury appearance, he correctly stated 2002, although he said he wasn't sure of the date, but recalled it was about three years after Sandusky retired.

Subpoena 1179:  Baldwin did not advise Penn State officials of their responsibility to search for materials relevant to the subpoena.

Curley: According to Curley's omnibus pre-trial motion, he twice met with Baldwin, once at the Outback Bowl in Tampa, Florida (prior to the issuance of the subpoena) and once in State College, Pennsylvania to discuss his appearance at the grand jury.  Curley's motion makes no mention that Baldwin advised him to search for materials responsive to the subpoena.  

Paterno:  Scott Paterno, son of legendary coach, Joe Paterno, stated that Baldwin resisted providing him with his father's subpoena to testify and didn't provide it until April 2011.  He also stated that Baldwin never asked his father to search for any documents.  The Paterno family later volunteered numerous documents regarding Sandusky to assist in the Freeh investigation.  

Schultz: According to Schultz's omnibus pretrial motion, in December 2010, Baldwin informed him that he was subpoenaed to testify before the grand jury in January 2011.  Schultz agreed to let Baldwin accept service of the subpoena on his behalf. Schultz's affidavit made no mention of Baldwin informing him to search for Sandusky related materials. 

Spanier:  According to Graham Spanier's New Yorker interview, he was not told to search for documents by Baldwin.  

"In that period from January, February, March, she [Baldwin] only gave me a report that these folks are going to the grand jury. She told me somewhere along the way that they were interviewing staff in the football program, and she would be there for all the interviews. But she never told me what was asked about in the interviews, never told me what came up with Curley and Gary Schultz in their testimony."


Motions To Quash: Baldwin never filed a motion to quash the Subpoena 1179 nor did she make any other formal appeal to the OAG for relief.  As such, the OAG was likely expecting many documents to be produced. 

According to the presentment, PSU had only turned over a handful of documents prior to the testimony of Curley, Schultz, and Paterno.

In consideration of the evidence above, Baldwin was either a completely incompetent attorney or she was intentionally undercutting PSU officials.  The circumstances of her hiring appears to point to the latter.

But what do Baldwin's follies have to do with Frank Fina? 

Unwitting Targets

During the January 2011 grand jury, Sandusky case prosecutors Eshbach and Fina didn't ask Curley, Schultz, and Paterno if they were informed about Subpoena 1179 or if they conducted searches to find relevant information. 

Fina: No questions about Subpoena 1179  

Given the allegation that Penn State had turned over just a handful of documents just TWO DAYS before the testimony of PSU officials,  it strains credulity that Fina and Eshbach didn't ask anyone a question about that subpoena or any questions at all about searching for documents related to Sandusky.  The only person asked about documents was Schultz, likely because Baldwin had already passed his notes to them.

Based on the evidence, it is almost certain that the Commonwealth knew Baldwin had not informed Curley, Schultz, and Paterno about their responsibilities to gather information in response to Subpoena 1179. 

This is not a case about a bunch of incompetent lawyers, but more likely a case of Fina, Eshbach, and Baldwin collaborating to extract sworn testimony from Penn State officials who had no idea they were targets of the Sandusky investigation.  

More Lies About Emails

Page 23 of the presentment alleges that Penn State did not use its established procedures or personnel to conduct the searches for emails.  The allegations (below) are false, as # 3 and #4 were disproved by the testimony of Penn State employee, John Corro, who works for Security Operations and Services (SOS).

On July 29, 2013, Corro testified (on page 89 and 90) that in April 2011, he recovered the emails based on the searches for Curley, Schultz, and Spanier, then provided them to Baldwin (page 91).  

Corro further elaborated (pages 91 and 92) that he provided three USB keys to Baldwin, one which contained the entire set of emails and two that were of specific searches. 

When asked if he saw Subpoena 1179, like the others, Corro stated had not. He had only seen a few lines of it as part of another document,  but understood that he was searching for information related to the Sandusky investigation.

According to the agreement made at the Spanier GJ colloquy on April 13, 2011, Penn State was ordered to provide the entire history of emails from PSU officials dating back the University's implementation of email (i.e., prior to 1997) for Spanier, Curley, Schultz, and Paterno.   

Due to the system cut-over in 2004, the search for emails responsive to Subpoena 1179 (citing 2002)  required Penn State to access the archived files where Gary Schultz's 1998 and 2001 email files were located.  Corro didn't testify to any issues with accessing the archived files.

Penn State was to provide the full set - everything found -  to the grand jury judge and then a "culled set" specifically related to Sandusky to the OAG. 

Baldwin agreed to provide everything by April 15, 2011.  

No evidence to date identifies the exact date on which Baldwin provided the USB keys to the grand jury judge and/or the OAG, however, the testimony of Corro, and statements by Fina and Eshbach reveal that all of the 1998 and 2001 the emails were in the OAG's possession by April 2011. 

As for Louis Freeh's alleged discovery of the 1998 and 2001 emails...the evidence reveals that it didn't happen.

Summary of Evidence

The bottom line is that Fina, et al, knew that Penn State had indeed used the SOS to gather materials responsive to Subpoena 1179 and that Spanier, Curley, and Schultz were not guilty of obstructing the investigation by failing to turn over information.  To wit:

1. Schultz was retired from Penn State when Subpoena 1179 was served and had no access to the Sandusky file in his old office or to his 1998 and 2001 (archived) emails. According to an affidavit filed by Schultz, he informed Baldwin of the possible existence of the Sandusky file.  Any failure to provide those materials was because of Baldwin, not Schultz. 

2. Spanier did not possess materials responsive to the subpoena. 

3. There has been no evidence provided to date, aside from a reference in Erickson's notebook, that Curley possessed any evidence responsive to the subpoena.

The only other conspiracy to obstruct justice charge is wholly dependent upon the Commonwealth's legally impossible task of proving that Mike McQueary informed Curley and Schultz that a crime was being committed.  

In other words, the Commonwealth has nothing.

And let's face it, if there was any material/inculpatory evidence to be found, Louie Freeh would have put in his report.

Fina vs. Nifong

One of the reasons Durham County DA Mike Nifong was disbarred was for failure to disclose evidence that negated the guilt of the defendants.  Nifong failed to provide the complete results of the DNA tests that concluded two of the three defendants were not involved in the alleged rape of Crystal Mangum and made numerous misrepresentations about the nature of the evidence before the court.  The withholding of evidence was in violation of former Rule 3.8(d) of the Revised Rules of Professional Conduct.  The misrepresentations were in violation of Rule 8.4 (c). 

Fina's case is a bit different than Nifong's, however the same rules of conduct apply.

The fact that the Penn State emails were in the Commonwealth's possession by at least July 2011 (if not April 2011)  is proof that the Commonwealth knowingly lied about Penn State's failure to comply with Subpoena 1179. 

Given that the emails (and the Schultz file) included the date of the 2001 incident witnessed by McQueary, the evidence also proves that Fina, et al, purposely misstated the year of the McQueary incident in order to charge Curley and Schultz with failure to report in November 2011. 

The Sandusky prosecution team of Fina and Eshbach filed numerous documents with the court misrepresenting the date of the Victim 2 incident as March 1, 2002.  It was not until May 7, 2012 that Fina and McGettigan's Motion to Amend the Bill of Particulars to provided the correct date of February 9, 2001.

The evidence shows that Fina, et al, made numerous misrepresentations to the court during the Sandusky proceedings, in initially charging Curley and Schultz, and during Baldwin's grand jury testimony in October 2012.

Conclusion

The evidence regarding Penn State's provision of the email evidence is exactly the type of information that Frank Fina and his cohorts likely feared would be exposed when their "flip" strategy failed.  

While Moulton's investigation didn't highlight it, there is little doubt that his investigative team uncovered the email ruse.  If not for the toxic politics of the Sandusky case -- and the pre-emptive strike by Fina -- AG Kane might have already went public about Fina's deception.

No doubt, there was a "conspiracy of silence" related to the Sandusky case, but not by the people accused of it.


Next: Freeh "Fail"

Trustee decision on settlement driven by secrecy, self-interest, and football

Yesterday's decision by the intransigent "Gang of 19" was secretive, self-serving.

By
Ray Blehar

After taking some time to reflect on yesterday's decision by the PSU BOT, it comes as no surprise that the 11/9/11 trustees and their "Praetorian Guard" (a.k.a., the Gang of 19) used that vote as a means to avoid discovery in the Corman v. NCAA  lawsuit.  If a settlement is reached without going through the discovery, another avenue for finding out the real story behind the NCAA Consent Decree will be shut off.   

The Corman suit was imminent and would have perhaps revealed some of the behind the scenes negotiating and deal making between the BOT inner circle and the NCAA.   With that lawsuit in the rear view mirror, the PSU legal counsel will keep up its fight to avoid turning over information pertaining to the Paterno v. NCAA lawsuit.

BOT Secrecy

Recall that in November 2011, in the immediate aftermath of the Sandusky scandal, the PSU BOT promised to be more open and transparent and in February 2012 launched its openness web-site.  However, when the alumni started asking the tough questions during Erickson's "listening tour" and during time provided at PSU BOT meetings, the Board quickly retreated from its openness position.   As we know from the efforts of Ryan Bagwell, Bill Cluck, and others, Penn State is not about to make an exception about being exempt from the Right-To-Know law and it will attempt to use attorney-client privilege whenever possible to avoid revealing information about its activities.  

Eckel: Protect board reform
discussions by using
attorney-client  privilege

In September 2013, board member Keith Eckel, who chairs the Committee on Governance and Long Range Planning, recommended that the governance consultant hired by Penn State be an attorney so that all discussions would be protected by attorney-client privilege.  

Of course, Eckel is a piker when compared to Kenneth Frazier.  Frazier, who was the General Counsel for Merck when it defended against the Vioxx lawsuits, attempted to preclude all Merck communications that went to its legal department from discovery under the auspices of attorney-client privilege.  The judge in the case, Eldon E. Fallon, rejected the argument and ruled that attorney-client privilege must be determined on a document-by-document basis.  Merck made several other arguments attempting to "blanket" protect information from discovery and those too were rejected by Judge Fallon.

Frazier:  Behind the A/C
privilege moves?

Frazier was elected as a Business and Industry trustee on July 1, 2009 -- not long after the Sandusky investigation had been put before a grand jury.  I'm certainly not implying any connection between Frazier's election to the board and the Sandusky investigation, however the evidence on how PSU responded to grand jury subpoenas indicates that Frazier may have been advising then-PSU General Counsel Cynthia Baldwin on how to avoid turning over information.  

Prosecutor Frank Fina's letter of December 19, 2011 (see exhibit O) admonished Baldwin and PSU for attempting to perform its privilege review without law enforcement supervision.  As Fina rightly stated, that procedure completely defeats the purpose of the subpoena, which was to ensure that materials are gathered in their "natural and unaltered state."

Baldwin: Ultimately responsible for
grand jury subpoena non-compliance

Right-To-Know (RTK) emails obtained from the PA Department of Education revealed that Frazier, Tomalis, and others involved in the Special Investigations Task Force had several discussions about the Fina letter regarding "Grand Jury Subpoena Compliance."  Frazier remarked that he believed there were "issues with the incumbent" (Baldwin).  

Baldwin announced her retirement just one month later in January 2012, with the press reporting her retirement was not related to the Sandusky scandal.  The Fina letter and subsequent email evidence suggests the opposite.

The value of the RTK efforts of Bagwell and Cluck cannot be overstated.  Those efforts have provided the PSU Community with considerable insights into the behind the scenes activities of the Board, the Board's attitude toward the alumni, and the cooperation between the Freeh group and the Attorney General during Freeh's so-called "independent" investigation.  

There is no doubt that the lid is being lifted off what happened at PSU and there really is nothing that the PSU BOT or General Counsel Steve Dunham can do to stop it.  The most positive outcome of yesterday's meeting was that the Alumni Trustees got those who want to maintain secrecy on the record.  While the vote will go down as a vote on a settlement resolution, the real issue that brought the NCAA to the settlement table was undoubtedly discovery in the Corman case.  Secondarily, the Gang of 19 and the NCAA also want to avoid getting egg on their collective faces from a ruling that would invalidate the Consent Decree.

Good Public Relations for the BOT, Not Penn State

The Board's handling of the Sandusky scandal was rated as the top public relations disaster for 2011 and 2012.  Dozens of media outlets wrote stories on how badly the University had mangled the communications, despite the fact the PSU has one of the top communications programs in the country.  

PSU's Dr. Donald Hambrick,
World Renowned Mgmt Expert

That irony shouldn't be lost on any of us, considering that PSU has one of the foremost management experts, Dr. Donald Hambrick, of the Smeal College of Business on staff, yet PSU's management of the University since 11/9/11 has been disastrous.  One would think the Board would be wise enough to turn to some of PSU's own in-house experts for help, but as the evidence has revealed, the Gang of 19 (and it's 11/9/11 predecessors) know what's in the best interest of PSU.  

The Gang of 19's PR efforts can be summed up rather simply.  Make sure that the public knows just how horrible things are at PSU right now and that the University is so fortunate to have a  Board that will fix everything.  Translation: the Board doesn't mind trashing the University, so long as an occasional crumb of good news is written about them.

The most recent example of this was the decision to include the Sandusky crime statistics in the data for 2012, rather than in the years the crimes actually occurred.  30 of the 63 crimes reported for 2012 happened between 1970 and 2011, according to campus safety officer, Gabe Gates.  The overall result of that decision was to (artificially)  thrust into the top position among U.S. colleges and universities for having an unsafe campus environment in the total number of forcible sex offenses for the years 2010-2012.  PSU PR employee, Lisa Powers, remarked that PSU didn't mind the "additional scrutiny" if it meant that the University could "share its best practices."  I'm sure other universities and colleges are beating down the BOT's doors to learn from them.

Seriously?  You can't make this stuff up. 

Moving along to the issue of the Consent Decree, several of the Gang of 19, including Keith Eckel, Kathleen Casey, and Richard Dandrea, stated that one of the reasons the Board should not strike the language about complying with the Consent Decree was that "we" (meaning, "they") had made such progress that it would be wrong to turn back now and send the wrong message about Penn State.  

Cutting to the chase, the Gang was clearly focused on what they believe will be a positive report from former Senator George Mitchell and the positive publicity it will generate about the alleged improvements at PSU.

Mitchell: AIA mointor or PR for BOT?

I anxiously await the report by Senator Mitchell to see if the Board has reigned him in and kept him focused on his role to monitor the 8 of 9 recommendations in the Athletic Integrity Agreement.  Note that recommendation 5.4 Academic Support for Athletes was completed in June 2012 -- before the Consent Decree existed.  In other words,  the inner circle and Erickson accepted a recommendation that they knew wasn't applicable at the time the CD was signed.  The other eight weren't exactly necessary either in terms of improving things, but needed to support the fallacy fixing our "integrity" problems.

If Mitchell's upcoming report is like the previous one, it will be well outside the scope of the AIA and give the Board pats on the back for everything and anything it accomplished.  I also suspect that Mitchell will not be so forthcoming in reporting the "warts" that have popped up since his last report, such as Emmanuil Kaidanov's lawsuit against Dave Joyner and Julie Del Giorno.  The lawsuit maintains that Joyner and Del Giorno fired Kaidanov in part because he was complying with an NCAA rule that required him to investigate potential NCAA violations by one of his athletes.

As the Alumni trustees rightly pointed out, Penn State has been doing things the right way for the last 61 years not just the last two. Penn State football was recognized by Miles Brand, former NCAA president, as the model for combining academics and athletics.  It wasn't just Brand who knew this.  Everyone knew it.  And that is why there is such a gulf right now.  When Mark Emmert condemned the PSU culture, his statements were based on the fallacies contained in the Freeh Report.  PSU alumni will fight everyday (until we die) against having to live a lie.

The Gang of 19 has fully bought into the lies of the Freeh Report and, by extension, the NCAA Consent Decree, as a means glorify their role in "fixing" the culture at PSU.

Blinded by Bowl Games

Closely related to the Gang of 19's desire for the positive report from former Senator Mitchell, was their expectation that the report would also bring relief from some of the sanctions.  Most likely among the relied would be the lifting of the bowl ban and the restoration of a few scholarships.  This too would result in positive publicity on the sports pages for the Gang, but as is typically the case, would dredge up the false narrative of how the football program put its success above the welfare of children.

Perhaps the most interesting comments of the day were made by Gubernatorial Appointee, Kathleen Casey, who said this:

Kathleen Casey: NCAA is her client?

" I think that if the removal of this language is to suggest that we would be backing away from the continued commitment to full compliance with the consent agreement, I think that'd be a horrible message to send, at a time when, again, they're looking at the prospects of additional relief and this relief is not efemoral (sic). This is real, I don't disagree with, I understand very deeply the, the issues that have been raised about some of the alumni. The search for truth and the desire for so greater accounting. What I'd also say though, I can't believe that would result in a statement today that we are disavowing our continued commitment to the clients."

Commitment to the clients?  Is Kathleen Casey actually saying our "independent monitor" (Mitchell) is a client? And the plural statement also implies she views the NCAA as a client, as well.

We understood that Louis Freeh was legally a client of the BOT, but now we've just gone into a whole new realm of understanding the perceptions and priorities of Ms. Casey - and it's rather disturbing.  While she understands deeply the issues of the 600,000 alumni, we're just the cattle. The persons we need to please are George Mitchell and Mark Emmert.  I think that's the message here and given what has transpired over the last two years, she's not the only one of the Gang who believes that.

To summarize, the wishes of the alumni "for truth and the desire for greater accounting" shall be trumped by the good publicity generated by the roll back of a few sanctions.  That is not just Casey's view, but also made clear by Dandrea and Eckel.

As Lubrano succinctly put it, "trading integrity for football.We're not interested in becoming that."

Financial Impacts

Goldstein, Lord, and Lubrano also brought up the financial side of the decision, with Goldstein making the cogent argument that more time should be spent to analyze the outcome of this decison.  Lord said it was far more than a $5 to $15 million decision and rather another $100 million  decision.  

Clearly, the Gang of 19, and their predecessors no the 11/9/11 Board had little appreciation of the financial impact of their decisions.  John Surma's remarks on that fateful day was that the board made the best decision to serve the "long term interest" of the University. 

That ill-fated decision to fire Paterno and Spanier and tacitly admit guilt for enabling Sandusky's crimes is nearing $200 million in additional costs in fines, consulting and legal fees. A November 2013 accounting by the Pittsburgh Post-Gazette put the total at $171 million.  

The 11/9/11 trustees also erred in concluding that the victim settlements would be paid by PSU's insurer - The Pennsylvania Manufacturer's Association Insurance Company.   The policy in effect specifically excluded payments for sexual abuse and molestation.  As a result, the $59.7 million in settlements paid to the victims were from University funds.  The University is suing in an attempt to recover the monies, but has little chance of winning the lawsuit.  Its policy which has been in effect since 1992 states that sexual abuse and molestation is not covered.

The other side of this equation are revenue declines, which are not just related to athletics but to overall giving to the University.  The issue of openness and transparency rears its head here  as well, because the AD didn't publish its Nittany Lion Club renewal information for 2013 and 2014.

Nittany Lion Club

Once upon a time, the NLC would provide a letter or email each year updating the NLC membership and point standings. That allowed members to gauge were they might fall in the pecking order for seating and purchase of away game and bowl tickets.  

The latest figures from the NLC only cover the years 2008 to 2012 and they revealed a decline of nearly 1,500 members in the NLC from 2011 to 2012.  

Also, note that 2011, the first year of STEP, showed a spike in lower level contributors.  That is exactly what STEP was supposed to encourage - bringing new fans to Beaver Stadium using the lure of premium seating.  But it appears that 2011 was a fleeting success, as the sour taste of 11/9/11 surely had much to do with the decline from 2011 to 2012.  We are left to wonder where membership was in 2013 and 2014.

Merchandising

Merchandising is a rather important metric because it is a gauge of perceptions about the University.  If people like you, they buy your t-shirt.  T-shirt sales are down.

From 2011 to 2013, Penn State fell from #10 to #19.  Interestingly, from 2011 to 2012, PSU had fallen just two spots to #12, but when the Freeh Report went unchallenged, which by extension meant that the Board allowed PSU's reputation to be smeared, the bottom fell out.  In terms of dollars, PSU 2013 revenues from merchandising, royalties, advertising, and licensing came in around $5.1M.   

On a related note, local businesses reported a 20% drop in revenues since the scandal.  This was noted in the film,  365 Days: A Year in Happy Valley.

Ticket Sales

Attendance has been on a constant decline since peakng in 2007, however the drop off from 2012 to 2013 was visible to the naked eye.  One only need to look around Beaver Stadium in 2013 to get a reminder of what the 11/9/11 decision meant to PSU's once loyal fan base.  For most games, the tops of the both the East and West stands were vacant as were patches of premium seats around mid-field.  The upper decks were perhaps 2/3 full (for most games).  The AD reported that the average attendance from 2012 to 2013 dropped by only about 143 fans per game, from 96,587 per game  to the 2012 average of 96,730.  Who should we believe, the AD or our own eyes?  

Donations

Overall donations to the PSU athletics fell from $34.2 million to $25.5 million between 2011 and 2012.  In 2013, it fell by $1.1 million to $24.4 million. 

2013 PSU Report on Philanthropy and Giving

Penn State took a rather dramatic decrease in gifts and endowments from 2011 to 2012.  The major spike in 2011 was due to a very good year in bringing in new commitments. On average, there are about $275 million new commitments per year, but in 2011 that spiked to $353.3 million. The decline from 2012 to 2013 was very modest and appears to be a return to "normalcy" if viewed optimistically.  However, it is also possible that 2011 could have been the "new normal," but the Sandusky scandal took away those gains.

Sanctions Impact Will Be Felt Long After 2016

Yesterday, Eckel and others were equally oblivious in their assessment that the settlement decision was a short term deal and that the end of the sanctions is just around the corner.    Eckel also opined to fight the NCAA though litigation would drag on for years and that PSU is better off to get this behind them.

Earth to Eckel -- most any litigation would end long before the "punishment" ends for the Athletic Department -- and that punishment was given to the AD by the 11/9/11 Board, not the NCAA.

The reality of the situation is if things go as planned, the AD will be done paying on its loans related to the scandal in 2047.  That would be the end date of the internal loans that PSU would provide to the AD to finance the fines.  A quick back of the envelope accounting reveals that providing the AD a 3% interest loan over 30 years would result in the AD paying out about $3M annually in principle and interest on the loan.  That's $3M off the bottom line and essentially offsets the average Big Ten annual bowl revenue share.

Rejecting the Consent Decree Remains As The Right Decision

Complete rejection of the Consent Decree results in savings of $60M to PSU immediately and turns what would be a zero net gain in bowl revenue over the next 35 years into a positive cash flow.  

It seems that the Gang of 19 (and their predecessors) don't have any appreciation of the concept of fiduciary responsibility.  The simple math here is $60M vs. $10-15M.  Reject the consent decree and PSU keeps its money and only taking a small hit for the remaining bowl revenue loss.  Part of the rejection of the CD would also be terminating Mitchell from his unneeded role as AIA monitor.  Perhaps, Mitchell could offer his services elsewhere.  I hear the Governor is looking for a new education advisor to replace Ron Tomalis.

Yesterday was a major opportunity lost.  

The Commonwealth court drove the need for the settlement discussion when it questioned the validity of the CD.  Even the dissenting judge on the panel remarked that spending the previous agreement by the Board to pay the $60 million in fines was a violation of fiduciary responsibility as the purpose was outside the mission of education.

The NCAA is taking arrows from all sides and the public's opinion of it as an organization couldn't be lower.  It was time for the Board to take a stand.   

Telling the NCAA to take a flying leap would have also done wonders to repair the damage between the Board and PSU alumni, fans, and friends.  

People who are withholding donations would again open up their wallets.  Those of us who decided to forego our "extra" football tickets would likely buy them back.  Quite honestly, that decision would have moved PSU toward real unification for the first time since 11/9/11.

But it was not to be.  

Secrecy and self-interest is standing in the way.

Senator Yudichak sees what we all see.

Give to the Penn State Sunshine Fund

https://www.pennstatesunshinefund.org/donate/