Monday, October 15

Trustee Chronicles - Part 1

Conflicts and Interests

by Jessi Lillo

When he was pressed by students about the Consent Decree at the September 19 Town Hall Meeting, President Erickson referred to the Don VanNatta Jr. ESPN article as an accurate accounting of the process, and discounted any controversy.

Rodney Erickson Addressing NCAA Sanctions

Most PSU supporters who read this article, and several quoting Dr. Ray, came away with a renewed and righteous anger at Dr. Emmert and the NCAA.  

The frustration and resulting anger this bred likely caused Penn Staters to overlook some facts that should also be of great concern regarding the continued failures and promoting of self-interest on the part of University leadership.

First, there is VanNatta's timeline:
Penn State NCAA sanctions timeline
The next week continues with threats from the NCAA, pleading on behalf of "the lawyers", Peetz huddling with the executive committee but failing to brief the entire BOT about negotiations, the removal of Paterno's statue, the signing of the Consent Decree, and Emmert's press conference.

Workers removing the  Joe Paterno statue on July 22
Three very important facts in that timeline seem to have slipped under the radar of many Penn Staters and the media.  

The most obvious to Penn Staters is the direct contradiction of these events endorsed by Erickson and subsequent statements by BOT members.  Peetz and Alexander have both stated at public meetings that they have not reviewed or accepted the Freeh report conclusions and are only focusing on governance issues in Chapter 10.  Yet the VanNatta article suggests that both Frazier and Erickson urged the NCAA to use the Freeh Report.  In fact, the only document outside the NCAA's own guidelines referred to in the body and footnotes of the Consent Decree is the Freeh Report.

Next, there is the eight-month lag between the contact by the NCAA and the hiring of a lawyer with expertise in this area.   Marsh was hired more than a month after the infamous emails were leaked to CNN and one day before the Freeh Report was officially released, and he seems to have been engaged into negotiations three days after Erickson and Emmert agreed to accept the Freeh Report as fact. 

NCAA Press Conference on Penn State Sanctions
Penn State President Rodney Erickson addressing NCAA Sanctions
Given the severity of the sanctions and the financial hardship the University will face over the next 5-10 years, can calling Marsh in during the eleventh hour be seen as anything other than a failure of fiduciary responsibility to Penn State by the BOT?  Was Marsh, a former member of the NCAA infractions committee who had already published an article against NCAA's domain in the Penn State case, rendered ineffective by a power-hungry Emmert out to make a name for himself, as Erickson and the Board have intimated?

Or was Marsh hired as a smokescreen in order to give the impression that everything had been done to protect the University while the main goal was to avoid investigation by anyone not selected, and perhaps directed, to produce a pre-determined result?

Penn State Outside Legal Counsel
Frank Guadagnino
The third troubling element is the insertion of Frank Guadagnino into the negotiations.  Guadagnino and his team of lawyers from Reed Smith were retained November 16, 2011 to represent the trustees, according to amlawdaily, an online legal newsletter.  Guadagnino's Reed Smith bio opens with "Frank is a member of the Financial Industry Group, practicing in the area of Financial Services. 
Frank is the former head of Reed Smith's transatlantic Financial Services practice.  His practice includes mergers, acquisitions, dispositions, joint ventures and other corporate transactions, primarily involving the financial services industry."   Most of his experience seems to center around work for Mellon Financial, the company that employs BOT Chair  Peetz and on whose Board Surma sat until recently.  

The hiring of outside counsel for the Board raises a lot of issues, the most important being a definitive identification of his client.  While it would seem logical that the Board's and the University's interests are the same, events over the last year have indicated otherwise:  the abrupt firing of Paterno that allowed the media to make this a football story ,the hiring of Freeh and Guadagnino months before Marsh, the refusal to grant Graham Spanier access to his files when he was threatened with indictment, the acceptance of an unappealable Consent Decree that will cost the University about a billion dollars, allowing Freeh's and Emmert's nationally televised statements about Penn State putting football above education and integrity to go unchallenged, public statements that the University would settle all victim civil suits without a fight, and the refusal to critically analyze the Freeh Report that is being used as the basis for all of the previous actions.  

No longer can it be assumed that the Board is acting in the best interests of Penn State; so it must be asked in whose interests Reed Smith is acting.

Why was Guadagnino involved in negotiations with the NCAA when Gene Marsh has expertise in this area and Stephen Dunham is a highly qualified General Counsel with over 30 years' experience in University law?  

Why was Guadagnino the attorney who responded to Spanier's request for access to his files?  How does this fit with his practical experience?  The response indicated that the same files which Freeh had been granted access to could not be shared with Spanier as an act of cooperation with the Attorney General's office.  Does it not seem that preventing yet another Penn State employee from being indicted is in the best interests of the University?

Why were Reed Smith attorneys paid to attend the Sandusky trial?  At what hourly rate?  What was to be gained?  Sandusky had not been an employee in 13 years and the media had already shown a strong propensity to report anything which reflected negatively on the University.  It is difficult to imagine anything brought up at trial that could have been more damaging to the University than the Grand Jury Presentment.  So what were the Reed Smith attorneys worried about hearing, and against whose interests?

President Erickson’s refusal to discuss publicly disputed versions of negotiations with the NCAA together with the timing of Board and University legal counsel acquisitions, and how those relate to the timeline of events throughout the scandal raise no small questions. The Board’s clamp down on the release of information to even its own former President, at a time of professed transparency and need to focus public and university understanding of events suggests a shadowy truth at best, if not something to hide. These events leave many with a pervasive sense that the Board’s actions were, and continue to be, undertaken solely to protect their own interests, at the costly expense of the truth, and Penn State.


  1. With regard to the threat of the Death Penalty that Emmert used to coerce Erickson into signing the consent decree - NCAA rules requires the BIG 10 to have 12 teams in order to have a championship game. There is no way that the NCAA would take away 8 conference games plus the conference championship game for the next four years. Too much lost revenue and it would harm the other members of the BIG 10.

    My point is, don't you think all these EXPERTS like Gene Marsh would know this? More wasted money on useless advice and inept counsel. I don't expect Erickson to know any better since he couldn't find a badge of courage even if the Great OZ himself gave it to him. We need REAL leadership, someone who will fight fight fight for the Blue and White.

    1. Mkpsualum, absolutely Gene Marsh knew a lot about this. Some people have speculated that the NCAA would not have dealt with him at all because of the article he wrote earlier in the year. That could be true. I don't think he was ever hired to do anything except show that they "tried". I find it bizarre that they hired him so late and that he took off on vacation. Were they not clear about how imminent the threat was, or was he taking the money for nothing? And when Erickson spoke to Emmert, they had already hired Marsh, so that seems like either the epitome of colossally stupid moves or a calculated move to render the negotiations pointless. I wish I knew which.

  2. My question has always been why does the BOT want to control all investigations? Did they know about the 1998 investigation? Were they the ones who had it squashed? Why? The Second Mile is involved, was TSM laundering funds for PSU BOT? What is this connection? It is serious enough that you hire an independent investigator that might as well be your brother for as close as he is to Sandusky, TSM, and the BOT.

    1. Those are excellent questions catalacjack, and point out the need to go back well before 1998 in scrutinizing the BoT make-up and actions.

  3. This is an excellent piece of work from Jessi Lillo that shows us all yet another indisputable view of the workings of the PSU Board that is in direct conflict with what is best for Penn State. Who is this board protecting? It certainly is not the former coach who devoted 61 years of service, or the administrators who did exemplary work on behalf of the university, or the current students and football players who's college experience will be marred by the gutting of the football program. It isn't in the best interest of the alumni or the faculty. Who benefits from denying Joe Paterno and Penn State due process by blindly accepting a report so flawed and in such serious error? Well Louuis Freeh and company benefited 6.5 million dollars. Some unnamed child protection agencies get 60 million. And one has to wonder if the arcane financial dealings of the wealthy and powerful end up with this being of some benefit to individual board members. The decisions of this board make no sense. NONE. And they should and will be exposed to their everlasting shame for what they have done.

    1. Barry, I agree completely. And one of the really disturbing things about the Consent Decree that seems to have flown under the radar is that the ONLY programs at the University for which funding is mandated to remain at 100% is athletic programs. So, the NCAA and the BOT keep talking about changing the "culture" at PSU, yet they crafted an agreement that protects athletics and will in essence have to siphon money away from academics.

  4. It continues to amaze me that the BoT either can not read or does not care about the future of not just the football program or any of the sports that benefit from the football programs success. Are they really that unaware of the rising apathy toward just about anything they do or say?

  5. $$$$$$
    Submitted by Soup2323 on Sat, 10/20/2012 - 08:31.
    Let's take a look at the bottom line.
    1. Removing JoePa statue?
    2. Freeh Report?
    3. Using only parts of Freeh Report?
    4. NCAA sanctions?
    5. Loss of Bowl games?
    6. NCAA fine?
    7. Employee training?
    8. Unscheduled BoT meetings?
    9. Cost of Removal of part of the stadium to return to before 2001?
    10. Price of loosing quality players now and in the future?

    You can add anything that I may have forgotten. I hope they don't return to the equipment worn in 90s.
    All for someone who was not an employee of PSU.

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