Freeh's Fake Investigation Covered Up the Ties Between The PSU BOT and The Second Mile

Freeh covered-up the financial relationships between The Second Mile and PSU and focused his reporting to railroad Paterno and the three administrators, while protecting his client, the BOT 

By
Ray Blehar

The Engagement Letter between Freeh, Sporkin, and Sullivan (FSS) and its client, the PSU Board of Trustees Special Investigations Task Force, required FSS to "perform and independent, full and complete investigation" of the Sandusky scandal.   Additionally, FSS was provided guidance to complete the investigation in parallel to, but independent of other ongoing investigations within or outside PSU (e.g. The Second Mile).

On the latter point, FSS's fake investigation clearly satisfied its client, as it covered-up  the financial relationships between key members of The Second Mile Board of Directors and Penn State.  This was very similar in approach to the omissions FSS made about the failures of DPW in the 1998 case, which I exposed in Report 1.

Not only did it omit the financial dealings of the TSM Board Members, but it also failed to identify PSU Board of Trustees and/or their companies who donated to the charity.  This information was readily available for the years 2005 through 2010 on the publicly available Annual Reports of the charity.  Moreover, the IRS 990 forms for the charity were also available for review by FSS, yet none of these documents are referenced anywhere in Chapter 7 (titled "Sandusky's Post-Retirement Interactions With the University").

Instead, FSS relied on a few newspaper articles and some alleged interviews with a program director and a counselor of TSM for the information.  I suspect the interviews are "alleged" because it appears that the  information on page 109 regarding the Friend Program may have come from a passage in the 1998 police report.

 FSS used a similar tactic when it regurgitated the grand jury report of the janitor  (see page 73 of linked report), called it his trial testimony, then said it was obtained through an interview of the janitor immediately after the trial.   And there are other examples of this in Chapter 7, where Freeh references an interview but the information appears to be taken from (erroneous) press reports.

Chapter 7 provides ample evidence that FSS conducted a fake investigation that resulted in a pre-determined outcome (blaming Paterno and the administrators for Sandusky's crimes) and attempted to spare its client (the PSU BOT) from being exposed as having financial incentives to cover-up for TSM.

The Nonsensical "Facilities As An Enabler" Ruse 

Part II of Chapter 7, Sandusky's Post-Retirement Involvement in Second Mile Activities provided a high level summary of PSU's support of Sandusky's activities with the charity that was mostly lies and  innuendo about the use of facilities enabling Sandusky's crimes.   The chapter leads off with the a few paragraphs about how Sandusky's access - and therefore people who approved his retirement package, sans Erickson -  put children in danger.

As I pointed out in this blogpost, there was not a single sign  ("red flag")  or complaint of child sexual abuse at Sandusky's privately held camps or at the camps on PSU's campus after his retirement from PSU.

Let that sink in for a moment.  There was not a single complaint emanating from any of the camps run by Sandusky from 2001 forward, yet PSU was castigated by Freeh for allowing Sandusky to use PSU facilities.  In fact, there is no evidence that Sandusky ever met a child during these camps that he groomed or attempted to groom for child abuse.

That is an amazing fact to consider.  Apparently, the environment and surroundings at the sports camps held on PSU property were not as conducive to Sandusky's abusive behavior as his "hunting ground" at TSM, yet TSM has escaped this scandal without being criminally charged.

However, there is another side to the facilities coin in this mess, and it appears that Freeh's whitewashing of the BOT's relationships with TSM and Sandusky is revealed in this passage if you know the background information on TSM:

The other non-University location was the Greenhills facility outside Reading, Pennsylvania.  It was owned by PSU BOT member Ira Lubert, who was also on the Board of the SouthEast Region of TSM for a period of years in the mid-2000s.   Therefore, if this was a "fair" investigation, the report should have made mention that Lubert also was putting children in danger by letting Sandusky use his facilities.

Those facts make all of Freeh's "reasonable conclusions" about the use of facilities granted through Sandusky's emeritus status quite meaningless and exposes the bias in his reporting.

Let's face it, if the key enabler for child sexual abuse was access to facilities, wouldn't the prime suspects in those types of crimes always be....janitors?

Freeh Report Hides Financial Connections Between PSU and TSM

While FSS was railroading Paterno, Spanier, Curley, and Schultz as the enablers of Sandusky's abuse, it did an even better job in ensuring that nothing would raise the public's suspicions regarding the PSU BOT's relationships with TSM's board members.

As noted earlier, there was ample information on the public record that any legitimate investigator would have utilized in conducting this part of the investigation.  But as we have learned, Louis Freeh is not a legitimate investigator -- he is a "hack" who runs a phony investigation racket.

The 2005 to 2010 Annual Reports of TSM revealed that many of the leaders of the 2011 PSU BOT and/or their companies were donors to the charity (see list below).

As you can see, US Steel, the company of the "hatchet man" (Surma) who fired Paterno, donated to the charity every year, but dropped its donations and the Sandusky investigation got underway in 2009.  Similarly, Merck, the company of the co-chair (Frazier) of the group that hired FSS, also was a donor up through 2009, but mysteriously stopped in 2010.   Coincidences?  Doubtful.

Linda Strumpf, who is on PSU's investment council may have believed TSM was a great "investment" in 2010 and chipped in between $5,000 and $9,999.  Strumpf is the retired chief investment officer of the Helmsley Charitable Trust -- yes, Leona Helmsley's charity.

Lloyd Huck, an emeritus trustee in 2011, and his wife Dottie, donated over $40 million dollars to PSU and was also a contributor to the charity.

However, where things get really interesting is when you examine the business relationships of Board of Directors of TSM and some of the prominent roles they play at Penn State.

First, the Chairman of the Board of TSM, Robert E. Poole, is a distinguished alumni of Penn State and sits on the Executive Committee of  Penn State's Campaign for the Future, along side PSU BOT members John Surma, James Broadhurst, Ed Hintz, and Karen Peetz (plus emeritus trustee Ted Junker).  Not so ironically, these PSU trustees on the Executive Committee for the Campaign for the Future were also on the 11-9-11 PSU BOT Executive Committee.

Poole is the major gifts chairman for the Campaign, which is expected to raise $2 billion for PSU by 2014.

However, Poole's relationship with PSU is not just as a fundraiser.  A visit to the website of his company, Poole Anderson construction, reveals that he has done a lot of big jobs (a spreadsheet has been reproduced below) for PSU over the last decade.  Isn't it amazing that the former-FBI Director and alleged top notch investigator, Louis Freeh, didn't report these facts after his fake investigation?  Note: This information was reported by Deadspin.com in November of 2011, yet the Freeh group didn't report it.

Another important TSM Board Member is Richard (Ric) K. Struthers, who is also a distinguished alumni and also is an at-large member of the Campaign for the Future.  As reported by blogger Marc Rubin shortly after the Sandusky scandal broke, Struthers was also on the MBNA team at the same time Louis Freeh was its General Counsel.

Struthers' MBNA/Bank of America credit card deal with PSU involved paying $30 million dollars to the University for exclusive use of its alumni lists for sales and marketing from 1994 to 2010.

Struthers donated at least $50,000 per year to TSM in 2005, 2006, and 2007.   He donated at lower levels in 2008 through 2010.  His family foundation donated $250,000 to the Building Fund for the PSU Smeal College of Business in 2010.

Finally, Linda Gall was also a member of the Board of Directors for The Second Mile, who also sits on the Executive Committee for the Campaign for the Future.  She is the chair of the Stewardship Committee for the campaign. Linda's husband, Blake, is the Founder and President of Micro Plus Plus Investments and is a member of Penn State's Investment Council.

Are we to believe that the former FBI-director and his team were not able to find this information that was not only on the public record, but in some cases already reported in the press?

At the July 12, 2012 press conference, where Freeh was asked about his investigation of the Second Mile by PSU alumnae Wendy Silverwood, he 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."

Doing the Math for Good Governance

As alumni voice concerns as Penn State's bill for the Sandusky scandal will easily clear $100 million, one can easily see that $100 million is chump change compared to the $2 billion the University plans to raise through its Campaign for the Future.   As a result, the PSU BOT members (Hintz, Peetz, Surma, Broadhurst, etc) may have had an incentive to ensure Freeh's fake investigation kept the stink of the Sandusky Scandal off of their cohorts on the fund raising campaign.  Note:  Corbett's investigation appeared to keep the stink off of TSM for financial reasons as well.

Today the legislature will propose structural changes to the PSU BOT, but subtracting a member here and there and reducing the size of the Board will not get to the root of the problems in governing PSU and serve the University's best interest.

As we have known since the release of the Freeh Report, the Boards foot-dragging on the implementation of recommendation 3.2.2 - full and public disclosure of the Board's financial relationships - is key to fixing the governance problems at PSU.