With transcripts, contracts and secret reports arrayed around her, Kenner Republican Rep. Julie Stokes was drawing lines, writing out what she knows and what she doesn’t on two pads of paper.
“I’m trying to get my thoughts together,” Stokes said Thursday.
A certified public accountant known in the Louisiana Legislature for taking detailed spreadsheets to the podium during debate, Stokes was combing through the sheaf of documents trying to connect what the evidence shows with the official version of an LSU intellectual property commercialization deal so complex that it has largely been ignored.
But as head of the Legislative Audit Advisory Council, Stokes will have the most say in whether investigators take another look at how arrangements to bring the university up to $60 million ended up costing LSU more than $1 million plus another $410,000 in legal fees.
LSU management did not follow its own practices, choosing instead to create a private nonprofit to commercialize potentially lucrative softwar…
Stokes said she hasn’t come to a decision on another investigation, but added, “something feels wrong.”
Rather than follow established procedures for selling intellectual products developed by university personnel, LSU chose instead to license the software to a foundation-style nonprofit, known as LaHIT, which then contracted with a newly formed, for-profit firm called HarmonIQ to sell — at 5% royalty instead of the usual 40% to 50%.
Members of the LSU Board of Supervisors, which never voted on the contracts, were directors on the nonprofit, and the daughter of one supervisor was on the board of both LaHIT and HarmonIQ. All the contracts were terminated by December 2018.
“The appearance of impropriety is certainly high,” Stokes said. Conversely, when issues were discovered by university accountants earlier this year, LSU System President F. King Alexander took the safer road and asked Legislative Auditor Daryl Purpera to take a look.
In unusually harsh language, Purpera’s auditors in June found that the deal was incompetent at best and bordered on unconstitutional. But that report had to be amended in July because it also left the impression, through a letter by Alexander, that the whole mess was the fault of an LSU executive who was charged by the Jindal administration to privatize the LSU charity hospital system.
The targeted former employee, Dr. Frank Opelka M.D., told The Advocate in July that his goal was for the university to keep the money earned from the deal, rather than have the proceeds swept into the state general fund as was the custom at the time.
LSU’s president recently blamed a former employee for botching the commercialization of a promising medical computer program.
LSU administrators and lawyers, not he, came up with the public-private structure, Opelka said. He left LSU in 2016 and now is medical director for health policy at the American College of Surgeons in Washington, D.C.
The imbroglio caused some critics to demand Alexander’s resignation. (The Board of Supervisors on Friday reaffirmed their support of Alexander’s stewardship over the LSU System.)
Monday’s audit report questioning LSU management’s ham-handed efforts to sell software developed by the university prompted renewed demands Tu…
The audit report left a lot of unanswered questions and kept many of the pertinent documents out of public purview.
For instance, when the timeline was compiled in January 2019, more than 20 instances were documented over the past six years that the LSU Health Sciences Center in New Orleans “was unaware of at that time.” That included the creation of LaHit and of HarmonIQ, which was given the exclusive contract to sell the software.
“This tends to read to me like a Grisham money-laundering novel,” said state Sen. Dan Claitor, R-Baton Rouge, during a three-hour hearing Thursday by Stokes’ council, an hour of which took place behind closed doors.
Baton Rouge Republican state Rep. Rick Edmonds agreed. “I have a headache. I’m dizzy,” Edmonds said while reading the auditor's report.
LSU spent about $1.5 million of taxpayer dollars without LSU Board approval. “To me, that seems a lot of money that you can just put in somebody’s hands,” he added.
As is usual with troublesome news, LSU executives have answered pointed questions with short written statements that said little.
An unusual setup for the sale of a computer program — created by LSU employees and worth an estimated $50 million — put the daughter of an LSU…
Speaking publicly for the first time, LSU General Counsel Thomas Skinner told the council that the situation developed during something of a “perfect storm.”
Alexander was named president in 2013. Legal work was being handled by Taylor Porter, a Baton Rouge law firm, during the transition between former general counsel Ray Lamonica and himself. All the while, the hospitals were being privatized and Opelka was pushing this commercialization idea, Skinner said.
“Nothing we could find that Dr. Opelka or anyone else was in this for personal gain,” Skinner said. “That’s why we turned it over to the legislative auditor.”
From now on, the general counsel will be required to sign off on such deals before they reach the LSU president’s desk, he added.
“We recognize there were shortcomings in our process,” Skinner said.