Former professor accused of misusing $400K of UK money

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LEXINGTON, Ky. (WKYT) -- He spent years teaching students at the University of Kentucky but now a long-time mining engineering professor has resigned after some serious fraud allegations.

Investigators claim he misused hundreds of thousands of dollars of the university's money.

On UK's extensive campus, some things are bound to slip under the radar.

“There are 15,000 employees at UK. Someone, somewhere may try to do something wrong and the question is do you catch it,” said UK Spokesman Jay Blanton.

In September of 2013, it was a student who caught onto one very serious wrongdoing.

“The university received a complaint from a graduate student about a professor, Dr. Dingpong or “Daniel” Tao with Mining Engineering. The student alleged that Tao had been involved in some inappropriate activity with student.

The alleged activities were recently brought to light in an audit conducted by the university.

The audit found that from 2008-2013, Tao allegedly misused more than $400,000 dollars of the university's money.

"He was double billing. He was also double billing some reimbursements for things like travel and other kinds of expenses and we found that he was inappropriately using graduate students," Blanton told us.

The audit found that doctor Tao frequently required graduate students to spend excessive amounts of time working on his private consulting projects that had not been approved by the university.

“Graduate students are supposed to work on prescribed activities like research grants and contracts, but they were being used almost exclusively to work on this private consulting business that Dr. Tao had.”

Tao resigned last December after confronted with these allegations.

The university says from now on, they'll work to strengthen awareness of their policies to prevent a similar problem from arising in the future.

Materials used in the audit were handed over to local, state and federal authorities for their review.

A copy of the university’s audit can be read below:

Overview of audit and status

• The university began an internal audit in September 2013 after receiving a complaint from a graduate student regarding compensation and doctoral studies under Professor Dongping Tao, a member of the UK faculty since 1996.

• Early in the process, the university identified serious evidence of apparent faculty misconduct, and continued the internal review, while working to ensure the privacy and preserve the rights of the employee.

• Interviews over the course of several months were conducted with students, college officials and senior administration.

• In addition, thousands of pages of documents were reviewed, including Dr. Tao's grants and contracts as well as operating and discretionary accounts he utilized. The review covered 2008 to 2013, the period of time in which Professor Tao engaged most heavily in professional consulting activity.

• University officials met with Dr. Tao in December 2013 to discuss initial findings of the audit. He resigned from the university when confronted with these allegations.

• An external auditor -- BKD -- was retained by the university. The external auditor has reviewed the institution's internal audit.

Major findings of the university's audit

• In several instances during the period in question, Dr. Tao created fraudulent invoices for travel, hotels and meals by billing both the university and consulting clients for the same expenses. The audit estimates fraudulent or duplicate invoices totaling more than $62,000.

• Dr. Tao, according to the audit, also fabricated or changed invoices relating to consulting work during the period in question totaling more than $31,000.

• The audit found that property, owned by the university, also was charged to a private grant. The cost of "tubes" involved in experiments Dr. Tao was conducting totaled more than $9,300.

• According to the audit, Dr. Tao required visiting scholars and graduate students, working under his purview, to routinely work on his private consulting activities. Students, according to university records, received no compensation for these activities. These actions were in violation of university policy.

• Dr. Tao, according to audit findings, also required students to work excessive amounts on these private consulting projects -- rather than university related contracts -- without the appropriate university approvals.

• University records from the audit indicate that Dr. Tao paid research assistants more than $312,000 from university grants and contracts for work that instead was conducted on behalf of private consulting clients.

• Based on a complaint from a graduate student, Dr. Tao was questioned by his superiors regarding the appropriate use of graduate students in 2011 and 2012.

• Dr. Tao denied any inappropriate activity and, based on the available evidence, no further action was recommended. The emails were placed in his personnel file.

Corrective actions from the College of Engineering and University


• A team, led by Provost Christine Riordan and Executive Vice President for Finance and Administration Eric N. Monday, conducted an extensive review of pertinent university regulations and policies
• The goal was to identify short-term and long-term actions necessary to reinforce and strengthen a culture of accountability, responsibility, compliance and ethics throughout the institution
• The graduate students impacted by this incident have been assigned new faculty for advising and are on course with their studies. Review

• Moreover, after a series of discussions, the following items were implemented or are being implemented:

A. UK Regulations: Review and Amendments
o Business Manual Procedures Sections on Fiscal Roles and Responsibilities and Internal Controls were updated in 2011
o Provost and EVPFA conducted extensive review of relevant University regulations and policies in the Fall 2013.
o Employee Performance Evaluation now include a review of Core Competencies (Integrity, Dependability, Diversity and Inclusion, Interpersonal Relationships and Initiative) for all employees in January 2014
o Human Resources developed a new process to review and approve all worker classifications, specifically anyone seeking to be classified as an independent contractor in March 2014
o Administrative team began an examination of the administrative regulations related to faculty discipline to reinforce a culture of ethics and compliance. This will be a campus-wide conversation involving University Senate during this academic year.
o Further revisions and changes are being considered with respect AR 3:9, “Faculty External Consulting Other Outside Employment, and Internal Overload Activity.” Those revisions will be fully vetted by administrators and faculty, including leadership of Faculty Senate Council.

B. Communication Enhancements:
o Compliance Ethics Work Group formed to review potential issues in Fall 2013
o Comply Line report distribution list expanded to include Human Resources and other key units in Fall 2013
o Increased Comply Line awareness in Fall 2013
o Provost’s office began communicating with the Deans about gathering and reporting on overload activity for faculty in Fall 2013. These paper forms were collected from all colleges for fall and spring semester.
o To ease reporting for faculty and leadership -- and ensure more timely and comprehensive collection -- an electronic version of the overload form was implemented in July 2014.
o Communications regarding the electronic form are ongoing to ensure education of faculty, department chairs, and other leadership on the overload policy and need for reporting.
o Dean’s Retreat Best Practices sessions were held with Faculty Advancement, Legal and Treasurer’s Office in January 2014
o Employee Relations database to allow for effective reporting and trend analysis launched in August 2014
o Multi-Action Group (MAG) Committee meets quarterly to discuss current and potential investigations
o Faculty Case Review Team meets every two weeks to review faculty issues. This team has members from the offices of Faculty Advancement, EEO, Legal, and Human Resources.
o Provost and the General Counsel meet every two weeks to review faculty cases.
o The Office of Faculty Advancement works closely with Deans, Department Chairs/Directors, and business managers to resolve issues related to overload.

C. Training: Educational sessions to increase awareness
o Identify and Address Workplace Bullying training class launched in February 2014
o Internal Audit’s Business of Fraud training class was revised in January 2014 (5 sessions through July 2014)
o College Training – Spring Semester 2014 – Legal Counsel expanded its Legal 101 and Legal 201 training programs to academic administrators:
 From January 2014 to the present:
• 7 sessions
• 252 attendees
 For the prior 6-month period - May to December 2013:
• 4 sessions
• 86 attendees
o Business Procedures Certification Series re-launched in July 2014
o New Internal Controls Online Training launched in July 2014
o Ethics Online Training Class will launch August 2014
o Department Chairs and Business Officers Financial Sub-Certification targeted Fiscal Year 2016

College of Engineering Response

The College of Engineering formed a Compliance Task Force. The Task Force, which was chaired by Dean John Walz, included engineering Department Chairs, Associate Deans, and the Assistant Dean of Finance for the College.

The first item performed by the Task Force was a review of the violations of Dr. Tao, which was led by both Dean Walz and Department Chair Rick Honaker from Mining Engineering.

After this review, a series of recommendations were developed that addressed each of the areas of concern. It should be emphasized that while the violations in the case of Dr. Tao were the focal point of the discussions, other compliance issues were also reviewed and recommendations for addressing these issues were developed as well.

The Task Force report contained more than 20 specific recommendations, organized in the following five areas:

• Recommendations Regarding Faculty Financial Transactions

• Reimbursements Recommendations Regarding Management and Use of University Resources

• Recommendations Regarding Graduate Student Advising

• Research Recommendations Regarding Management of Temporary Employees Working with a Faculty Member

• Recommendations Regarding Faculty Travel, Outside Employment, Conflicts of Interest, and Sabbatical Leaves

Major policy changes include:

• Separating purchasing activities to ensure managerial approval of all employee expenses.

• Ensuring that usage of college issued credit cards -- so-called procards -- is logged in accordance with policies to better track expenditures

• Ensuring more rigorous approval of travel and related expenses by requiring preapproval of any proposed travel

• Properly registering all vendors and communicating that fully to college and departmental staff

• Better monitoring of overload forms for consulting work to mitigate against the occurrence of conflicts of interest

• Developing, implementing and communicating consistent cash management policies

• Increasing training for staff members involved record-keeping and records retention of documents relating to financial transactions

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