Three former employees of Michigan Public Media in Ann Arbor were charged March 15 [2006] with embezzling goods and services including meals, money, massages, airline tickets, a pool table and Persian rugs.
Details of the criminal investigation were not available, but the university’s internal audit of its radio operation said, without mentioning specific employees, that underwriting revenues were lost to in-kind trades that did not benefit the station.
Washtenaw County prosecutors charged former deputy director Michael Coleman, development director Justin Ebright and account executive Jeremy Nordquist. The employees of the university’s radio operation were accused of embezzling no more than $20,000 each, a felony punishable with a 5-year sentence and fine of at least $10,000. Nordquist and Ebright were also charged with conspiring to embezzle.
The director of Michigan Public Media, Donovan Reynolds, was not charged and said he had reported financial irregularities, but he resigned March 1. “These things occurred on my watch, and I had to take responsibility,” he told Current. “... At this point, the organization needs a fresh start.”
The university said bonuses may have been improperly awarded to underwriting staffers and found problems with expense accounts. Losses exceeded $50,000 for Michigan Radio, which had $5.5 million in fiscal 2005 revenue. The losses occurred mostly in fiscal years ’04 and ’05.
Coleman left Michigan Public Media last August to become g.m. of Wayne State University’s WDET-FM in Detroit. He denied the charges and said he had no knowledge of his colleagues taking in-kind trades. “I’m confident that I’ll be vindicated through this process,” he said.
Officials at Wayne State University, which operates WDET, could not be reached for comment. But a university vice president told the Detroit News that there were no plans to remove Coleman from his job.
A note posted on WDET’s website last week said independent auditors have never found financial problems at the station. “Our listeners and supporting members have our assurance that business operations of Detroit [Public] Radio have not been compromised, and we take the responsibility of our stewardship of donations very seriously,” it said.
Michigan Public Media fired Nordquist, the account executive, on Jan. 26, according to Thomas Moors, his attorney. The former account executive admits that he accepted goods, including some as bonuses, but said he was following supervisors’ orders and common practices at the network, according to Moors. Nordquist returned Persian rugs and offered to give back a pool table when doubts of legality arose, Moors says.
Moors knows of no evidence that Nordquist broke the law. “The University of Michigan had almost no clear direction for the sales force in public radio as to what they could or could not do,” he says. Characterizing Nordquist’s actions as criminal is “not a useful exercise,” he adds.
Ebright left the station Nov. 14. His attorney could not be reached for comment.
Coleman is scheduled to appear in court March 29. Ebright and Nordquist will appear April 12.
The charges stem from an investigation that began in November when Reynolds, who supervised Michigan Public Media’s Ann Arbor radio station and its Flint TV station, discovered financial irregularities in the radio underwriting division.
Reynolds reported his findings to university administrators, who launched the internal audit and a criminal investigation through the school’s Department of Public Safety. The audit reviewed radio underwriting and related business practices from July 1, 2001 through the end of 2005, according to university financial officer Tim Slottow. A second audit of the network is not yet complete but has found no further improprieties.
University officials said outside consultants were reviewing internal controls and procedures. The university is revising rules determining which staffers can approve purchases and other measures, says spokeswoman Julie Peterson, and will require more documentation of underwriting sales.
Officials tried last week to assure the public that they are addressing the problems. “We will take every step possible to ensure this will not happen again,” said President Mary Sue Coleman.
The former employees are denying the charges, but Reynolds believes he uncovered a clear-cut case of wrongdoing. Reynolds says he became suspicious after Coleman’s move to WDET, when he began supervising the underwriting department directly and noticed discrepancies.
"The amount of trade seemed rather high,” Reynolds says. Some trades were peculiar—services from an irrigation company, for example, though Michigan Radio has no lawn. And why did the station need a pool table?
Reynolds questioned development staffers and got a lead from an account executive who was not charged. He confronted Ebright on Nov. 14, and the development director resigned immediately, according to Reynolds. The next day, Reynolds discussed his findings with university officials.
Reynolds and officials blame the alleged abuses in part on shoddy record-keeping. There was no documentation linking cash and in-kind payments to the underwriting bought, they say.
"In some cases, there was no contract at all,” Reynolds said, and in other cases Ebright violated protocol by keeping contracts secret and withholding them from the business office.
"These guys saw a crack in the system and were able to exploit it for a while,” Reynolds said.
The former director said he has “racked his brain” over whether he could have prevented the abuses. “Obviously, I trusted the wrong three people. ... But the fact of the matter is that if people are determined to steal, they will find a way to do it and get away with it, at least for a period of time.”
Reynolds will take time off this summer but hopes to rejoin public broadcasting.
Web page posted March 22, 2006
Current
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Copyright 2006