Wednesday, February 25

PS4RS Statement on Olbermann Suspension and 11.9.11 Recalcitrants


"PS4RS is gratified that Keith Olbermann was suspended after his atrocious comments attacking the selfless efforts of Penn State students participating in THON.

Once again, when Penn State has been attacked, Old Main has remained silent while students, alumni and other members of the community have risen to its defense. However, it's important to remember that Olbermann's negative perception of the Penn State community is a direct result of the horrific things that Louis Freeh said about us. Our community will continue to suffer these kinds of attacks until this report is finally thrown on the scrap heap of history where it belongs.

It is in the university's interest to publicly release all of the Freeh-related materials that are being sought by the Paterno et al plaintiffs so that the truth of its creation – the collusion between certain trustees with an agenda, the Freeh Group, and the NCAA – becomes known to all. Hiding these materials serves only the interests of those involved in the report's drafting.

We ask the university to publicly release all materials so the public can judge the veracity of the report for itself. The remaining November 2011 trustees have an irresolvable conflict of interest with the university and must resign.”

Maribeth Roman Schmidt
Penn Staters for Responsible Stewardship

-----------------------------------------------------------
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Penn Staters For Responsible Stewardship
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Sunday, February 15

PETITION: NCAA & B1G should match $60 million for child abuse prevention & research


We call on the NCAA and Big Ten Conference to individually match the penalty monies they imposed on The Pennsylvania State University towards the research, prevention, treatment, and support of Child Sexual Victimization

Sign the petition
Jerry Sandusky used his charity, The Second Mile, to find and abuse what is likely dozens of children over at least 20 years in central Pennsylvania. Many outsiders have come to believe, based on the lies and omissions of the media and the Freeh Report,   that Penn State, especially Joe Paterno, was actively involved in a cover up Sandusky’s crimes.   Moreover, the public was erroneously led to believe that it was Sandusky’s access to Penn State football facilities that enabled his crimes.   In summary, the media and Louis Freeh ignored the facts that didn’t fit the narrative of a Penn State cover-up and in so doing kept the public in the dark about how “pillar of the community” offenders operate. 
The NCAA was one of those who simply went along with Freeh Report, without even reading the report in some cases (see depositions of Bob Williams and Ed Ray).   In July of 2012 they handed down unprecedented sanctions against Penn State Football including a 4 year bowl ban, reduction of scholarships, suspension of transfer restrictions, the creation of an athletics integrity monitor, the stripping of 112 victories, and of course a $60 million fine to be used towards child sexual abuse charities. The President of the NCAA stated that Penn State caused “damage” to the victims and their families when announcing the sanctions:
“The Penn State case has provoked in all of us deeply powerful emotions and shaken our most fundamental confidence in many ways. As we – the Executive Committee, the Division I Board and I – have examined and discussed this case, we have kept foremost in our thoughts the tragic damage that has been done to the victims and their families.”
The Big Ten took the opportunity to add to the punishment, instituting censure, probation, ineligibility for the conference championship, and an addition fine equal to 4 years of B1G bowl revenue or approximately $13M. Their statement noted that Penn State damaged the victims and their families:
“We must begin first and foremost, by again expressing our great sorrow for all of those whose lives have been so grievously harmed by the series of failures at Penn State University, particularly the lives of the young victims and their families.”
Many sources have since documented the massive failings of both Freeh’s methodology and conclusions. The Prosecutor in the case, Frank Fina, explicitly stated that no evidence was found to indicate Paterno was involved in any cover up -- and he had vastly more access to evidence than Freeh . Through multiple lawsuits and RTKL requests related to the issue, evidence has since come to light that Freeh was neither independent, nor thorough and due to this, the NCAA and B1G sanctions which were based on the Freeh report have been mostly rescinded. Documents made public in the Corman v. NCAA lawsuit showed that the NCAA and B1G regularly collaborated and guided Freeh, even going so far as to call their move for the consent decree a “bluff.”  The recent settlement in Corman & McCord v. NCAA (which was attempting to keep all fines paid by Penn State within the Commonwealth) restored Joe Paterno & Tom Bradley’s wins, the last of the “on-field” sanctions, but the fine was left in place along with the monitor. More recently the B1G has now stated that Penn State will again receive its full share of bowl revenue.
The only way to logically view such capitulation is that the NCAA and B1G are admitting they had little power to do what they did, and did not want an actual trial to reveal such a fact, or worse.  Unfortunately for them there is still a trial pending, and one they likely can’t avoid, brought by the estate of Joe Paterno.
Interestingly the recent release of almost 5000 pages of evidence in the Corman suit revealed one strategy the NCAA was using to attempt to fight the suit was attempting to embarrass Senator Corman by suggesting the  $60 million meant for children’s programs would be delayed or even removed entirely if he won his suit.  Ironically it was the NCAA’s own lawyers who brought the validity of the sanctions into play and thus the possibility of removal of the money, as Senator Corman was only arguing for the money to stay in state. Per the deposition of Senator Corman by NCAA lawyers:
Q: “Have you explained to anybody outside this room that you're seeking to invalidate the consent decree and that the result of what you're asking for would be no money to the victims and child abuse organizations here in the State of Pennsylvania?”
Judge Ann Covey duly noted previously however that absolutely nothing was stopping either the NCAA or anyone else for that matter from pro-actively donating their own monies towards “child abuse organizations here in the State of Pennsylvania.”  To wit:
“At no time did the court ever deny the NCAA from making contributions to organizations that assist victims of abuse. I have one question: Why hasn't the NCAA honored its original intent of having $60 million go nationwide to assist children who are sexually abused?"
Not only was there no reason that the NCAA or any other concerned party could have donated monies to help child sexual abuse causes, the actual agreement upon which the $60 million was based contained no governance language which stated the NCAA would control the fine, or that it would be used nationally as opposed to in Pennsylvania. Therefore it was actually the NCAA itself what was preventing the monies from being distributed by suing to use the money as they pleased.
The NCAA is a huge corporate entity that generates billions of dollars of revenue. The recent College Football Playoff contract signed with ESPN in 2012 was a 12 year deal for more than $5.6B.  In 2010 the NCAA signed a 14 year deal with CBS/Turner to broadcast the NCAA Basketball tournament for almost $11B According to a USA Today story, the NCAA had over $900M in revenue for fiscal 2013, net assets of $627M (including an endowment of $326M), and a $61M surplus.
That’s a $61M surplus for a “non-profit” entity.
The B1G is a similarly successful entity, reporting revenues of approximately $315M, and an after tax profit of $13.4M in 2013. Not surprisingly both the head of the B1G and NCAA, Jim Delaney and Mark Emmert, got hefty raises for such performance.
For these reasons we call on the NCAA and Big Ten, individually, to match the funds that Penn State Athletics is providing towards the research, prevention, and treatment of child sexual abuse.    
Sign the petition

Tuesday, February 10

Bad Faith, Addendum 2: Unintended Costs of the Railroading of PSU

When the BOT inner circle reached its "bad faith agreement" with the NCAA on the Consent Decree, it is likely that they thought the University would incur very little in the way of future expenses.  They were wrong, mostly because they believed their own hype.

By
Ray Blehar

According to PSU's progress web-site, as of June 30, 2014, the University incurred $79.7 million in expenses not including settlement of claims related to the Sandusky crimes.  Adding the settlements of $59.7 million, the current tab for the scandal is $139.4 million.  However, that does not include the additional $36 million in payments/donations owed from the lNCAA/Corman settlement.  

Adding those brings the total cost to $175.4 million... and counting.  But that figure is an illusion.  The cost to PSU is far lower -- but still a lot more than the BOT inner circle ever expected.


The BOT Inner Circle Misjudged Costs of Scandal
Based on the earliest accounting available, it is reasonable to estimate the scandal's expenses were in the $15 million dollar range when Erickson signed his name on the dotted line on July 23rd, 2012.  

It is also very likely that he and the cabal of Board members didn't believe that the scandal expenses would move much farther beyond that.  They believed they convinced everyone that there was a PSU cover up and that all future litigation in the matter was closed. 

To review, the BOT inner circle:
  • Created a narrative that the PSU "culture" was to blame for enabling Sandusky's crimes;
  • Hired Louis Freeh to conduct a phony investigation and create a report to justify their actions of firing Paterno and Spanier -- and to further indict the PSU culture.
  • Got the NCAA to repeat the "culture" narrative and to praise them for their actions that (allegedly) "saved" PSU football; and, 
  • Attempted to cut off future challenges to the consent decree by giving up PSU's rights to appeal to the NCAA or take other legal actions. 
The BOT inner circle, apparently believing the stuff they were shoveling, likely thought the only things left to happen after the consent decree was signed was that the "moving forward" train would leave the station and that everyone would jump on board.   

As Karen Peetz mistakenly stated, "by the time someone gets here in 2014, it will just be a distant memory." 

Their mistaken beliefs would cost PSU millions.


OOPS!  The Scandal Won't Cost PSU Anything

Unfortunately, the "smartest people in the room" were not only foolish to believe their own hype about the PSU culture being responsible for Sandusky,  but they were also foolish enough to believe their faulty assumptions about the costs of the scandal.  

According to a media source, PSU spokesperson David LaTorre stated that the scandal wouldn't cost PSU anything.  The University stated the situation a bit more eloquently.


"The University maintains General Liability and Directors & Officers insurance policies which are expected to cover the defense of claims brought against the University and its officers, employees and trustees. Legal and other expenses not covered by insurance are expected to be funded from interest revenues related to loans made by the University to its self-supporting units. As a common business practice, the central University -- which has the ability to finance bonds backed by its credit rating --is able to loan its self-supporting units money for special projects. These units do not have their own borrowing authority, but they are all part of the University's credit profile. As an example, in the case of the most recent $100 million Beaver Stadium expansion, the University bore the risk to finance a bond at a variable rate during a favorable financial period. The University then loaned funds at a fixed interest rate to Intercollegiate Athletics, which then repaid the loan with interest from its ticket sales, club seats leases, sponsorships and other income generated. The interest from this loan is then placed into a fund that can be used for more projects in the future or in emergency situations. Therefore, uninsured expenses can be covered by this interest and will not be funded by student tuition, taxpayer funds or donations. Compensation paid to all such attorneys, consultants and firms will be regularly updated and all expenses are audited."

The interest expected from the series of loans to PSU athletics is estimated at $43 million over the terms of the loans.  As the accounting shows, however, the university did not issue bonds and instead used funds from the institutional support budget.  That decision was likely driven by the fact that there were too many eyes watching the Board's every move.

Regardless of how the costs were funded, they total at around $32 million -- which is a lot more than zero.  

Sandusky Injury Claims ($59.7 Million and Counting)

Lubert's sub-committee blew it.
The legal and compliance sub-committee of the PSU BOT culminated research it began in February 2012 and in October 2012 the Board approved a resolution which stated the University was liable for injuries suffered as a result of the crimes of Gerald Sandusky.  Among the many reasons why this was a bad decision, the foremost was that the decision was made under the premise that  PSU's insurer would reimburse the University for the claims (up to the specified coverage limits).  The insurer, the Pennsylvania Manufacturer's Association (PMA) Insurance Company, denied the claims.  PSU sued and the case is scheduled to go to trial in March 2015. 

The "plain language" of PSU's policy indicates that the University will lose.  Molestation and sex abuse aren't  covered.  

Also, there are three pending cases against PSU regarding the Sandusky case -- all which rely heavily on the Freeh Report as evidence that the University was at fault for Sandusky.  These are civil cases and the burden of proof is on the victims to show a preponderance of evidence supporting their respective cases (that PSU was a "third party" who contributed to or facilitated the crimes).   Obviously, the attorneys will also point to the language of the BOT's resolution that states the University is liable.   

PSU isn't looking good in these cases and they know it.  According to PSU's 2013 financial statements (p. 36), the University believes "a loss is reasonably possible in future periods which could have a material adverse effect on our current and future financial position, results of operations and cash flows."   

NCAA/PSU Unexpected Litigation Expenses ($8 million)

Given that the consent decree contained derogatory/defamatory statements about Paterno and other PSU leaders, it provided grounds for those individuals to sue for damages.  The Board's inner circle and the NCAA's belief a single sentence in the consent decree could stop damaged parties from litigating was rather foolish to say the least.  

The group of litigants claiming damages because of the University's, Freeh's, and NCAA's statements and actions include: Mike McQueary, Bill Kenney and Jay Paterno, the Paterno Family (et al), and Graham Spanier.   

As mentioned earlier, the BOT inner circle also erred in concluding that insurance would pay for Sandusky claims.  As a result, it hired Jenner & Block, LLP and Lee, Green & Reiter Inc. to litigate the PMA lawsuit.  

The legal tab incurred by PSU since the outset of the scandal is approximately $17 million. About half of those costs were unexpected.


Externally Initiated Investigations ($4.5 million)

The costs for externally initiated investigations has exploded since July 2013, when they were just $842 thousand.  Those costs were inclusive of the services provided by Margolis and Healy for consulting on Clery Act compliance.  The Department of Education issued its initial Clery Act compliance report in July 2013.  In addition, those costs included the services of Gene Marsh, who was brought in allegedly negotiate with the NCAA.

In August 2013, PSU released another statement revealing externally initiated investigations cost PSU about $1.1 million.   However, as of June 30, 2014, the cost of those investigations reached a whopping $5.6 million.  

Based on the firms listed, the monies are being paid to Buchanan Ingersoll, a governance consulting firm (but not Holly Gregory's)  and the law firm of Saul Ewing.  Saul Ewing holds the documents and related information related to the Freeh Report and has been supporting civil litigation efforts since the early days of the scandal.  The costs related to civil litigation and hiding the truth about the Freeh Report have escalated as the litigation efforts continue.  Given that some of  these cases are tied to Sandusky's criminal acts and some may be eventually be tied to criminal acts, it is unlikely that D & O insurance will cover the costs.

Indemnified Persons' Legal Defense ($4.1 million)

According to documents uncovered in the investigation, prosecutor Frank Fina advised PSU officials that he expected "C + S to flip" on Spanier.   Had that happened, the costs for the legal defense of the indemnified persons would have been much lower.  The Curley, Schultz, and Spanier cases would have been resolved by now, Spanier would have a criminal record, and the University would been done paying legal fees for indemnified individuals.  

Of course, none of that happened.


Much to the chagrin of Frank Fina and the BOT,
PSU officials have maintained their innocence. 
The three former PSU administrators have maintained their innocence and continue to fight in the courts.  

As of December 31, 2012 -- about two months after the OAG issued the Conspiracy of Silence grand jury presentment, the cost of indemnified persons defense was $5.8 million.  At the last accounting the cost was $9.9 million and counting as more Penn State officers file lawsuits.



Public Relations (Unexpected Direct Costs, $3M) 

Freeh, like Mitchell, was hired for PR purposes.
Considering that the hiring of Freeh and George Mitchell were nothing more than public relations ploys, the cost of PR for the scandal has reached $20.7 million.  Not so ironically, in the earliest accounting for the scandal, the Freeh investigation and public relations costs were combined in the same category.  

In February 2012, that total was $5.75 million.   However, the costs of Freeh and Mitchell ($11.6 million) were expected at the time of the consent decree.

As noted above, the OAG and PSU expected one or more of the PSU officials to roll and bring an end to the scandal and its related costs.  The cost of PR calculated at the end of 2012 was $6.2 million.  PR costs have now unexpectedly reached $9.2 million

Firms providing early PR support were:  Reed Smith LLP, Ketchum, Kekst and Company Inc. and Domus Incorporated.   Firms added in April 2012  at a cost of $2.5 million for a 12 month period were: Daniel J. Edelman, Incorporated and La Torre Communications.

It is notable that Edelman's advice to PSU is likely to cost more than 40 times what the firm was  paid.  Here are his remarks from August 2012 about PSU's consistent messaging.


"Look, the school has lived through three major news cycles in the 
last two months, the Sandusky trial and verdict, the Freeh report, and then the NCAA

sanctions. In all three of these situations we've been responding to events not in control of

the events, but in each situation we've been able to provide consistent messages.



"And those are as follows: First, we take responsibility to insure this sort of thing
never happens again, and that we are going to fix the shortcomings so we're a stronger
institution in the future. 

"Second, we're committed to developing and supporting specific programs to protect children on and off campus.

Edelman: Learned nothing from Duke
"Third, we have a plan to improve the school's governance which will be informed in part by the Freeh Report's recommendations and will make this great University even greater in the future. This University has received praise in many corners in the past two months, despite these three big events in the sense that you have been willing to hold nothing back in the investigation and to take very strong actions, such as the removal of the statue in front of the football stadium prior to the NCAA sanctions.

In summary, Edelman's consistent message was to confirm that Penn State and Paterno was responsible for Sandusky's actions.   It should be noted that Edelman also advised the Duke administration's public relations efforts after the rape allegations lodged against its lacrosse team.  In that case, he relied on the media and the court of public opinion to form his beliefs and suggested that it might be right for Duke to do the same.  

It seems some people never learn from the past.


Conclusions

At this point in time, the unexpected costs for the scandal are $75.2 million -- well over the $43 million in interest that the University expected to cover everything.  Of course, those costs will continue to rise as the litigation continues and more potential lawsuits are filed over a variety of issues related to the Board's continued poor decision making.

Clearly, the BOT inner circle's analyses were flawed when they underestimated the direct costs (and indirect costs) of the scandal.  The only thing they may have underestimated worse was the resolve and intelligence of the University's alumni.

Next: Underestimating the alumni.

Sunday, January 25

Bad Faith, Addendum 1: Freeh's Mangling of the Janitor Incident

Many people, like media blowhard Keith Olbermann and disgruntled class action lawyer, Michael Boni , are still clinging to the myth that Louis Freeh's credentials are impeccable and he conducted a legitimate investigation at Penn State.  I suspect few have ever read the full Freeh Report and are unaware of the reports glaring inaccuracies. A prime example is Freeh's mangling of the janitor's testimony, which revealed just how shoddy and lazy his PSU investigation and report really was.  

By
Ray Blehar

At his press conference on July 12, 2012, Louis Freeh called the incident witnessed by the janitor as "the most horrific rape" that was described in the Sandusky case.  

Apparently, the former FBI Director, with impeccable credentials, decided the trial verdicts were irrelevant to his press conference remarks and his report.  

Many who continue to criticize PSU would likely be surprised to learn the most incendiary charge in the case -- that McQueary had witnessed Sandusky anally raping a boy -- resulted in a not guilty verdict.   Just as importantly, there was not a single victim who credibly accused Sandusky of attempting to rape them while they were on the campus.  Obviously, if there were no credible allegations of rapes, there weren't any rape convictions.

So how did Freeh come up with his wild claim of a "horrific rape" in the janitor incident?

Simply put, Louis Freeh appears to be a pathological liar (see here also).

Facts didn't matter to Freeh nor his PSU BOT handlers.  The public relations smear of the University, likely by the Core Group of Ken Frazier, Ron Tomalis, Freeh, and Omar McNeil, became a substitute for the facts of the case.  When the McQueary incident resulted in a not guilty verdict, the alternative was to pump up the janitor incident to indict the PSU culture.  Freeh stated that PSU's reverence for football was ingrained from the top (Spanier) to the bottom (the janitors).  

Freeh's PSU investigation's found very little
 and his report is riddled with serious errors.
Freeh was able to sell the janitor incident as proof that PSU had a morally corrupt culture and that the janitors were innocent "victims" who couldn't dare fight back against the system. The media and the public fell for it. 

Few, if any, bothered to fact check Freeh's story.  If they had, they would have found that it didn't stack up against the evidence and especially not the trial testimony of Ronald Petrosky.  Freeh embellished Petrosky's testimony in at least a dozen different places in the report's account on pages 65 and 66.  

Those who believe the Freeh Report was accurate need only look at the diagram below to see how inaccurate it was in reporting the testimony of Petrosky (Janitor B).  




Anyone who sat through the Sandusky trial and heard Petrosky's testimony should have known Freeh had gotten his account of the janitor incident terribly wrong.  As I pointed out in Friday's blog, Freeh used the Sandusky grand jury presentment as his report template and he did very poorly when attempting to edit it after the trial.  This also demonstrates that the contents of a grand jury presentment often do not reflect legitimate evidence that could be presented at a trial.  In  this case, the Pennsylvania OAG wrote a very inaccurate presentment based on shaky evidence.  As a result, it tripped up America's #1 phony investigator for hire.

The first very important error Freeh made was stating that two janitors testified at the trial.  The second janitor (Janitor C), who prosecutors had lined up as the corroborating witness, never did.  Therefore, the entire account that Petrosky gave at the trial was uncorroborated hearsay that may have been improperly admitted under the excited utterance exception.  Judge Cleland overruled Sandusky's appeal on the hearsay testimony by incorrectly stating that a second janitor had testified at the trial and corroborated Petrosky's testimony (p.18).  However, the exception also requires evidence of the crime - and none was presented.

Between Freeh, Cleland, Feudale, Baldwin, and Lunsford,  the competency of judges who have been associated with Sandusky isn't looking too hot.

Next, please point your attention to number 11, where Petrosky says Janitor A (Calhoun) didn't want to report Sandusky because he was afraid "they'll get rid of us all."  This statement doesn't pass the logic test. 


Petrosky testified that Calhoun - a temporary janitor - didn't know who Sandusky was.  So if Calhoun didn't know who Sandusky was, why would he conclude that reporting Sandusky would result in them all being fired?   That makes absolutely no sense (aside from the fact it wasn't testified to by Petrosky!).

Also, Freeh's contention that a culture of reverence for the football program caused PSU employees not to report Sandusky got "stood on its head" by the timeline of the case. 

Just three months after the janitors were paralyzed by their reverence for football (or fear for their jobs), lowly graduate assistant football coach Mike McQueary witnessed Sandusky in the showers with a child and reported him to Joe Paterno.  He didn't detour to an assistant to talk it through first.  He went directly to Paterno.   After which he continued as a GA until he was hired as a full-time assistant in 2004.  

Oh, the fear. Oh, the reverence for a retired coach!

Freeh's reasonable conclusions about the janitor incident didn't square with the facts -- and certainly not the testimony provided at the Sandusky trial.  

President Barron's review of the Freeh Report
is unlikely to recognize the report's errors
Those who continue to stand by the accuracy of the Freeh Report simply don't have the knowledge of the case to identify the report's errors.    And without knowledge of the facts of the case (that weren't included in the Freeh Report), reviewing it is rather pointless.  That's why I expect little from President Barron's review.

In the end, those who stood by the Freeh Report (and Freeh) will be embarrassed when it is completely eviscerated in the Paterno v. NCAA lawsuit and in Spanier's defamation suit.
  

Next: Addendum 2: Unintended Financial Consequences of the Sandusky Scandal.




Friday, January 23

An Act of Bad Faith: The BOT's & NCAA's Railroading of Paterno & PSU

A construction of the Freeh investigation timeline and other evidence shows the NCAA didn't influence the outcome of the Freeh investigation or bluff PSU.  The inconvenient truth is that Erickson knew the NCAA had no grounds to penalize PSU, but collaborated with them to railroad Paterno and the University.

By 
Ray Blehar

The NCAA has slithered away from the Corman/McCord lawsuit with its reputation somewhat intact due to a settlement that still has PSU paying fines and also making quarterly payments to flim-flam man, George Mitchell.  Worst of all, there was no admission by the NCAA that it had overstepped.  In fact, it was quite the opposite.

The NCAA took the words "good faith" (from the settlement) out of context to boast that it had authority to punish PSU in Sandusky matter, even though they (and Rod Erickson) knew there was no basis for penalties.

Statements by Erickson, Gene Marsh, Emmert, and other NCAA officials that the Freeh Report provided the basis to punish Penn State were absolute hogwash.  We all now know that the head of the Executive Committee (EC), Ed Ray, never read the report nor did he recall the EC's early favoring of the death penalty.   Statements by the NCAA's PR Exec Bob Williams and Mark Emmert also proved that both men were clueless about the contents of the Freeh Report.  

So, the million dollar question is:  Was Erickson bluffed by Emmert's statements that the Freeh Report showed the worst case of lack of institutional control he had ever seen and that the EC's reaction to it was that they wanted blood? 

Absolutely, unequivocally, no.  

While the email of Julie Roe (Lach) mentioned that "our approach to PSU as a bluff when talking to Mark," it was clear she wasn't among the cabal at the NCAA who was collaborating with Erickson and company.  To make an analogy, she was the NCAA's equivalent of former PSU BOT member Ann Riley in terms of influence. Roe (Lach) would eventually be fired over the Miami (Fla) investigation.    According to Gene Marsh, he had expected to be dealing with Roe (Lach), but stated this was "a whole different critter" when he found himself negotiating with the top brass of the NCAA (Remy and Berst).   

In an interesting aside, Marsh was hired late and had a track record of failures at his two negotiations with the NCAA (on behalf Ohio State and Alabama).  According to Frank Guadagnino's deposition (p. 14), Marsh reached out to PSU at the urging of none other than Cynthia Baldwin.  Previously, Marsh wrote that he believed the NCAA "should leave this one alone."  Later, he would advise PSU to not risk an investigation by the Committee on Infractions.  

Are you smelling something rotten?


Erickson:  Documents confirm he knew
the NCAA didn't hold any cards.


The truth that Penn State and the NCAA so desperately want to stay hidden is that both parties knew there was no Lack of Institutional Control (LOIC) over PSU Athletics.  There were no major violations to support it.  According to documents obtained from Old Main, by January 31st, 2012 the NCAA and PSU understood that the ongoing investigation had found PSU to be very good at following the rules.  

But that didn't stop Erickson and Emmert from striking a "bad faith" agreement.



An Act of Bad Faith

Analysis of the Freeh Report, email evidence, court depositions, and other evidence paints a picture of collusion between top officials at PSU and the NCAA in railroading Paterno and the University at large.  In addition, the evidence shows that Freeh, Sporkin, and Sullivan (FSS) used its engagement letter as the investigation plan and the Office of Attorney General's Sandusky grand jury presentment as the report template for convicting PSU officials in the court of public opinion.  

In summary, it was an "act of bad faith" by all involved.  And they did it for a variety of self-serving reasons.

The PSU Board of Trustees (BOT) needed a replacement narrative to justify the firings of Paterno and Spanier.  It ensured the Freeh Report would do so by specifying the expected contents in the engagement letter with FSS.   There are other reasons for the BOT's inner circle's scapegoating of Curley, Schultz, Paterno, and Spanier, but for the sake of simplicity, the   focus will stay on justifying the firings.

Louis Freeh, who was hired with the encouragement of Governor Tom Corbett, conducted his investigation as not to undermine the Sandusky prosecution and (likely) to assist the OAG in finding more evidence against Spanier.  In doing so, the investigation ignored exculpatory evidence that would have undermined the stories of the janitors and possibly Mike McQueary. 

The investigation and report also whitewashed the failures of The Second Mile and the failures of Pennsylvania's child protection system   The latter fact "benefited" Governor Tom Corbett and the PA government -- who would have been embarrassed if the public learned of the colossal failures of the child protection system (and police) in the Sandusky case.  The failures of The Second Mile also may have exposed the OAG's lax oversight of charities.  In both cases, the state could have suffered financial loss if it had been found negligent and likely forced to establish a victim's fund.

Centre County Children and Youth Services also benefited because it may have faced lawsuits over its shameful performance in the Sandusky case -- had it been exposed by either the OAG or Freeh.  

Freeh didn't work for free.  
The NCAA got what it paid 
for in the Freeh Report.
While the NCAA (and Big Ten) were permitted to engage with the Freeh investigation -- and received substantive updates along the way -- the NCAA's guidance to FSS didn't result in any findings of wrong-doing.   According to the Freeh Report, FSS conducted just one substantive interview concerning NCAA rules after it was briefed by Julie Roe (Lach).  The result was a weak allegation that PSU's compliance staff was understaffed (p. 36). 


The NCAA obviously didn't know the first rule of "Freehdom" -- Louis Freeh doesn't work for free.  You pay your money -- you get your results.  NCAA got what it paid for -- a report that didn't mention a single NCAA violation.  

Conversely, the PSU BOT's payment of $6.5 million ensured that the investigation would go exactly as the SITF directed.  The $6.5 (and eventually $8.1 million) also likely was enough to get Freeh's and his team lie about many things related to the case.

The confirming evidence follows.


Breaking Down the Freeh Investigation

The timeline constructed from the end notes of the Freeh Report correlates quite well with the timeline previously constructed from Right-To-Know emails. Both timelines show that significant updates to the Freeh Report occurred as the PA OAG was forced to utilize (release) evidence already in its possession.  The other significant update to the Freeh Report occurred after the Sandusky trial and the not guilty verdict related to the incident reported by McQueary.

It is highly probable that PSU provided Freeh with the relevant emails and the Schultz file early in his investigation, but Freeh had to wait for the approval of the OAG to utilize them.  Governor Corbett stated Freeh was selected because he would not interfere with the ongoing prosecutions or investigations.  That, of course, would include getting clearance to use certain evidence.


Timeline of the SITF's (Freeh) Investigation

The Right-To-Know emails obtained by PSU alumni Ryan Bagwell and Bill Cluck do not include any mention of a "BOT briefing call" for Freeh to brief the trustees about his investigation plan.  He didn't need to because the engagement letter set forth the outcomes of the investigation, which were to FIND:  1) the reporting failures that occurred; 2) the causes of the failures; 3) who had knowledge of the sexual abuse allegations; and 4) how the allegations were handled by the BOT.  

The timeline of Freeh's investigation reveals he followed the SITF's instructions perfectly, with little diversion of its attention to the NCAA's guidance. 

Engagement 1. Find reporting failures (focused on Paterno and 2001 incident)


November: The 2001 Incident

Freeh began his investigation on November 23rd with an interview of Cynthia Baldwin regarding her discussion with former Senior VP of Business and Finance, Gary Schultz, about his grand jury subpoena.  On the 28th, FSS continued interviewing Baldwin about the 2001 incident.


December: Joe Paterno/PSU Football

 In December, the end notes reveal that the investigation's focus had shifted to Joe Paterno and the football program.  FSS interviewed members of the Athletic Department (AD) and football staff about Sandusky working out in the facilities (Dec 5, 7, 11);  Paterno's knowledge of "everything that was going on" (Dec 6, 19);  Paterno's (lack of) involvement in sports camps (Dec 19); and compliance with NCAA rules (Dec 19).  The Freeh team also met with an official from the Office of Student Affairs to discuss disciplinary matters pertaining to football players (Dec 12).

Engagement 2.  Find causes of the failures (focused on access to facilities)
Engagement 3.  Who had knowledge of abuse allegations (focused on police,1998 incident)


January: Sandusky's Retirement benefits, the Clery Act, and 1998

 After being briefed by the NCAA in early January, the Freeh team met with a PSU AD official on January 10th, but didn't find any evidence of lax protocols or violations.  The FSS team then moved off the subject of NCAA violations and began investigating Sandusky's retirement benefits (Jan 12), conducted interviews with police about the Clery Act (Jan 13) and Sandusky's access to Beaver Stadium (Jan 25).   On January 27th, FSS interviewed a former University Park police officer (likely Detective Ronald Schreffler) regarding the 1998 incident.  

In January, the NCAA was informed that PSU's AD compliance staff was "fastidious about rules violations."  The NCAA responded that it would "wait for Freeh Report."

SIGNIFICANCE: In January 2012, the NCAA and PSU knew the athletic department was compliant with NCAA rules and Freeh's investigation found nothing of note in its investigation from that point forward.


February: Clery Act,Sandusky Retirement, 1998

In February, FSS continued work on the Clery Act, interviewing former police chief Steven Shelow on the 1st.  The next day (Feb 2) they questioned Office of Human Resources (OHR) officials about reporting of incidents and about Sandusky's retirement.  While questioning OHR, the investigators also inquired about the 1998 incident and Curley's background.  The investigation looked into Sandusky's access privileges to the Beaver Stadium luxury suites on February 8th. On February 22nd, a retired dean was questioned about Sandusky's emeritus status, while OHR was likely questioned about background checks.

Engagement 4:  How allegations were handled by the BOT (focus on Spanier's leadership).


March: BOT Knowledge of Sandusky, PSU Culture 

On the last day of February (Feb 29) and through March, the investigation conducted numerous interviews with members of the BOT about how the Board was informed of the Sandusky investigation and about Spanier's leadership.   On March 22, the FSS team received a letter from The Second Mile's attorney explaining its knowledge of the 2001 incident. In the letter, the charity's attorney informed FSS that Curley had told the charity to "avoid publicity issues."  To be clear, the Freeh Report's lone piece of evidence about PSU avoiding bad publicity (p. 78) was based on double hearsay. 


Triponey: Reached out to Emmert
to assist in "Penn State mess."
The investigation took a brief detour to interview Vicky Triponey on March 10th to discuss her interactions with Paterno and Spanier.  According to Triponey's affidavit, she had reached out to Mark Emmert to assist with the "Penn State mess," referencing a "toxic culture."   She also stated that she was told that she would be brought in near the end "to clarify, validate or perhaps confirm what they were hearing in their other interviews."  The significance of Triponey's information was summarized in a footnote on page 65 of the Freeh Report.   The investigation still had nothing on Paterno.


At this point, the report draft was likely a repackaging of the grand jury report with embellishments about Sandusky's access and a few additional areas, like University governance, compliance with the Clery Act and other policies mixed in.  That's when the first bump in the (rail)road occurred.

The Perjury Particulars Bump in the (Rail)Road
In response to a request for perjury particulars by the attorneys for Curley and Schultz, the OAG was forced to utilize the Penn State emails (that had been turned over to the PA State Police in July 2011) to support the Commonwealth's response. The significance of using the emails was two-fold: first, it allowed Freeh to use them in his report; and second, the emails more fully exposed the role of DPW in the 1998 investigation.  


April:  Revisiting 1998 and Continued BOT Interviews.

Up until the release of the emails, Freeh had relied on the University Park police report and an interview (January 27) of a former police officer (likely Schreffler) to recount the incident.  The OAG's release of email evidence essentially forced FSS to revisit the 1998 incident.  The Freeh team performed  interviews with DPW program representative Jerry Lauro (Apr 26) and with Centre County CYS case worker Miller (also Apr 26).  

The BOT threw Spanier  under the bus.
Interviews about the BOT's knowledge of the Sandusky investigation had been ongoing all month (Apr 5 to Apr 23).  The majority of the BOT claimed to have received knowledge of the Sandusky investigation through the May 12, 2011 briefing by Spanier and Baldwin.  A handful of trustees said they had no knowledge of the grand jury investigation until November 2011.  Most trustees recalled that Baldwin informed them it was the third or fourth grand jury to investigate Sandusky and that the incidents  didn't involve PSU. 

In summary, the BOT members dubiously claimed they were in the dark on the Sandusky matter and blamed Spanier for a lack of transparency and for not being inclusive as a leader.


May:  Investigation Wraps Up

According the end notes, only a few interviews were conducted on May 9 and 16 to answer lingering questions about the firing of Paterno.   On May 5, Frazier sent an email to Louis Freeh which confirmed the investigation was wrapping up.  An excerpt from the email follows.


Sent from my iPhone 

On May 5, 2012, at 9:52 AM, "Frazier, Kenneth C." <ken frazier@merck.com> wrote: 

I would recommend waiting a few days to see if Wick calls. If he doesn't, I'd call him 
saying that I suggested that you reach out to him based on my conversation with 
McGinn. I would also let him know ( as I told McGinn) that you guys are wrapping up 
the investigative phase. If they have something to say they should speak up now.

The Schultz File Bump in The (Rail)road
According to the Freeh Report, FSS had twice interviewed Kimberly Belcher (Jan 12 and Apr 12), who denied possessing the Schultz file.  Later that month, in response to a grand jury subpoena, Belcher testified that she turned over a copy of the file to the OAG in April 2012.  She also testified that Schultz provided the originals of the file to the OAG one day earlier. The Freeh Report lists the date of the Schultz file as 5-1-2012, confirming it was obtained after Belcher and Schultz had turned their files over to law enforcement.  

Note: OAG officials concealed the existence of the emails and the Schultz file from the public until the emails were leaked in June.  In May, the OAG changed the date of the McQueary incident from March 1, 2002 to February 9, 2001, however they did not say how the new date was determined.  

The information from the Schultz file very likely caused the Freeh Report to be significantly edited to include details from the notes and emails regarding 1998 and 2001 incidents. However it is also very likely that there was considerable debate on the risk-reward of using the handwritten notes of Schultz.  The notes from 1998 contained damaging information about CYS and DPW being told of many signs of child sexual abuse.  Emails reveal that on May 20th, Frazier, Tomalis, Freeh, and McNeil likely planned to discuss the updates to the Freeh Report and the (selective) use of information from Schultz's file.





The "you dun good" statement by Tomalis was a reference to Frazier lying to the Board about Freeh's investigation being very active and continuing into the fall.  The email between Frazier and Tomalis on May 4th showed that Frazier had lied because he expected the information to be leaked.

At the end of May, the final draft of the Freeh Report was ready, but all involved likely knew that it was light on facts.  It was very likely that the group began its public relations/smear strategy to cover for the deficiencies in the report.


June: Minimal investigation activity -- smearing begins

Little investigative activity took place in June 2012.  The end notes show the investigation circled back with a former finance officer on June 12th (likely Al Horvath) to obtain background information about VP Schultz.  

Evidence indicates that the efforts of the SITF and Freeh focused on making the public believe that honorable men like Joe Paterno and Graham Spanier had more concern for the well-being of a pedophile than the well-being of children.  They did that through leaking emails to the press.

On or about June 11th, existence of the emails was leaked to NBC news.   NBC cited "law enforcement" and "legal sources" (either of which could have been a loose reference to a Freeh team member) in its report.  NBC's report cited just the word  "humane" from the emails -- taking it out of context.  NBC's report was picked up by most papers, including the Philadelphia Inquirer, who reported that Paterno was involved in the email exchange.  The Inky's report appeared to be welcomed by SITF co-chair Ron Tomalis, who forwarded it to the Core Group of Frazier, Freeh, and McNeil.










The original reporting on the emails didn't gain traction initially because the Sandusky trial took center stage.  Interestingly, the trial had one very unexpected - and mostly unreported - result.

Last Bump in the (Rail)Road - Not Guilty, Count 7
Had the Sandusky trial gone according to plan, little changes would have been required to the draft of the Freeh Report.  However, the failure of a jury to believe McQueary's testimony about witnessing a rape likely blew a major hole in the Freeh Report's ability to condemn Paterno's actions in 2001.  The result was that Freeh retreated to using a non-specific passage in an email (of dubious provenance) to "reasonably conclude" that Paterno was solely responsible for stopping the report of the 2001 incident.  Freeh also played up the janitor incident and Sandusky's access to facilities, the latter claimed to be under the purview of Paterno, to condemn the football culture.

The media, who hadn't been paying attention to the details of the Sandusky case from the outset, persisted with the theme that football - and by extension, Paterno - was the reason Sandusky could commit crimes for so long.  A column written by Howard Bryant was embraced by Ken Frazier and likely others at PSU who had been looking to justify the firing of Paterno.



Before the month of June ended, the media returned to the story of the emails -- only with more details being released about their content.  Public opinion was turning against Paterno and Spanier, just as the SITF intended.

July:  Last minute interviews, and finalizing the report

Although Graham Spanier and his legal team had requested meeting with Freeh's team since the outset of the investigation, it didn' take place until July 6th -- about one week before the report was published.   While FSS incorporated some of Spanier's information into the chapters on 1998 (Ch. 2), 2001 (Ch. 4), and the BOT (Ch. 5), it is important to note that the investigators re-interviewed Cynthia Baldwin on July 9th.  The purpose of the interview was to rebut Spanier's statement that he didn't have knowledge of the 1998 incident. 

Freeh Report missed badly on the
testimony of janitor, Buck Petrosky
The other significant interview allegedly took place on July 2nd with janitor Ronald "Buck" Petrosky. Petrosky allegedly told Freeh's team that "football runs this place" and "going up against Paterno would be like "going up against the President of the United States."  However, it is highly probable that Petrosky wasn't interviewed at all.

EVIDENCE:  Pages 65 and 66 of the Freeh Report purport to be Petrosky's testimony at the trial, but there are at least eleven statements included on those pages that were not part of his testimony. In conclusion, it is almost certain that Freeh used the grand jury report to fill in the information and fabricated the quotes.   

Note: The Freeh Report also attributed direct quotes from Mike McQueary (p.67), who was not interviewed, to an interview on March 1, 2012. 

CONCLUSION: No NCAA Violations, No LOIC

The Freeh investigation ended without finding any more evidence of NCAA violations than it had in January.  In short, the NCAA had nothing to hang its hat (or cattle) on. The only NCAA related finding in the Freeh Report was an unsupported assertion that PSU's NCAA compliance staff was understaffed.

Both parties knew (from substantive updates during the investigation) that the Freeh Report would not include information to justify the NCAA penalizing PSU.   Instead, a media campaign would be used to prop up the Freeh Report.


PSU's PR Campaign "Justified" NCAA Sanctions

The inner circle had been working on the public lynching of Paterno, Spanier, and the football program all along.  As noted in a previous post, the outline for the NCAA Consent Decree (CD) was consistent with the key points of Erickson's five point promise.  

The CD was not a cram down...  

..it was the BOT inner circle handing a gun to the NCAA for the execution of the legacy of Paterno and to give PSU football the virtual death penalty (via the athlete transfer option).  The NCAA, who had a reputation as a weak enforcer, had no qualms about playing the heavy.   As part of the deal, the NCAA agreed to mention the death penalty threat and give Peetz and Erickson a pat on the back for cleaning up PSU when gave its press release on the CD.  


Freeh: made many false 
statements during presser
PSU's well crafted media campaign gave "legs" to the Freeh Report.   It started by allowing Freeh to conduct a grand standing press conference where he made statements that were not supported by any evidence (in Freeh Report or anywhere else).  The media and the public learned all they needed to know about scandal by watching "Freeh TV."  

No one in the media fact checked or disputed any of Freeh's statements.

Here is a sampling of false statements made by Freeh at his presser:

20:40- “the evidence clearly shows, in our view, an active agreement to conceal

22:20 -”the rapes of these boys occurred in the Lasch Building

26:20 – “the reasonable conclusion that we make is that all four individuals, that I’ve mentioned including Mr. Paterno made a decision – made a decision to actively conceal knowledge in the events of February 2001. I can’t parse between them, degrees of responsibility - what’s significant and shocking is that the four of them, the four most powerful people at Penn State University made a decision to conceal this information.”

30:08 – “Well we know when Mr. Curley speaks to the Second Mile he uses the same word, that they were worried about Sandusky showering with a boy because of bad publicity. So this 
notion of bad publicity, which is really disclosure, opening, and reporting, is a pervasive concern and fear by those running the university.”

30:55 - “There’s several e-mails – contemporaneous e-mails – in 1998, which we found by the 
way, which shows he’s (Paterno) clearly following the case. He’s clearly following the 1998 
investigation.”

33:08 - “The janitors, that’s the tone on the bottom. Ok. These are the employees of Penn 
Stare who clean the locker rooms in the Lasch building where young boys are being raped. They witness, what is probably, in the report, the most horrific rape, that’s described.”

36:20 – “He (Paterno) as someone once said, made perhaps the worst mistake of his life. We’re not singling him out. We’re putting him in a category of four other people who are the four 
major leaders of Penn State….He was an integral part of the active decision to conceal.”

The press ran with those soundbites and they became a substitute for the lack of evidence in the Freeh Report. 


PSU and the NCAA Respond to Freeh Press Conference

PSU's Response
Frazier: Praised Freeh investigation and
emphatically condemned PSU officials
According to the deposition of Frank Guadagnino (pages 18 and 19), a small group including Ken Frazier, Karen Peetz, Rod Erickson, Guadagnino, Tom Poole, and Richard Edelman met to review the Freeh Report and craft PSU's response.  The cabal who would go on to inflict more damage on PSU than Sandusky, gave the University the death blow.

Ken Frazier praised the Freeh Report for "following the facts" and for being "thorough and comprehensive." Frazier also emphatically condemned  Paterno, Spanier, Curley, and Schultz for their alleged failures.  Peetz piled on, stating Paterno's 61 years of service were "marred."  Erickson's pledge to implement all of the recommendations in the Freeh Report (just as he said he would in his November 2011 five point promise), left little doubt that PSU had totally accepted the Freeh Report.

 In the public's eyes, PSU's press conference confirmed the Freeh Report.  Dissenting views  were given no credence by the PSU administration or the media.

Two days after the press conference, Frazier emailed Peetz to suggest disbanding the SITF. It's mission was accomplished -- it had justified the firings of Paterno and Spanier by propping up the Freeh Report.



NCAA Response

The NCAA's response to the Freeh report was originally very cautious, stating that it would carefully review it and were awaiting PSU's response to the four questions in its November 17 letter to Erickson. 


"Like everyone else, we are reviewing the final report for the first time today. As President Emmert wrote in his November 17th letter to Penn State President Rodney Erickson and reiterated this week, the university has four key questions, concerning compliance with institutional control and ethics policies, to which it now needs to respond. Penn State's response to the letter will inform our next steps, including whether or not to take further action. We expect Penn State's continued cooperation in our examination of these issues."


PSU Substitutes Freeh Report & Pleads Guilty to LOIC

In November 2011, then PSU General Counsel Cynthia Baldwin was drafting a response to the aforementioned letter, but was told to stand down by the SITF.  Erickson and Baldwin were told that the response should wait for the outcome of its (Freeh's) investigation.

The deposition of Rod Erickson revealed that after the release of the Freeh Report, it expected to respond to the NCAA's four questions by early August 2012.   On July 17, 2012, Erickson made a statement that PSU was crafting a response to the four questions and then would "negotiate what would be appropriate sanctions."   

Erickson was lying about those two things (and likely many others).

An email dated July 18th from Gene Marsh indicated that penalties were already proposed by the NCAA as early as July 16th or 17th.   According to NCAA Counsel Don Remy, Erickson told the NCAA that PSU had accepted the Freeh Report and that the report contained evidence of a LOIC.  

Erickson's deposition confirmed Remy's position that it was the former PSU President who determined the Freeh Report constituted a LOIC.  Under questioning, Erickson stated he was familiar with the concept of a LOIC from reading sports pages and that PSU was in violation.  He then spun the story to state that it was the NCAA (Emmert) concluding it was the worst case of a lack of institutional control and that the University presidents "wanted blood."   

Contrary to the statements of PSU and Erickson, they were not bluffed and the NCAA wasn't holding any cards.   


Ed Ray's deposition and emails indicated that the talk about the NCAA EC favoring the death penalty was not true.  As Ray said, "if you told me the vote was 19-2 against, I wouldn't have been surprised."  

The truth as that the PSU BOT Executive Committee pushed the NCAA to play up the death penalty scenario and also asked the NCAA to give them props for improving governance and removing the former leadership.


The excerpt below is from an email exchange between Don Remy and Ed Ray, in which Remy explained how PSU asked the NCAA to play up the death penalty and its improvements in governance.   



The CD came down hard on Paterno, Spanier, and the Athletic Program and caused irreparable harm to the University's reputation.  By design of PSU, the CD penalties didn't inflict direct financial damage to PSU.  Collateral damage would be another story.


PSU Athletics Pays The Price

Evidence uncovered during my investigation revealed that Erickson was quite well versed in the financial affairs of both the University and the Milton Hershey Medical Center.   While he was a puppet of the inner circle, he was no dummy when it came to finances and the penalties bear that out.

PSU Athletics will bear the financial burden
 of the scandal for the next 35 years. 
Under PSU's plan, the $60 million in fines (and the subsequent payment of claims related to the Sandusky incident) wouldn't cost the University anything.  The fines, originally expected to come from football reserves,  would instead be paid by the Athletic Department through an interest bearing loan.  It is estimated that the University will earn around $43 million in interest over the life of the loan -- while the football program is saddled with the debt for 35 years.   That of course, is on top of vacation of wins, scholarship reductions, bowl bans, probation, a phony Athletic Integrity Agreement, and confiscation of bowl money by the thugs in suits who run the Big Ten.  

The litigation expenses for University officials (Curley, Schultz, Spanier, and Baldwin) are covered through directors and officers (D&O) liability insurance.  Additionally, the Erickson mistakenly assumed that the payoffs to the Sandusky claimants would be covered by its insurance policies.  The insurer pushed back, stating PSU's policies didn't cover abuse and molestation incidents. PSU sued and ironically, count 4 is "BAD FAITH."  Talk about irony. Litigation in that case is expected to begin in March 2015.

In late 2012 through 2013, Erickson and the inner circle must have believed it got a pretty good deal for the money it paid Freeh.  

It had blamed Paterno, Spanier, PSU Athletics, and the "football culture" for Sandusky's crimes, got the NCAA to gratuitously pile on, absolved themselves of any real responsibility or accountability, kept control of the University, feigned concern for child abuse victims, and won the support of the media and the public.  

 All for about $8 million. 

Call it a railroading.

Call it a framing.

Call it what it was...an act of bad faith by the BOT inner circle and the NCAA.