Report questions $1.8 million paid by WSU to consultant

The Ohio Inspector General’s office Tuesday said it flagged as questionable about $1.8 million of the $2.3 million Wright State University paid economic development consultant Ron Wine and sent a 20-page report on the findings to the Greene County prosecutor’s office and state auditor for review.

But an attorney for Wine, who has filed a lawsuit against the university alleging breach of contract, said the university owes Wine money.

“Ron Wine did this whole thing the way Wright State told him to do it,” attorney Ken Ignozzi said.

The report by Ohio IG Randy Meyer identifies $1.8 million in overpayments or unsupported, questionable or unauthorized payments to Wine and his consulting company since 2009.

Wine is the former Dayton Development Coalition chief executive who the university hired to help secure state and federal funding and contracts.

Related: The Rainmaker of Wright State

In January 2016, the university suspended its contract with Wine while state authorities investigated a litany of issues. In September 2016, Wine sued Wright State in the Ohio Court of Claims for $4.5 million.

Ignozzi says university officials during depositions in the lawsuit have testified to the exact opposite of what the inspector general found.

“There’s no question that all the payments are legitimate and he is owned a ton of money,” Ignozzi said of Wine.

Ignozzi said both former WSU president Dave Hopkins and former Wright State Applied Research Corporation director Ryan Fendley confirmed that the payments were legitimate in depositions in the case. Those depositions have not been filed with the court. The Dayton Daily News has asked both Ignozzi and Wright State for copies of the depositions.

Related: Consultant sues Wright State

“That’s a complete bureaucratic failure on behalf of the inspector general’s office to issue a report without that information,” Ignozzi said.

State IG investigators questioned Hopkins on May 11, 2016, according to the report. The report says Fendley’s attorneys declined to make him available to talk to investigators.

Neither Hopkins nor Fendley could be reached for comment Tuesday.

WSU responds

Wright State spokesman Seth Bauguess said the university received a copy of the report Monday but had already adopted recommendations made by the OIG. These include creating new contracting and compliance procedures, hiring a new general counsel, and establishing an affiliated entity policy to manage the relationship with WSARC and other entities.

“It is the university’s understanding that the OIG has referred the report to the State Auditor’s office and the Greene County Prosecutor for appropriate law enforcement actions and the university will cooperate fully with those offices in any further action,” Bauguess said in a statement.

“As the university is currently involved in litigation with Mr. Wine regarding his consulting services and amounts paid pursuant to such contracts, the university’s longstanding practice is not to comment on pending litigation matters.”

Ignozzi said Ron Wine Consulting Group was singularly responsible for the growth of Wright State’s research contracting arm.

“It was more successful than anyone ever thought it would become,” he said.

Local lawmaker started probe

The OIG investigation started when state Rep. Jim Butler, R-Oakwood, made a complaint to Meyer’s office in January 2016, raising concerns about Wine’s contract work for the university. This followed an investigation by the Dayton Daily News that reported, among other things, that the university couldn’t produce contracts for years when Wine was billing the university.

The inspector general identified the following questionable payments:

  • $403,028 for payments prior to October 2012 that lack proper documentation;
  • $1.13 million in unallowable performance bonuses;
  • $63,250 in double billings;
  • $139,950 in unauthorized costs; and
  • $181,500 in payments that lacked sufficient detail.

The university could only provide Meyer’s office with two contracts and one contract modification. The first covered October 2012 to December 2013, and it was retroactively extended 15 months after it had expired. While the contract specified a $400,000 cap, Wine’s company was paid $1.13 million.

There was such a lack of documentation for billed administrative work that “neither WSU nor WSARC would have known they were paying for these services,” the IG’s report said.

The second covered May 2015 to June 2019, and it was suspended in June 2016. It didn’t specify a cap on costs or who would bill at what rates. In the first eight months of that contract, Wine’s company was paid $449,400.

Also, Wine told state investigators that he had a verbal “understanding” with Hopkins that Wine’s firm would be paid a 5 percent of all funds he helped secure as a retainer fee. Emails between Fendley, Wine and former provost Sundaram Narayanan discussed awarding a 5 percent “performance bonus” to Wine’s firm based on total funding generated for the university, the inspector general found.

‘Not the way we work’

Hopkins said in an October 2015 interview with the Daily News that Wine’s compensation was not based on the amount of funding he brought to the university.

“Read the contract. It does not say that,” Hopkins said. “I’m confident it doesn’t say that because that’s not the way we work.”

RELATED: Wright State contract suspended pending probe

Butler said verbal agreements for performance bonuses are “at least sloppy and it makes it incredibly difficult for the public to hold the entity accountable. There is no transparency with a verbal contract.”

Wine was paid, in part, out of state money earmarked for workforce development. “There is no evidence that Wine materially participated in any workforce development projects,” the IG report said.

Aaron Miller, a project manager at the Wright State Research Institute, told the investigators that “he felt pressure from Fendley and Narayanan to include Wine on all grant proposals. Miller stated that he was constantly trying to avoid Wine, as he felt Wine did not add any value to his projects,” the report said.

Hopkins stepped down as university president in March. Fendley and Narayanan were removed from their posts amid an ongoing federal probe into potential immigration law violations.

“I’m hopeful (Wright State is) in good hands now and they can start to rebuild,” Butler said.

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