HIGHLAND HEIGHTS, Ky. - HIGHLAND HEIGHTS, Ky. -- Northern Kentucky University officials and the former athletic director they say stole $311,000 wait to see whether criminal charges are filed now that school’s internal investigation has concluded.
Former Northern Kentucky University Athletic Director Scott Eaton stole $311,215 in university funds, mostly using a scheme with Kroger gift cards, according to an internal investigation whose findings were released Thursday.
That figure is twice as much as the university said Eaton admitted to diverting when it accused him of conducting the scheme last April.
In a letter to NKU's board of regents, President Geoffrey Mearns wrote, "University personnel continue to cooperate fully with the law enforcement investigations into Eaton's conduct," adding that NKU intends to seek $145,000 restitution for the cost of the investigation should criminal charges be filed.
For their part, spokespeople for the US Attorney in Lexington and Attorney General Jack Conway said Thursday they could not confirm the existence of investigations or when any action would be taken.
Benjamin Dusing, Eaton's attorney, said he does not know whether criminal charges are pending.
But Eaton admits to misappropriating funds, which were part of the public university's athletic department budget.
Asked for his reaction to the findings, Mearns said at a press conference in his office Thursday, "I guess the word I would use is disappointed. He abused the trust of many people at the university, and we are all victims of his conduct."
In the letter, Mearns said Eaton misappropriated more than $262,000 between 2007 and March 2013 by purchasing Kroger gift cards using his NKU procurement card “and then using the gift cards for his personal use.”
Read Mearns' letter below or at http://goo.gl/2XJqYZ.
In addition, he used more than $49,000 of university funds at other stores using his procurement card and covered his tracks with falsified receipts or by returning merchandise and using the cash, according to the letter.
Eaton was fired on March 18 for unspecified violations of NKU's Code of Conduct. An internal investigation determined that he had “intimate, inappropriate relationships" with four university employees, including two he supervised, and a similar relationship with a student in a class he taught. Accusations of theft emerged in April, and an investigation was conducted by Dinsmore & Shohl, a Cincinnati law firm, and the accounting firm Clark Schaeffer Hackett to determine the breadth of the theft and how it was allowed to happen.
“Dinsmore and Clark determined that the principal reason that Eaton’s fraudulent conduct was not detected earlier was because he manipulated other employees to gain their trust, and then he exploited their misplaced trust,” Mearns wrote.
He continued that the employees were not complicit in the misconduct but missed multiple opportunities to report or investigate it.
Thursday, he added, "No other employees deserve to be disciplined, but we all need to do better (at identifying and reporting possible misconduct)."
Dusing said at a separate press conference that he was disappointed with NKU's characterization of the discovery of theft. "This matter was not discovered. It was brought to the attention of administrators by Dr. Eaton," he said.
Though Eaton admits to misappropriating money, he contends it was less than the $311,000, his attorney said.
"The substance of what is contained in the report...he does not dispute," Dusing said. "That number is more than we think (the actual total) is."
Whatever the number, Eaton wants to repay, Dusing said, but does not have the money.
"He accepts full responsibility for his actions, but it's still a difficult time for him and his family," Dusing said.
As a result of the investigation, NKU intends to initiate a series of reforms intended to prevent future misconduct, including issuing procurement cards to fewer people and putting whistleblower safeguards into official policy.
Mearns said at the press conference that more than 500 faculty and staff have procurement cards and that new policies would reduce that number substantially.
He said NKU has been in contact with federal and state prosecutors, though no criminal charges have been filed against Eaton. Spokespeople for federal and state prosecutors contacted Thursday would not confirm whether an investigation was ongoing or when news of charges would emerge.
If Eaton is prosecuted, Mearns said the university will seek full restitution as well as the costs of its investigation. Those costs were $145,000 as of Aug. 1, Mearns said. NKU has not pursued a civil court case against Eaton to date.
Mearns told reporters in April that the funds Eaton admitted to stealing were taken solely from the athletic department.
"These were monies that were appropriated to use for our athletics program. This was money that was designed to support our student athletes, coaches, and everyone committed to the academic and athletic success of our athletes and I believe we're entitled to have Mr. Eaton repay us for those financial losses," said Mearns.
Mearns said university officials do not believe there have been any NCAA violations but they will refer the matter to the NCAA.
Mearns said he started an investigation into Eaton on March 8, when he became aware of a pattern of possible misconduct. On March 11, additional information was received and outside counsel was hired the following day to conduct an independent investigation.
NKU hired Ken Bothof, formerly AD at the University of Wisconsin-Green Bay, in late June as the new athletic director.
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