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IOWA CITY — State investigators believe a University of Iowa professor abused his position and misused UI money, resulting in nearly $100,000 in improper and undeposited payments, according to an audit.
Among the allegations against UI physics professor Michael Flatté is that he spent more than $8,000 in UI resources on robots 'to teach classes, supervise assistants, and attend meetings while he was out of the country or attending conferences.'
The Office of Auditor of State also found the university failed to follow up on reported conflicts of interest, missed abuse of its name and logo, and could not recover emails requested by the state.
In a report made public Thursday, State Auditor Mary Mosiman said inadequate documentation curtailed her office's efforts and made it impossible to know for certain whether more money was misused or mishandled.
Auditors urged the university to improve its handling of conflicts of interest, require more detailed cataloging of expenses, and review its policy 'allowing emails to be moved off the university system to determine if it should be continued.'
'The university relies on the employees' ethics to properly disclose all required or potential conflicts,' according to the audit report. 'Such reliance is not sufficient.'
Copies of the report have been filed with UI police, the Johnson County Attorney's Office, the State Attorney General's Office, and the Division of Criminal Investigation, but no charges have been filed, according to court records.
Flatté, 50, continues to be listed as a physics faculty member on the UI website. In a statement, the university said it 'has taken appropriate action to protect the interests of the university and is reviewing possible disciplinary measures.'
Flatté did not respond to a call or email from The Gazette.
The audit report comes at a time of fiscal stress across Iowa's Board of Regents campuses, which have been dealt tremendous blows in state funding of late and likely will face more reductions.
Lawmakers in the last legislative session cut a total of more than $30 million from UI, Iowa State University, and University of Northern Iowa for the 2017 and 2018 budget years. The UI's portion of that cut to its general education fund was $15.4 million.
Legislators of late have said more cuts could fall on regent institutions for the 2018 year, as they work to shore up that budget.
In a statement about the state audit, UI officials reported the institution 'takes seriously its fiduciary responsibility to spend taxpayer and research dollars wisely and has several procedures in place to ensure this happens.'
UI executives in November 2016 first flagged concerns related to Professor Flatté, who served as director of the Optical Science Technology Center in the UI Department of Physics and Astronomy. Initial inquires triggered the state investigation for the period from July 1, 2011, to April 30, 2017.
Auditors found at least $99,805.67 in improper disbursements and undeposited registration fees related to three conferences organized by Flatté, whose time atop the Optical Science Technology Center ended April 7, 2017.
That total included $55,643.98 of improper UI payments and $44,161.69 in undeposited registration fees that should have gone into UI accounts but instead went to a private company he helped organize named 'Scientific Conferences.'
Flatté's tenured faculty agreement at Iowa lets him spend just 25 percent of his time teaching — which is about 15 percent below a standard faculty allocation. That's allowed through a 'buyout' process, which lets faculty members buyout up to 90 percent of their teaching requirements if they're awarded research grants to help fund their salary, for example.
Flatté was allowed a 'research buyout,' according to the audit, due to this appointment as director of the Optical Science Technology Center. The university does not keep written agreements related to faculty buyouts, auditors point out.
As a professor, Flatté must complete conflict of interest forms, and in 2016 he disclosed ownership of QuantCAD, LLC, formed in 2009 to develop and sell design and characterization software for quantum devices in the semiconductor industry. He also at that time disclosed his work with Eindhoven University, several nonprofit organizations, and as a director with Scientific Conferences, established in 2011 to facilitate scientific conferences.
Dating back to 2012, Flatté disclosed additional conflicts of interest to the university — including commitments in England, Ireland, Italy, and Germany. UI policy requires it develop a management plans for disclosed conflicts.
'We requested copies of any agreements or management plans between the university and Dr. Flatté related to his disclosures,' according to the audit report. 'The university has only one agreement.'
That was related to QuantCAD and its licensing of software developed as part of Flatté's UI research.
'University officials could not locate any management plans or any follow-up requests for more information on Scientific Conferences,' according to the report.
Flatté's conflict of interest filings, additionally, were lacking, auditors reported. He didn't get into the type of business Scientific Conferences conducted, and 'university officials did not follow up.'
Auditors in their investigation determined three conferences advertised using the UI name and logo and pitching the institution as a sponsor deposited registration fees into a Scientific Conferences bank account. Two of the conferences occurred in Romania — one in 2011 and another in 2013 — and the most recent conference took place in Chicago in October 2016.
Additionally, Flatté used UI money to cover $47,203.81 of the conference costs.
'We are unable to determine why university officials did not identify concerns the costs were related to conferences which were not approved by university officials,' according to the state audit.
Separately, Flatté spent $8,440.17 on robots to teach classes, supervise assistants, and attend meetings while he was out of town or at the conferences.
'The purchases of the robots and related equipment were from general fund resources and not from federal grants administered by Dr. Flatté,' according to the audit findings.
Although the purchases were approved in accordance with university policies, officials said the equipment is not 'reasonable or necessary for the operations of the university or physics department.'
Beyond the nearly $100,000 in question, auditors identified concerns with Flatté's travel reimbursements — including for trips Flatté made to California 'and other states where family members resided.'
In their review of Flatté's interactions, auditors requested access to his emails and learned Flatté's university account included a 'rule' that forwarded all messages to a private account.
That is allowed, per UI policy, but auditors questioned whether the university can 'monitor the propriety of the email and ensure information moved off the university system is not confidential or protected by other restrictions such as HIPPA.'
The state auditor suggested, among other things, the university implement more procedures to ensure compliance with its policies and reconsider allowing emails to be moved off the university system.
UI officials said in a statement they're evaluating each recommendation individually, but recently began to centralize department transaction experts to reduce administrative costs, minimize redundancies, increase compliance, and decrease errors.
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