Dear Attorney Peters,
cc: Penn State Board of Trustees, alumni networking
I saw in today’s Times Leader that you plan to review the Sandusky case to “see if all fiduciary responsibilities of the Penn State University’s Board of Trustees were met.” I and other alumni can provide substantial objective evidence that they were not.
(1) Commonwealth Court Judge Dan Pellegrini opined that the Board was derelict in its fiduciary duty for failing to challenge the NCAA sanctions.
http://www.pacourts.us/assets/opinions/Commonwealth/out/1MD13_4-9-14.pdf?cb=1 (page 37 of the document)
The majority appears to arrive at this outcome because it is bewildered, as I am, by how the Board of Trustees of PSU could have approved or allowed to be executed a “Consent Decree” involving the expenditure of $60 million of PSU funds when the Consent Decree specifically states that the matter “ordinarily would not be actionable by the NCAA.” If, as the majority suggests, the NCAA did not have jurisdiction over conduct because it did not involve the regulation of athletics, then the expenditure of those funds is problematic, given that PSU is a non-profit corporation as well as being tax-exempt as a charitable organization, and that Boards of Directors of non-profit charitable corporations have a fiduciary duty to ensure that funds are only used for matters related to its charitable purpose – in this case, the students of PSU. See 15 Pa. C.S. §5712. Moreover, the majority position is understandable given the lax supervision by those responsible for insuring that non-profit and charitable organizations operate as non-profit and charitable organizations as well as their failure to take action against Boards of Directors and Officers who use funds of a non-profit and/or charitable entity to pay funds that they are not legally obligated to pay and/or expend funds not related to their charitable purpose or who no longer act as a charity.
(2) Unknown Board members misused Penn State communication resources to publicly attack other Trustees for making Penn State a party in an action against the NCAA.
Penn State communication channels issued public statements to the effect that the Trustees involved in the lawsuit had a conflict of interest—an accusation that borders (not legal advice, I am not a lawyer) on defamation: an implied and false accusation that the Trustees in question were using their positions for personal gain, when they had no personal stake in the outcome. In other words, the people responsible for the false accusation of conflict of interest were not only refusing to perform their own fiduciary duty to challenge the sanctions, they were using the University’s name and resources to attack others for doing their duty.
In addition, Board members threatened to remove the Student Trustee from the Presidential search commission if he remained a party to the NCAA lawsuit.
(3) The entire Board (as of March 2012) was proven to not only have scapegoated Coach Paterno, but to have lied about the circumstances of his dismissal.
That is, the Board lied to and on behalf of the organization to which it owed a fiduciary duty. Here is what the Board said in 2012. Note that it said “failure of leadership” twice.
http://giveto.psu.edu/s/1218/2014/i...id=15638&calpgid=61&pgid=252&ecid=3519&crid=0
While Coach Paterno did his legal duty by reporting that information the next day, Sunday, March 3, to his immediate superior, the then Penn State Athletic Director Tim Curley, the Board reasonably inferred that he did not call police. We determined that his decision to do his minimum legal duty and not to do more to follow up constituted a failure of leadership by Coach Paterno.
The Board spent hours on conference calls between Saturday, Nov. 5, and Tuesday, Nov. 8, discussing appropriate action and our fiduciary responsibility as the Trustees. On Wednesday evening, Nov. 9, we met in person in State College. At about 9 pm, we unanimously made the difficult decision that Coach Paterno’s failure of leadership required his removal as football coach.
Here is what current Board Chairman Keith Masser said in a subsequent court deposition.
http://onwardstate.com/2015/01/19/board-chairman-still-thinks-paterno-wasnt-fired/
When pressed for a reason why Paterno was let go, Masser said: “The decision to remove Coach Paterno had nothing to do with what he had known, what he hadn’t done. It was based upon the distraction of having him on the sidelines would have caused the university and the current football team harm. It had nothing to do with what Coach Paterno had done, or hadn’t done.”
If Paterno was fired for nothing he had or had not done, he was not fired for failure of leadership. This means the entire Board lied about the circumstances of Coach Paterno’s dismissal. Scapegoating a subordinate is by itself a form of lying (falsely assigning blame, false witness) and the misrepresentation shown above makes it a lot worse.
(4) Board Chairwoman Karen Peetz’s unauthorized affirmation of the Freeh Report’s findings gave the NCAA the excuse it needed to impose the sanctions.
In July 2012, Peetz affirmed the Freeh Report’s conclusions on the Board’s and Penn State’s behalf even though the Board never voted to approve this action. This looks like a violation of the Standing Orders that the Board’s current leaders like to talk about so much; no Trustee can act on the Board’s behalf without the Board’s approval. The NCAA later told a court of law that Penn State had accepted the findings even though it knew that the Board had never voted to do this.
(5) Merck CEO Kenneth Frazier used a racial slur during the March 2013 Board meeting.
He belittled a Caucasian alumnus’ criticism of the Board’s performance with a remark about “the few people in this country that look like you who believe the O.J. Simpson verdict was correct.”
Regards,
William A. Levinson, B.S. ‘78
cc: Penn State Board of Trustees, alumni networking
I saw in today’s Times Leader that you plan to review the Sandusky case to “see if all fiduciary responsibilities of the Penn State University’s Board of Trustees were met.” I and other alumni can provide substantial objective evidence that they were not.
(1) Commonwealth Court Judge Dan Pellegrini opined that the Board was derelict in its fiduciary duty for failing to challenge the NCAA sanctions.
http://www.pacourts.us/assets/opinions/Commonwealth/out/1MD13_4-9-14.pdf?cb=1 (page 37 of the document)
The majority appears to arrive at this outcome because it is bewildered, as I am, by how the Board of Trustees of PSU could have approved or allowed to be executed a “Consent Decree” involving the expenditure of $60 million of PSU funds when the Consent Decree specifically states that the matter “ordinarily would not be actionable by the NCAA.” If, as the majority suggests, the NCAA did not have jurisdiction over conduct because it did not involve the regulation of athletics, then the expenditure of those funds is problematic, given that PSU is a non-profit corporation as well as being tax-exempt as a charitable organization, and that Boards of Directors of non-profit charitable corporations have a fiduciary duty to ensure that funds are only used for matters related to its charitable purpose – in this case, the students of PSU. See 15 Pa. C.S. §5712. Moreover, the majority position is understandable given the lax supervision by those responsible for insuring that non-profit and charitable organizations operate as non-profit and charitable organizations as well as their failure to take action against Boards of Directors and Officers who use funds of a non-profit and/or charitable entity to pay funds that they are not legally obligated to pay and/or expend funds not related to their charitable purpose or who no longer act as a charity.
(2) Unknown Board members misused Penn State communication resources to publicly attack other Trustees for making Penn State a party in an action against the NCAA.
Penn State communication channels issued public statements to the effect that the Trustees involved in the lawsuit had a conflict of interest—an accusation that borders (not legal advice, I am not a lawyer) on defamation: an implied and false accusation that the Trustees in question were using their positions for personal gain, when they had no personal stake in the outcome. In other words, the people responsible for the false accusation of conflict of interest were not only refusing to perform their own fiduciary duty to challenge the sanctions, they were using the University’s name and resources to attack others for doing their duty.
In addition, Board members threatened to remove the Student Trustee from the Presidential search commission if he remained a party to the NCAA lawsuit.
(3) The entire Board (as of March 2012) was proven to not only have scapegoated Coach Paterno, but to have lied about the circumstances of his dismissal.
That is, the Board lied to and on behalf of the organization to which it owed a fiduciary duty. Here is what the Board said in 2012. Note that it said “failure of leadership” twice.
http://giveto.psu.edu/s/1218/2014/i...id=15638&calpgid=61&pgid=252&ecid=3519&crid=0
While Coach Paterno did his legal duty by reporting that information the next day, Sunday, March 3, to his immediate superior, the then Penn State Athletic Director Tim Curley, the Board reasonably inferred that he did not call police. We determined that his decision to do his minimum legal duty and not to do more to follow up constituted a failure of leadership by Coach Paterno.
The Board spent hours on conference calls between Saturday, Nov. 5, and Tuesday, Nov. 8, discussing appropriate action and our fiduciary responsibility as the Trustees. On Wednesday evening, Nov. 9, we met in person in State College. At about 9 pm, we unanimously made the difficult decision that Coach Paterno’s failure of leadership required his removal as football coach.
Here is what current Board Chairman Keith Masser said in a subsequent court deposition.
http://onwardstate.com/2015/01/19/board-chairman-still-thinks-paterno-wasnt-fired/
When pressed for a reason why Paterno was let go, Masser said: “The decision to remove Coach Paterno had nothing to do with what he had known, what he hadn’t done. It was based upon the distraction of having him on the sidelines would have caused the university and the current football team harm. It had nothing to do with what Coach Paterno had done, or hadn’t done.”
If Paterno was fired for nothing he had or had not done, he was not fired for failure of leadership. This means the entire Board lied about the circumstances of Coach Paterno’s dismissal. Scapegoating a subordinate is by itself a form of lying (falsely assigning blame, false witness) and the misrepresentation shown above makes it a lot worse.
(4) Board Chairwoman Karen Peetz’s unauthorized affirmation of the Freeh Report’s findings gave the NCAA the excuse it needed to impose the sanctions.
In July 2012, Peetz affirmed the Freeh Report’s conclusions on the Board’s and Penn State’s behalf even though the Board never voted to approve this action. This looks like a violation of the Standing Orders that the Board’s current leaders like to talk about so much; no Trustee can act on the Board’s behalf without the Board’s approval. The NCAA later told a court of law that Penn State had accepted the findings even though it knew that the Board had never voted to do this.
(5) Merck CEO Kenneth Frazier used a racial slur during the March 2013 Board meeting.
He belittled a Caucasian alumnus’ criticism of the Board’s performance with a remark about “the few people in this country that look like you who believe the O.J. Simpson verdict was correct.”
Regards,
William A. Levinson, B.S. ‘78
