University of Kentucky officials have accused a former employee of defrauding the school of more than $220,000 since 2011.
Steven Ellis, a former business manager in the physics and astronomy department, was suspended last spring and was fired in September, according to a report released Tuesday to the UK Board of Trustees. UK officials said he sold more than $137,000 of UK equipment on eBay and misappropriated $87,000 in royalty revenues.
The university has turned over the results of a yearlong investigation of Ellis to the U.S. Attorney’s office.
Lexington attorney Fred Peters, who is representing Ellis, declined to comment on the case. A spokesman for the U.S. Attorney’s office said he could neither confirm nor deny an investigation.
“Nearly all UK employees do the right things all the time,” UK provost Tim Tracy said. “But on those rare occasions when we do uncover inappropriate activity, we will — and we do — take action to address the situation. As important, we constantly assess our processes to do everything possible to help prevent a future occurrence. That’s exactly what we have done in this unfortunate incidence.”
Another employee reported Ellis last spring, prompting investigations by UK police and the UK audit department, officials said. In April 2015, Ellis’ annual salary was $60,845.
Ellis started at UK in July 1995 as an instructional lab specialist in the physics and astronomy department, according to the investigative report. He moved on to various departmental jobs, including academic coordinator and information technology manager. He also taught undergraduate labs, supervised teaching assistants, and stocked and maintained the equipment inventory for the physics labs, according to the report. He reported directly to the department chairman.
UK police started investigating in April 2015, and in June, they seized property from two storage units rented by Ellis. Police took 77 items, including desktop computers, monitors, multimeters, dehumidifiers and projectors. Police determined that about half the items belonged to UK.
In one of the most serious findings, officials said that since 2003, Ellis had required his students to buy lab manuals that he had written and had published through an outside vendor. Normally, if a professor requires one’s own books or texts to be used in a class, the professor must donate any royalties to the school. In this case, Ellis allegedly collected $84,794 in royalties from his students’ purchases since 2007. Students had bought about 14,000 manuals.
Official allege that Ellis received an additional $2,250 from another vendor for signing an agreement with the company to provide student personal response systems, also known as clickers.
The report also includes the following allegations:
▪ Ellis bought 30 Tektronix oscilloscopes (which measure voltage) in 2013 and later sold them on eBay for $27,480.
▪ Ellis used UK money to buy hundreds of multimeters (which also measure electric currents) over several years. About 334 were sold on Ellis’ eBay account for $49,856.
▪ The physics and astronomy department bought 210 temperature probes, 89 of which were found unopened in a closet at the school. A total of 151 probes were sold on Ellis’ eBay account at a loss of $4,470.
▪ Ellis signed or authorized contracts with outside vendors, including buying calculators from Texas Instruments that he later sold on eBay as “new in box” for about $30,317. Another kind of calculator was bought with UK money as required materials for Ellis’ lab students. A total of 33 of those calculators were sold on eBay, at a loss of about $11,000.
▪ UK found purchasing documentation for 100 personal-response clickers required for students in Ellis’ labs. According to the report, Ellis sold 248 of them on eBay for about $3,200. Ellis’ eBay account also showed sales of $10,000 for VID power supply units.
▪ He accepted in-kind gifts from a donor, including routers and cables, some of which were identical to items sold on Ellis’ eBay account for about $1,000.
UK officials said several changes have already been made to purchasing rules, including better training and more standardized purchasing rules. The College of Arts and Science will now have a senior budget manager, responsible for making sure all accounts are balanced and reconciled on a monthly basis.
“As a learning institution, we constantly assess our processes, and when we do find gaps, we’re going to move quickly to close them,” Tracy said.
UK officials said they would not allow Sumit Das, the chairman of physics and astronomy department, to comment because of investigations.
Trustee Mark Bryant, chairman of the board’s audit committee and a former McCracken County commonwealth’s attorney, said he wasn’t surprised by the allegations.
“When you have the kind of money we’re dealing with, people have a tendency to steal,” Bryant said. “I think they (UK’s internal auditors and police) did an excellent job. It will take time for the feds to indict him. I think it will run its course and the justice system will attend to him.”