BY JIM DOOLEY – An auditor’s report on the “Wonder Blunder” concert fiasco at the University of Hawaii spread plenty of blame around but largely faulted athletics arena director Rich Sheriff and Athletics Director Jim Donovan.
Released by the Board of Regents today, the report, prepared by KMH LLP, is the latest post mortem analysis of how the UH was scammed out of more than $200,000 by promoters of a phony fundraising concert by Stevie Wonder.
There was institutional blame reported, too: the auditors said the University failed to enact policies and procedures covering various aspects of fundraising events like the planned concert.
But individuals including Donovan and Sheriff used poor judgment in how they proceeded, the report said.
An advisory group of regents which commissioned the audit said in its own report: “Notwithstanding the good intentions of individuals within the Athletics Department to benefit the University, a lack of judgment and taking overall responsibility by individuals involved with these financial transactions resulted in the loss to the University.”
But the auditors said Donovan and Sheriff were largely responsible for arranging the concert and for assuring that terms of the promotion were actually carried out.
“Despite the lack of written policies and procedures, as the individual responsible to oversee and administer written contracts, it was the responsibility of (Sheriff) to ensure that all terms of the Agreement were complied with,” the audit said.
“While it was primarily the responsibility of (Sheriff) to monitor compliance with the Agreement terms and conditions, the Athletics Director was ultimately responsible to ensure that terms of the Agreement were followed.
Donovan told auditors and other factfinders that he assigned many of the concert responsibilites to Sheriff and others because of his out-of-state travel schedule.
Donovan was removed as Athletics Director in July was assigned to a new, $211,000-per year university job after he threatened a lawsuit against the institution. The University also paid $30,000 in Donovan’s legal expenses.
Among the significant failings cited by the auditor’s in the concert debacle were:
- The concert agreement with local promoter Bob Peyton required him to obtain cancellation insurance before tickets to the concert were sold.
Peyton and others associated in the deal, including Sean Barriero of Florida and Marc Hubbard of North Carolina, never produced the insurance but advance tickets were sold anyway, the auditors said.
- The auditors and factfinders couldn’t find out who approved the ticket sales.
The ticket office manager “indicated that (Sheriff) provided verbal authorization to begin ticket sales, the report said.
But Sheriff denied doing that and said the “must have come from higher ups,” the auditors reporter.
“Regardless of where the authorization came from, the sales did occur,” the audit said.
- The concert agreement should have been approved by the UH Manoa Chancellor’s office but was not.
- The Athletics Department performed little or no “due diligence” analysis of Peyton before signing the deal with him.
Due diligence could have included “a review of the promoter’s history or record of putting on similar events and following up with references provided by the promoter. None of this was done, nor are there any procedures in place requiring due diligence on parties requesting to use University facilities for non-University events,” the audit said.
Hawaii Reporter previously disclosed that Peyton had been through personal bankruptcy in 2010 and his home was in foreclosure when he proposed the concert to Sheriff.
The University’s agreement was with Peyton and no effort to research Barriero, his company Epic Talent, or Hubbard was undertaken.
Barriero’s company was formed earlier this year and operates from a private mailbox service in a Miami strip mall.
Hubbard has a history of defrauding investors in phony entertainment ventures, according to court and business records. Regulators in five state around the country have issued “cease and desist” orders against him.
- On top of the $200,000 lost deposit fee, other unrecovered direct expenses for the concert include $11,975 for ticket printing. And the University is out the $15 wire transfer fee it paid to send the $200,000 to Barriero in Miami.