Investigation on Scott Eaton reveals over $300,000 ‘misappropriated’

Former NKU Athletic Director Scott Eaton misappropriated a total of $311,215, according to a law firm’s key findings in its investigation released Sept. 12 by NKU President Geoffrey Mearns. This new amount of money is over double the original $150,000 total, forecasted by Mearns in the earlier stages of the investigation.

Led by external law firm Dinsmore and Shohl, the investigation revealed that Eaton misappropriated $262,106 of the total amount through purchases of gift cards at a local Kroger.

“The majority of Eaton’s fraudulent conduct occurred by him purchasing gift cards at a local Kroger store with his university procurement card and then using the gift cards for his personal use,” Mearns announced in a letter to NKU Board of Regents Chair Dennis Reppenning. According to the firm, this conduct occurred between January 2007 and March 2013.

Another $49,109 was misappropriated by Eaton in various ways, including the use of his procurement card to purchase personal items from various merchants and to turn a photocopy of various receipts from items into the university, only to return to them to the store and receive full credit for the purchase.

This amount also included submitting falsified receipts to hide the true nature of his purchases and using university printing services and materials to support his own personal activities, according to the letter to Reppenning.

The original estimate of $150,000 was what Mearns called “very preliminary information” which was aimed to be as transparent as possible.

As far as getting the money back is concerned, Mearns said he plans on seeking full restitution from Eaton, but added that the university has insurance for matters such as these which will also help.

“[Eaton] embarked on a pattern of conduct over… many many years, through a variety of methods,” Mearns said. “We are very disappointed and we are committed to doing the best we can to make sure something like this doesn’t happen again.”

The university is currently cooperating with law enforcement as they recommend criminal charges.

After financial review of the Department of Athletics in the earlier investigations, Dinsmore and Shohl retained the help of the accounting firm Clark Schaefer Hackett to perform an investigation under the law firm’s supervision. Conclusively, the report was a combination of the two firms’ work.

In Mearns’ letter, it was announced that both Dinsmore and Clark concluded the main reason Eaton’s conduct was not detected earlier was because he had manipulated his employees to gain their trust and then exploited it.

“Simply put, Eaton deliberately developed multiple ways to misappropriate university funds,” Mearns said in the letter.

Moving forward, both Dinsmore and Clark provided the university with several recommendations broken into two distinct categories.

The first contains recommendations that are aimed to “deter and detect unethical behavior” with the second containing recommendations focused at fi nancial control of university procurement cards.

Some specific examples of the recommendations include regular financial training for all faculty and staff, restructuring of several financial departments, a reduction in the number of faculty and staff who have procurement cards and regularly conducted analyses of procurement card activity.

While Mearns understands the importance of taking these recommendations into consideration, he said there were no gray areas in ethical responsibilities within the university. “The expectations for Eaton were clear,” Mearns said.

Eaton was terminated March 18 after he admitted to “inappropriate, intimate” relationships with university employees and a former student, according to a previous letter sent to the Board of Regents by Mearns.

Mearns avoided commenting on the relationships, only stating that the relationship aspect of the investigation has been closed. Follow for continual updates on the termination and investigation of Eaton.

Eaton’s perspective
according to his lawyer Benjamin Dusing:
-Mearns statement to the Board of Regents failed to refl ect the fact that Dr. Eaton brought the diversion to the attention of the university on his own accord and voluntarily worked with NKU and others within the investigation, according to a press release issued Sept. 12 by Dusing and Angela Hayden.

-What Mearns said in the letter about Eaton exploiting his coworkers was invalid, according to Dusing. “We would respectfully submit that that is inaccurate,” Dusing said.

-”There are certain things in the report that we would quibble with; the extent of the funds that were diverted being probably chief among them,” Dusing said. According to Dusing, Eaton wouldn’t dispute the circumstances Mearns laid out in his address but the attorneys are still working with law enforcement to determine the accuracy of the total amount that was misappropriated.

-Dusing admits Scott Eaton doesn’t have the money to repay the university the amount that was misappropriated, but is willing to “make meaningful steps toward repayment”.

NKU’s perspective
according to Mearns:
-A total of $311,215 was misappropriated by former AD Scott Eaton, according to a law firm’s key findings in an investigation released Sept. 12 by NKU President Geoffrey Mearns.

-Both Dinsmore and Clark came to the conclusion that the reason Eaton’s conduct wasn’t detected before last semester was because he had manipulated his employees to gain their trust and then exploited it.

-Many recommendations were made in the letter Mearns sent out, from Dinsmore and Clark, some were to “deter and detect unethical behavior.” Mearns agreed that there is importance to these recommendations
but there wasn’t a gray area in ethical responsibilities within NKU. “The expectations for Eaton were clear,” Mearns said.

-Mearns said he plans on seeking full restitution from Eaton, but also said NKU has insurance for matters like these.