Twelve holes in the internal ISU Flight Service audit

The Iowa Board of Regents gave Iowa State University President Steven Leath a well-choreographed vote of confidence on Monday. First, Chief Audit Executive Todd Stewart took the board through highlights from his team’s review of ISU’s Flight Service, noting the “full cooperation” provided by ISU staff. Then a contrite yet defensive Leath took the floor. Still insisting he did not violate any policies or laws, the president admitted he could have shown “better judgment” and said he is “very sorry” about “things I should have done differently.” In particular, he “used the university planes more frequently than was absolutely necessary, and should have been more transparent about some of the use.” He promised to be “more thoughtful” and learn from this experience. The 12-page auditor’s report and full statement from Leath are enclosed at the end of this post.

Regent Larry McKibben was up next to thank Leath for his leadership and contribution to positive trends at ISU, adding that he hopes for more “great things” during the next five years. The chair of the Regents’ audit committee has never viewed what he called a “ding on an airplane wing” as grounds to change his opinion of Leath. His remarks before the regents went into closed session signaled that the overseers would neither fire nor severely sanction the ISU president.

After board members evaluated Leath’s performance, Board President Bruce Rastetter asserted that Leath had “eliminate[d] any questions about the personal benefit that he may have received by using the university aircraft,” having reimbursed the ISU Foundation for costs associated with some flights. He went on to say,

“Clearly, President Leath’s acknowledgment that he takes full responsibility for the issues identified in the audit and that he should have been more transparent about the use of the planes reassures this board, and I hope all Iowans, that the president deserves our continued trust and support,” Rastetter said. “Furthermore, the board believes the audit has put to rest any concerns about President Leath’s use of the aircraft.”

This Iowan is not reassured. The audit has big holes and failed to fully account for costs of Leath’s airplane habit.

First, a few words on the explosion in spending on air travel during Leath’s tenure at ISU, a key finding of the audit. Expenses for ISU’s Flight Service increased by approximately 124 percent over five years, from $393,783 for fiscal year 2012 to $880,584 for the year that ended on June 30, 2016 (see page 3 of the audit report below). Those figures don’t include related costs to the university or the ISU Foundation, notably $290,000 on avionics upgrades to the King Air 200 in 2013, more than $3.5 million to buy and refurbish a King Air 350 in 2014 (page 2), and $498,000 to purchase a Cirrus SR22 in 2014 (net cost $470,000 after an older plane was traded in).

Leath has reimbursed the ISU Foundation $19,113.08 for plane use that might be considered personal. More than three-quarters of the total ($14,575) covered Cirrus training flights. The audit identified 76 trips in ISU’s smaller plane between August 2014 and September 2016. Leath was a pilot or passenger on 72 of those trips; for 52 of them, ISU records showed “proficiency/training or certification” as the business purpose. Leath was the trainee on most of those flights, though perhaps not all of them, as will be discussed below.

Note the tactful comment on page 8: “Internal Audit did not determine the reasonableness of the number of proficiency/training flights taken.” Many instructors offer instrument training for a Cirrus with far fewer flying hours than Leath had on ISU’s plane. Federal regulations mandate a certain number of takeoffs and landings periodically to stay current, but a pilot can fulfill those requirements on a single outing every few months. A comprehensive audit should have established whether the president attributed an excessive number of flights to training.

Leath told the regents he was required to receive instrument flight training to be added to ISU’s insurance policy. He thought flying himself “would save time and money” but now sees “why my use of the Cirrus for training may be viewed as a personal benefit.” ISU plans to sell the Cirrus, the president noted a short while later. The plane has “significantly lower” potential since he has promised not to fly it anymore, and one of ISU’s three professional pilots will soon retire.

Bleeding Heartland readers can draw their own conclusions about the wisdom of spending nearly half a million dollars on an airplane that increased ISU’s maintenance and aviation insurance costs, yet was flown on at most two dozen non-training, business-related trips over two years. Before the payments announced this week, Leath had reimbursed ISU’s Foundation for four other Cirrus trips that involved “some personal business” as well as donor outreach–in one case, a single donor meeting during an eleven-day vacation in North Carolina.

The internal audit recommended stronger oversight by the Board of Regents and better ISU policies and procedures related to university-owned aircraft. Leath assured the regents that ISU staff have “launched a thorough review and overhaul” of Flight Service operations to improve billing and record-keeping. In addition, ISU has “a comprehensive review” underway to determine if the university should maintain a Flight Service.

So, all’s well that ends well?

Not until ISU provides more complete information about Leath’s airplane use. Big pieces are missing from the internal audit.

1. The audit did not explain controversial March 2016 flights.

The audit is silent on a March 12 round trip to Jefferson, North Carolina, where Leath owns a home. ISU’s Cirrus was on the ground for only 37 minutes before returning to Ames on the first day of spring break. Leath didn’t reimburse for that trip. Concerned citizen David Wheeler’s request for an investigation of whether Leath broke the law went nowhere. Story County Attorney Jessica Reynolds kicked the case over to ISU’s interim police chief, despite the obvious conflict of interest. Wheeler e-mailed Story County Sheriff Paul Fitzgerald and Iowa Department of Public Safety Commissioner Roxann Ryan on December 14 to again request a criminal inquiry into Leath’s possible personal use of university-owned aircraft.

After refusing to answer questions about the March 12 trip for some time, Leath’s communications assistant Megan Landolt told me on December 13 that the business purpose was Cirrus training for Joe Crandall, one of ISU’s professional pilots. I will seek further information about Crandall’s experience in the Cirrus. I had the impression pilots could not carry passengers while training to fly a specific kind of aircraft.

Landolt confirmed Crandall dropped off the president and First Lady Janet Leath on March 12 but denied that was personal travel, saying Leath conducted university business over the long weekend in North Carolina. Board of Regents spokesperson Josh Lehman later responded by e-mail, “Internal audit determined this trip was for business purposes.”

Forgive me for being skeptical, given how many times Leath and ISU have provided inaccurate or misleading information in recent months. The pilot could have done his Cirrus training near Ames, rather than flying for more than nine hours to Jefferson, NC and back. Most of Leath’s training flights were local.

Not only was the March 12 trip more expensive than a training flight closer to home, taking the Leaths to North Carolina that day also increased the cost of the president’s business travel the following week. ISU’s King Air flew to Jefferson on March 15, costing $3,150.44 for the flight alone, plus an undisclosed amount for two pilots’ meals and overnight stays. If the Leaths hadn’t spent the weekend in Jefferson, ISU could have saved thousands by having the King Air fly them straight from Ames to Pittsburgh and other destinations on March 16.

Another questionable flight not mentioned in the internal audit: the King Air took the Leaths and four other passengers to Kansas City and back on March 10, 2016, and again on March 11, during the Big 12 men’s basketball tournament. The second trip would be unremarkable, except that the Cyclones lost their first-round game on March 10. Ditchwalk flagged this oddity nearly two months ago, noting that the King Air passengers included Miles Lackey and his wife. Lackey is Leath’s chief of staff and chief financial officer, as well as the president’s close personal friend. The March 11 flights cost $1,744.72.

If Leath conducted business at his second home over the first spring break weekend, ISU should produce the evidence.

If there was any legitimate business purpose to the Kansas City trip after the Cyclones had been eliminated from the Big 12 Tournament, ISU should produce the evidence.

Although Leath claimed on Monday to have reimbursed ISU for any trips with a debatable business purpose, we have no idea how many times he used airplanes inappropriately, because:

2. Auditors did not account for Cirrus flights recorded only on Leath’s personal log.

The report buried this critically important passage in the middle of a long paragraph on page 4 (emphasis added):

Flight Service did not maintain flight records for the Cirrus. Therefore, the flight records provided by [the tracking data service] FlightAware were relied upon for the Cirrus, however, these records may not have identified all flights in the Cirrus and do not identify passengers. Based on the manner in which the aircraft was flown, FlightAware may not have been able to track all flights. When an aircraft is flown using instrumentation flight rules, the aircraft is directed by air traffic control, so FlightAware likely has a record of the flight. When an aircraft is flown using visualization flight rules, there is no contact with air traffic control and there may not be a record of the flight available. FlightAware may not have captured flights in the Cirrus when it was flown using visualization flight rules. The pilot was determined by reviewing individual pilot logs.

So, speaking hypothetically, if Leath used visualization flight rules to fly himself and his wife to Owatonna, Minnesota for breakfast and back in the Cirrus, that trip would not be listed in FlightAware logs and therefore not included among the 76 flights internal auditors tallied for the small plane since 2014.

ISU policy and state law prohibit “any state employee from using, or permitting any other person to use, property owned by the state or any subdivision or agency of the state for any private purpose or for personal gain.”

The regents voted unanimously in October for an audit of every flight taken on an ISU airplane since Leath became president. Rastetter said at the time, “We at the Board of Regents take the use of university resources very seriously. In more than just a few instances, the decision to use the plane appears to be questionable at best.”

Stewart’s team was able to view Leath’s personal pilot log (page 4). Why are the regents satisfied with a report leaning on excuses about FlightAware’s limitations? Auditors should have done their job and compiled a full record of Leath’s Cirrus use, revealing any flights on his log that were not also found through FlightAware.

Given the gaps and inconsistencies in Cirrus data ISU has posted, someone with investigative authority needs to obtain and thoroughly review Leath’s pilot log.

I had hoped State Auditor Mary Mosiman’s staff would be up to that task. However, Vanessa Miller reported for the Cedar Rapids Gazette on December 12,

The state auditor also has said she is looking into ISU Flight Services, but Leath and Rastetter said Monday she was awaiting results from the board’s report and hasn’t been in touch with Leath about a second audit.

Mosiman’s chief of staff and legal counsel, Bernardo Granwehr, responded to my inquiry, “Our Office cannot comment or respond to specific questions while we are engaged in our audit work. Any findings and recommendations will be included in our annual report of recommendations, which is typically issued in the Summer of each year.”

In other words, Ryan Foley reported for the Associated Press, Mosiman’s staff will conduct no special review of airplane use at Iowa State University.

The State Auditor’s Office makes time for many small-scale investigations of embezzlement or improper allocation of resources. When it comes to a major public institution, where more money is at stake and several laws may have been broken, Iowans have to settle for a few paragraphs in next year’s annual report.

It strikes me as very unlucky that Mosiman spent ten years as the Story County auditor. Anyone with deep roots in Ames presumably has a lot of ISU connections and may be more influenced by pressure to back off.

Someone who doesn’t report to the Board of Regents needs to check Leath’s pilot log for personal flights that have not been recorded elsewhere. Only a government official would be able to gain access. Assistant Iowa Attorney General Rob Sand was forced to end his investigation into the ISU airplane scandal, because his supervisors said criminal investigations are a matter for police, and the Attorney General’s Office “doesn’t have jurisdiction to bring charges unless a case is referred by a county prosecutor.” The Story County attorney wants no part of investigating Leath.

In theory, Iowa House or Senate committee chairs could hold hearings and obtain documents, but don’t bet on Republicans who control both chambers approving any scrutiny of high-level conduct at ISU. For what it’s worth, GOP State Senator Amy Sinclair will lead the Education Committee and Senator Mike Breitbach the Government Oversight Committee. In the Iowa House, GOP State Representative Walt Rogers will lead the Education Committee and Representative Bobby Kaufmann the Government Oversight Committee.

Several other angles scream for further investigation.

3. The audit glossed over multiple trips wrongly ascribed to fundraising work.

Auditors examined 181 King Air or Cirrus trips “on which the University President was the pilot or a passenger […] and a business purpose for the trip was obtained.” (page 5) Records listed donor relations or outreach as the purpose for 62 of those trips. However, ISU Foundation records reflected details of a donor visit for only 38 of those trips. For another seventeen trips, “the Foundation was aware of the individual [being solicited], but no records could be provided specific to the trip in question.” The audit noted,

There were seven trips in which the ISU Foundation did not have any records. Four of those trips were identified as sporting events in which the University President would have a business purpose to attend the event regardless of meetings with donors. The three remaining trips could not be validated by ISU Foundation records.

Hang on–you’re telling us the foundation can’t back up seven trips Leath claimed were for donor outreach. How much did those trips cost? Where did the president fly, and how many times did he bring along friends and hunting buddies who weren’t donors? The audit is silent.

Leath loves to talk about his fundraising success and cares enough about that part of his job to have dumped two foundation presidents. If he did any donor work on those trips, the foundation should have a record of the visit or at least the prospect’s name.

As for those four sporting events, was one of them by chance the March 11, 2016 outing to the Big 12 basketball tournament after ISU had been eliminated? Even if all four were actual Cyclones games, Leath wouldn’t have been entitled to give non-donor friends a ride on ISU’s dime.

ISU has shielded non-employee King Air passenger names from the public, using a bogus excuse. The auditors had access to all internal records and should have told the Board of Regents how much was spent on trips with no donor relations component.

Here’s an opportunity for State Auditor Mosiman’s staff to rethink their decision not to conduct a special investigation of ISU’s Flight Service. It’s a safe bet these seven unaccounted-for trips were more costly than some of the misconduct leading to full reports on small-town clerks or county sheriffs.

4. The audit contained an incomplete assessment of Leath’s trips to Rochester, Minnesota.

The following passage appears on page 6:

Between May 2013 and August 2016, a university-owned aircraft or university resources were utilized to transport the University President to Rochester, MN seven times. The University President stated that on three occasions the sole purpose of the trip was a medical appointment, but the use of Flight Service was necessary for him to return to campus to meet university obligations. The University President’s employment contract does not address the necessity or requirement for an annual physical, nor does it address whether any associated travel expenses would be covered by the university for medical appointments.

Records linked here do not show any Flight Service trips to Rochester in 2013 and 2014, so I can’t verify how many times Leath went to the Mayo Clinic during those years. Currently available records for 2015 show King Air round trips from Ames to Rochester on July 23, July 29, and July 30. According to the AP’s Foley, billing records ISU pulled down after the airplane scandal broke also showed a July 20 round trip. The King Air records show more round trips carrying Leath and his wife to Rochester on October 13 and October 15, 2015.

ISU’s King Air made two more round trips to Rochester in 2016: on March 8 (Leath alone) and on August 23 (both Leaths). The partial Cirrus log shows another round trip to Rochester on August 25 of this year.

I count nine Flight Service trips to Rochester in 2015 and 2016 alone. The appointment schedule isn’t consistent with the audit’s reference to annual physicals.

Of the $19,113.08 Leath paid recently to reimburse ISU, $3,796.80 covered trips to Rochester. Here’s how he explained the decision in his December 12 statement to the regents:

I have also paid for two trips when I used university planes to go to Mayo for medical visits. At the time, I believed it was appropriate because I had to get back to Ames for important university commitments. Even though this was within policy, I told [Regents Executive] Director [Bob] Donley that I would feel more comfortable if I paid for those flights myself–which I have done.

“Within policy” is a stretch, since ISU has no policy on covering travel for the president’s medical care. The auditors recommended that the Board of Regents adopt guidelines and add clarifying language to the president’s employment contract.

I asked Landolt why the audit mentioned “three occasions” on which “the sole purpose of the trip was a medical appointment,” while Leath described “two trips when I used university planes to go to Mayo for medical visits.” From her December 13 reply:

As the audit states, a university-owned aircraft or university resources were utilized to transport President Leath to Rochester, MN seven times.

On three occasions (which is actually two trips) the sole purpose was for a medical appointment. The wording in the audit is likely confusing because two of the “occasions” are actually considered “one trip” – that is the university plane flew President Leath to Mayo for a medical procedure (one occasion), then the plane returned a few days later to pick up President Leath and fly him back to Ames (second occasion). The third occasion was up one day and back the next. The President paid for all three occasions (two trips). Both trips occurred in July 2015.

The other four occasions included medical appointments and donor/outreach meetings.

Each July 2015 King Air round trip to Rochester cost $1,265.60, according to ISU’s billing records. Leath’s $3,796.80 reimbursement covers the July 23, 29, and 30 trips, but not the July 20 flight that took him to Mayo and has since disappeared from public view.

Leath owes ISU another $1,265.60 for that leg of the first trip.

Landolt later said the flights to Rochester on October 13 and 15, 2015, and on August 23 and 25, 2016 similarly describe one trip each. Planes dropped off the Leaths in Rochester one day and brought them back to Ames two days later.

The King Air records don’t show how long the plane was on the ground in Rochester on March 8, 2016, so it’s impossible to know whether Leath had time for a business meeting as well as a medical appointment before returning to Ames the same day.

Now we’re getting into awkward territory. Leath traveled to Mayo twice for medical reasons soon after his July 14, 2015 hard landing in the Cirrus. As Ditchwalk was first to point out, the travel dates to Rochester suggest periodic follow-ups (3 months, 8 months, a year) on whatever condition was being evaluated or treated in July 2015.

ISU has said on many occasions, starting with this September 23 press release, that “There were no injuries resulting from the landing.” Landolt told me again this week, “there were no injuries sustained in the hard landing, and therefore, none of the trips to Mayo had anything to do with the hard landing.”

Federal law defines “incident” and “accident” differently, for purposes of the National Transportation Safety Board (NTSB) and Federal Aviation Administration (FAA).

Aircraft accident: An occurrence associated with the operation of an aircraft which takes place between the time any person boards the aircraft with the intention of flight and all such persons have disembarked, and in which any person (either inside or outside the aircraft) suffers death or serious injury, or in which the aircraft receives substantial damage.

Aircraft incident: An occurrence other than an accident that affects or could affect the safety of operations.

In this analysis for aviation maintenance professionals, aviation attorney and private pilot Lori Edwards went over factors to consider in determining whether an event qualifies as an incident or an accident. Professionals need to be precise, because all aircraft “accidents must be reported to the National Transportation Safety Board,” and accidents may result in more serious repercussions for pilots, air traffic controllers, or mechanics than incidents. Edwards noted,

While a maintenance professional may be in a good position to determine whether or not an aircraft has sustained “substantial damage,” determining whether or not there has been a “serious injury” may be more difficult. With the various patient privacy laws in place these days, obtaining information about an injured passenger or crew member could be a daunting task.

ISU’s September 23 press release stated, “The FAA was also informed of the matter and did not consider it as an accident pursuant to FAA regulations.” The “frequently asked questions” page ISU created in October states, “President Leath immediately contacted the control tower and ISU Flight Service and subsequently the FAA.” If he had been injured, an accident report to the NTSB would have been required.

The internal audit does not show whether anyone confirmed that Leath’s medical trips in July 2015 were unrelated to the hard landing.

For whatever reason, auditors failed to realize that getting Leath to and from Rochester that month required four King Air round trips, not three, costing ISU $5,062.40, not $3,796.80. The discrepancy doesn’t inspire confidence in the work of Stewart’s team.

5. The audit failed to calculate extra costs associated with unnecessary landings at Elmira Corning.

The smallest piece of Leath’s $19,113.08 recent reimbursement to ISU was $741.28 to cover March 2014 stops at the Elmira Corning airport in Horseheads, New York. Here’s how he addressed the controversy in his statement to the regents:

In hindsight, even though there was no additional cost incurred by the university, I understand why inviting my brother and his partner on the plane could be perceived as inappropriate. As a result, I have paid for the amount that Flight Service would have attributed to my brother and his partner.

This trip happened in ISU’s old King Air 200, for which billing records are not posted. Leath’s payment of $741.28 may represent charges per nautical mile for King Air passengers on the short hops between Elmira Corning and Teterboro, New Jersey.

The audit discussed the same events on page 6.

In March 2014, the university aircraft stopped in Elmira, NY en route to the NCAA basketball tournament. During the stop in Elmira, the University President’s brother and sister-in-law boarded the aircraft. Flight Service scheduled a refueling stop in Elmira in advance of the trip. A return stop in Elmira would not have been necessary other than to drop off passengers.

Working part-time on this post for about a week, I was able to demonstrate that:

• The King Air’s fuel capacity is sufficient to fly from Ames to the New York metro area without refueling en route, so the stop was unnecessary in either direction;
• Contrary to the narrative pushed by Leath and ISU staff, the professional pilots would have had no reason to choose Elmira Corning if they had independently selected a place to refuel between Ames and Teterboro;
• Fuel costs were higher at Elmira Corning than at several other nearby airports;
• ISU could have avoided ramp fees at Teterboro by refueling there; and
• Unnecessary landings and take-offs waste fuel, because planes run more efficiently at cruising altitude.

Stewart and six other people spent a month and a half preparing this audit. They were able to interview the professional pilots as well as Leath.

Who decided Flight Service would schedule a refueling stop at a convenient location for Leath’s relatives? The audit didn’t say. If the president made that call, he put state property to personal use and incurred costs the Internal Revenue Service might consider an “excess benefit transaction” by the ISU Foundation.

The audit didn’t mention any expenses associated with stops that benefited Leath’s family. Those costs must have substantially exceeded $741.28. Board of Regents spokesperson Lehman confirmed by e-mail: “Internal audit did not determine specific costs related to making the extra stops in Elmira.”

They didn’t even try.

By sidestepping those issues, Stewart’s team allowed Leath to cling to fictions in his December 12 statement: “there was no additional cost incurred by the university”; “As the preliminary audit showed, and the comprehensive audit has now confirmed, I did not violate any policy or break any laws.” Let’s get real: only one person could have told pilots to make the return stop that “would not have been necessary other than to drop off passengers.”

Incidentally, now that ISU is routinely concealing King Air passenger names, nothing would prevent Leath from bringing his relatives on future trips.

6. Auditors submitted an inaccurate account of Leath’s charter flights.

The audit discussed four charter flights Leath has taken (page 7). Two flights with a combined reported cost of $25,561 brought the president back to Ames after commercial flights from Washington, DC were either delayed or canceled in June 2015 and June 2016. Two other charter flights cost a total of $9,231; one took Leath and other passengers to a July 2014 board meeting in Moline, Illinois, the other took a group to a November 2015 basketball game in Sioux Falls, South Dakota.

Auditors recommended that the Board of Regents “consider developing a policy with guidelines regarding the use of chartered aircraft.” ISU’s policy on “cost-efficient” travel envisions commercial flights and says nothing about circumstances that justify a charter. But by any standard, $25,000 is a lot to pay for two one-way flights from Washington. Moline is just under 190 miles from Ames, a roughly three-hour drive. Sioux Falls is about 255 miles from Ames, so driving Leath’s group would have taken about four and a half hours each way.

A bigger red flag: auditors missed at least three of Leath’s chartered flights and incorrectly reported the cost of the charters they mentioned.

Weeks ago, I requested records relating to Leath’s travel by private charter. Although ISU received my payment for those documents on November 28, and initially estimated the request would take 3.5 hours to fulfill, the university didn’t send me the records until shortly before the Board of Regents met on December 12. ISU staff denied any intentional delay–“Potentially responsive documents are maintained in several different offices.” At the end of this post, I’ve embedded the file–a whopping twelve pages long.

Documents show seven charters:

• A trip to Virginia on July 19, 2012, costing $13,698.25
• A trip to Moline on August 23, 2012, costing $5,695.60
• A trip to Minneapolis on August 31, 2012, costing $5,158.34
• A trip to Moline on July 22, 2014, costing $5,028.00
• A flight back from Washington, DC on June 18, 2015, costing $12,000
• A trip to Sioux Falls on November 13, 2015, costing $4,203
• A flight back from Washington, DC on June 21, 2016, costing $14,781.25

The internal audit missed the first three trips, which cost a combined $24,552.19.

The auditors accurately summed up the cost of 2014 and 2015 chapters to Moline and Sioux Falls ($9,213) but reported the two Washington charters as costing $25,561. The records indicate ISU paid $26,781.25 (pages 10 and 12 of the document embedded at the end of this post). Auditors appear to have reached the incorrect sum by missing a $189 charge on page 10 and an “additional tax charge” of $1,031.25 on page 12.

Landolt provided further explanation of the charters:

1. July 18-19, 2012: ISU Foundation arranged travel for a corporate visit to Smithfield Foods on July 18; President Leath traveled on to Washington, DC to testify in the HELP Committee Hearing: “Making College Affordability a Priority” at the invitation of President Obama on July 19. The ISU aircraft was down for maintenance.
2. August 23, 2012: ISU Foundation arranged travel for a corporate visit and meetings at John Deere and donor meetings to build relationships with key constituents in the area; President Leath also participated in a meeting with area state legislators. The ISU aircraft was at the factory for maintenance.
3. August 31, 2012: ISU Foundation arranged travel for scheduled visits with key foundation constituents for relationship building. The ISU aircraft was at the factory for maintenance.
4. July 22, 2014: Regularly scheduled meeting of the Cultivation Corridor Board of Directors hosted by John Deere in Moline, IL. The ISU aircraft was in Dallas, TX for Big 12 Football Media Day.
5. June 18, 2015: President Leath traveled commercially to Washington, DC to present the AAAA Riley Memorial Lecture, meet with members of the Iowa congressional delegation, participate in a series of media meetings, attend the meeting of the APLU Council of Presidents, and attend a board meeting of the University Innovation Alliance. His late evening return flight was delayed which meant he would miss his connection. Due to scheduled international travel less than 36 hours later and meetings the next day, use of a charter flight was necessary.
6. November 13, 2015: Attended the men’s basketball game vs Colorado in Sioux Falls, SD and interacted with 100’s of alumni and friends of ISU in attendance at the game. ISU aircraft was in use by Athletics for a Cross Country meet in Lawrence, KS.
7. June 21, 2016: President Leath traveled commercially to Washington, DC to attend the meeting of the APLU Council of Presidents and attend a board meeting of the University Innovation Alliance. Severe storms forced the cancellation of a number of flights, including his return flight, which was the last of the night. It was anticipated that flights would be unavailable for an estimated 24-48 hours due to rebooking of earlier cancelled flights. President Leath had to return to Ames to finalize the FY17 budget before his scheduled international travel that weekend, in addition to other university obligations. This required his return to campus earlier than commercial flights would have allowed.

As mentioned above, ISU has no policy on charter flights, so you can’t say Leath broke any rules here. But wow, that was a pricey trip to Virginia in July 2012. The group could have saved the university a lot of money by flying commercial to the Washington, DC area and renting a vehicle to take them to Smithfield.

The August 2012 charters cost ISU more than $5,000 a pop to reach cities within easy driving distance. Like Moline, Minneapolis is about a three-hour drive from Ames.

Why did the internal audit leave out the three chartered flights from 2012? Lehman told me, “The scope of the audit was ISU Flight Services and flights by university owned aircraft. Additionally, internal audit reported on charter flights they became aware of.”

I don’t understand why auditors would mention charters at all if they weren’t going to dig deep enough to report expenses accurately to the Board of Regents. Assuming ISU has sent me all the relevant records, we’re not talking about a large volume of material. The audit listed four charters, costing a combined $34,792. The seven charters for which I have documents cost a combined $60,546.34.

This supposedly comprehensive audit understated charter plane expenses by more than 40 percent.

For those who may be wondering, ISU staff told me Leath has never used a charter for international travel on university business.

7. The audit underplayed the number of times Leath flew on the King Air alone or with only his wife.

Auditors catalogued 44 trips Leath took on ISU’s old King Air 200 and 65 trips on the King Air 350. From page 5:

Analysis of passenger lists provided by Flight service for the King Air 200 showed the University President as the only passenger on 12 of the 44 trips. On another five of the 44 trips the only passengers were the University President and his spouse. An additional trip included the University President, his spouse, and other family members. Analysis of passenger lists of the King Air 350 showed the University President as the only passenger on nine of the 65 trips. An additional 17 trips included the University President and his spouse as the only passengers.

To sum up: the auditors counted 21 King Air trips where Leath was the only passenger, 22 trips where Leath and his wife were the only passengers, and one trip (with infamous stops at Elmira) where Leath, his wife, his brother, and his sister-in-law were the only passengers.

According to the internal audit, Leath or his relatives were the only passengers on 44 of the 109 trips Leath has taken in the King Air. That’s a large proportion, considering Leath told the Iowa State Daily in early October, “I mean it’s not like I just took it [the King Air] by myself, except very rarely. I can’t say I’ve never been on it alone or just with my wife. But most of those trips had other people on them.”

The number of days the King Air transported only Leaths exceeds the number of trips listed in the audit. As described above, ISU’s pilots flew the King Air round trip between Ames and Rochester four times in July 2015. However, auditors appear to be counting those flights as just two trips, because Leath traveled to Mayo and back twice that month. Similarly, the two King Air round trips to Rochester in October 2015 seem to be counted as one trip by Steven and Janet Leath.

ISU didn’t link to King Air 200 trip records on its FAQ page, but using the available records for the King Air 350 from April 2014 to September 2016, Ditchwalk counted 40 daily invoices for trips with only Steven Leath and/or Janet Leath as passengers, at a combined cost of $122,048.08.

You can check his work: four trips in 2014, 21 trips in 2015, 15 trips in 2016.

The internal audit did not tabulate the cost of King Air flights with no passengers other than Leath or his wife. Nor did auditors say whether any of those trips were among the seven for which the ISU Foundation had no records supporting the stated business purpose of “donor relations/outreach” (see point 3 above).

8. The audit gave Leath a pass on concealing his hard landing from ISU’s Office of Risk Management.

Did you ever notice how gutless bureaucrats and politicians use passive voice to evade accountability? Here’s some classic “mistakes were made” phrasing (page 8):

The ISU Office of Risk Management was not notified at the time of the hard landing. If the Office of Risk Management had been informed, the insurance carrier would have been notified immediately to record the date of the event, regardless of whether an insurance claim was to be filed. The Office of Risk Management was also not consulted or involved in the decision to not file an insurance claim regarding the damages sustained. The business reason provided for not filing the claim was that it was less expensive to absorb the costs rather than risk insurance premium rates increasing. However, there was no supporting documentation provided to detail the cost analysis to justify the business decision.

ISU’s Insurance, Buildings, and Property policy states, “all losses or damage to university property must be reported to the Office of Risk Management.”

Audit Recommendation – The Office of Risk Management should be contacted when university property is damaged and consulted as part of any analysis as to whether or not an insurance claim should be filed. Final decisions should be documented along with the calculations of the business case to support those decisions.

Who didn’t notify the Office of Risk Management? Who didn’t inform the insurance carrier promptly? Who didn’t involve the Office of Risk Management in deciding whether to file an insurance claim? Who didn’t have staff conduct a cost analysis before making that decision? Who didn’t document the reasons for not filing an insurance claim? Who didn’t comply with ISU’s Insurance, Buildings, and Property policy?

The same person who didn’t tell any members of the Board of Regents about his hard landing before the board voted to extend his contract.

The politically correct wording in the audit enabled Leath. He sat before the regents on Monday and said with a straight face, “As the preliminary audit showed, and the comprehensive audit has now confirmed, I did not violate any policy or break any laws.”

9. The audit gave Leath a pass on omitting relevant facts from ISU’s aviation insurance application.

Speaking of not informing insurance carriers, Foley reported for the AP last month that Leath and ISU had been less than forthcoming about a 2014 hard landing, which happened while the president was flying a plane not owned by ISU:

The pilot history form signed by Leath [as part of ISU’s 2016 aviation insurance application] asked him to disclose details of all prior accidents and incidents as a pilot, including dates, and warned that concealing material information was “a fraudulent insurance act” subject to criminal and civil penalties.

He listed the 2015 landing in Illinois, noting that it triggered a Federal Aviation Administration test ride that he passed. But he left off the 2014 incident. The university also attested in the application that it had no “aviation losses” during the last three years, even though the 2015 accident would have qualified and it had divulged the 2014 landing as a loss the previous year.

The audit briefly noted (page 8) that ISU switched insurance providers in February 2016 to obtain “a lower premium with better coverage,” adding,

The pilot history form completed by the University President in February 2015 as part of the insurance coverage renewal included details of a hard landing in August 2014. Subsequently, the same form completed again in February 2016 included details of a hard landing in July 2015 but not the hard landing in August 2014. The underwriter for Catlin reviewed the forms for both years and confirmed there is no problem with the information provided on these forms and the carrier would continue to provide aviation insurance for the University President as a pilot if asked to do so.

Thus ended that section of the report, not indicating whether anyone asked the underwriter about ISU’s incomplete reporting of aviation losses.

Leath is fortunate Catlin’s representative apparently viewed this set of facts sympathetically. His error could have exposed the university to massive liability. Insurance companies often cite failure to disclose information on an application as grounds to deny a claim or cancel coverage. Such language appears on page 17 of ISU’s current aviation insurance policy:

21. FRAUD OR MISREPRESENTATION. This policy will be void if you have concealed or misrepresented any material fact or circumstance concerning this insurance or if you have sworn falsely touching any matter related to this insurance or the subject thereof, whether before or after a loss.

10. The audit did not examine Leath’s flying lessons from Jim Kurtenbach.

Auditors found more than two-thirds (52) of the 76 recorded Cirrus flights had a stated business purpose of “proficiency/training or certification” (page 8). Leath worked on his instrument training in late 2014 with Jim Kurtenbach, who did not charge the president for the lessons.

During the same period, ISU “scrapped a planned national search and announced that Kurtenbach, a former ISU associate dean, would return as interim vice president and chief information officer.” After about a year and a half in an interim role, Kurtenbach landed the high-paying job on a permanent basis. Leath waived the requirement that the university advertise the position and conduct an open search.

Leath has claimed Kurtenbach did him no special favors, since he “normally does not charge or accept any money for his lessons.” ISU officials likewise deny the flying lessons had any connection to Kurtenbach’s career advancement. But under ISU’s gift policy and Iowa gift law, it may not matter whether Leath did anything concrete for Kurtenbach in exchange for helping him become certified to pilot the Cirrus.

From the university’s policy manual:

Employees of the University and the immediate family members shall not, directly or indirectly, solicit, accept, or receive from any one donor in any one-calendar day, a gift as defined below. […]

A gift is a rendering of money, property, services, discount, loan forgiveness, payment of indebtedness, or anything else of value in return for which legal consideration of equal or greater value is not given and received, if the donor is in any of the following categories:

• Donor is doing or seeking to do business of any kind with the Board of Regents, State of Iowa or an institution it governs.
• Donor is engaged in activities that are regulated or controlled by the Board of Regents, State of Iowa or an institution it governs.
• Donor has interest that may be substantially and materially affected, in a manner distinguishable from the public generally, by the performance or nonperformance of the official duty of the Board or any of the Board’s employees. […]

Iowa law defines a gift as “a rendering of anything of value in return for which legal consideration of equal or greater value is not given and received” and further stipulates,

24. “Restricted donor” means a person who is in any of the following categories:
a. Is or is seeking to be a party to any one or any combination of sales, purchases, leases, or contracts to, from, or with the agency in which the donee holds office or is employed.
b. Will personally be, or is the agent of a person who will be, directly and substantially affected financially by the performance or nonperformance of the donee’s official duty in a way that is greater than the effect on the public generally or on a substantial class of persons to which the person belongs as a member of a profession, occupation, industry, or region. […]

Stewart emphasized during his December 12 presentation to the regents that the Internal Audit department does not make determinations about violations of the law. Even so, auditors could have commented on an apparent conflict with ISU’s gift policy when Leath accepted for free flying lessons worth hundreds of dollars. Remember, the Board of Regents asked for a comprehensive review of university-owned aircraft usage during the past five years (page 4). Kurtenbach’s generosity is part of that story.

Someone with investigative power should look into Leath’s compliance with gift law.

11. The audit did not say whether Leath followed university policy on transporting weapons.

Bleeding Heartland was first to report that Leath and other passengers on various hunting trips appear to have violated ISU policy requiring written authorization before transporting firearms or archery equipment. In response, university officials “asked the Board of Regents to expand its internal audit” to consider this issue, then cited the pending audit as an excuse not to answer further questions. Stewart told the board on December 12 that because the Flight Service audit was already covering so much ground, his staff opted to conduct a separate review of the weapons policy. Board members should receive that report at their February 2017 meeting.

Nothing surprised me more during Monday’s meeting than hearing Leath say this:

With regard to the weapons policy–it is my understanding that General Counsel provided a report to the audit team. When I first became president, I sought advice from then-university counsel on the storage and transport of firearms, and I fully complied with that guidance which included an inspection by the Chief of Police.

ISU officials didn’t bring up any such legal advice when I sought documents including any requests by Leath for authorization to transport hunting gear on university aircraft. I don’t see how an in-house attorney could give Leath permission not to follow ISU’s unambiguous policy: “The unauthorized transportation, use, or storage of any firearms, weapons and/or explosives is prohibited. In extenuating circumstances, a request for authorization for transporting firearms, weapons and/or explosives must be submitted in writing and approved by the office of risk management or department of public safety.” I am seeking further information on the alleged guidance from former university counsel.

12. The audit did not mention ISU’s actions regarding its hangar at the Ames airport.

Two sentences on page 7 referred to five airplane rentals from Haverkamp Properties before ISU purchased the Cirrus in the summer of 2014: “The rental was for university business and the total cost was $3,192.” The short paragraph has a CYA feel and reads like someone slotted it in at the last minute after Foley reported on December 1, “Iowa State University spent up to $225 per hour to rent an airplane for President Steven Leath to fly himself to meetings on multiple occasions even as an older school plane that he piloted sat unused.”

The audit seemed to justify the rental (“for university business”) and did not calculate the extra expense of renting Haverkamp’s plane when Leath could have used ISU’s own Piper Warrior.

Internal auditors either did not ask Leath or did not report whether the president’s August 2014 hard landing occurred in Brent Haverkamp’s plane. (ISU staff refused to provide that information to Foley.)

A few months after Leath stopped renting Haverkamp’s plane, ISU “evicted a longtime tenant” from its hangar at the Ames airport, then signed a deal under which Haverkamp and a partner would be able to store their planes rent-free for five and a half years in exchange for funding $40,000 in hangar renovations.

Was it in ISU’s interest to stop leasing its hangar to the company that had used it since 1997? Or was Leath doing a favor for a friend who shared his love of flying and (perhaps) held no grudge over damage done in the August 2014 hard landing? Although the Board of Regents oversees facilities at the state universities, the audit did not call board members’ attention to a decision that may have been unduly influenced by Leath’s airplane use.

Final thoughts

I’m embarrassed for the seven staff members who signed the Flight Service audit. Most of the group assigned to this important task didn’t determine the audit’s scope and didn’t have editorial control over the final product. This report probably doesn’t reflect their best work, but it may be their most memorable contribution to the Board of Regents.

I’m disappointed State Auditor Mosiman hasn’t grasped the need to specially investigate possible wrongdoing at ISU. The legislative auditor for our neighbor to the north doesn’t hesitate to take on powerful political figures. I remember when Iowa’s Republican State Auditor Richard Johnson stood up to Governor Terry Branstad, shining a light on inconvenient truths.

I’m discouraged Story County Attorney Reynolds was eager to pass the buck on the March 12, 2016 flights and “didn’t see any reason to investigate further” after the Iowa Attorney General’s Office forced one of its attorneys to stop looking into ISU’s airplane usage. I hope the Story County sheriff or Iowa Department of Criminal Investigation will take some initiative.

I’m sorry a sudden illness prevented Regent Subhash Sahai from attending the December 12 board meeting. Of the nine regents, only Sahai seems to take his oversight responsibilities seriously. He immediately understood the gravity of the airplane scandal and demanded more information, whereas Rastetter’s first instinct was to ask Leath’s office for talking points. This audit might not have happened if Sahai hadn’t warned board leaders, “We are being perceived as neglectful of our obligations.” He told the AP this week, an “external audit would have been much more helpful.”

I’m frustrated that most of the regents seem content with a report that pulled so many punches. I’m bewildered that people who “scolded” former University of Iowa President Sally Mason for not telling them right away about an interview gaffe don’t care that Leath left them in the dark about his plane troubles.

I’m angry that regents let Leath get away with outrageous spin on Monday: “As the preliminary audit showed, and the comprehensive audit has now confirmed, I did not violate any policy or break any laws.” Even this deeply flawed report pointed to unsubstantiated “donor relations” trips, unnecessary refueling stops, using planes for personal benefit, and failure to inform the Office of Risk Management about damaged university property.

I’m determined to keep asking questions.

Internal auditor’s report on ISU Flight Service and University Owned Aircraft (also available here or here):

Prepared statement by President Leath for the December 12, 2016 Board of Regents meeting. He stuck closely to this text when delivering the statement; any slight changes in his phrasing did not substantively alter the message.

The twelve pages of documents Iowa State University provided following my records request on chartered flights.

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