LAWRENCE — The allegations could fill Allen Fieldhouse — almost 20,000 tickets worth more than $1 million, skimmed for several years by several people within the University of Kansas athletic department.
KU officials say the scheme blindsided them. Donors and alumni say it outraged them. And investigators say KU's ticket operations, which operated like an "ice cream store," need an overhaul.
The internal investigation, commissioned and paid for by the athletic department, began two months ago after the Kansas City Star reported that a federal inquiry was focused on the possibility that KU men's basketball tickets had been taken and sold illegally.
Disclosed Wednesday in the final report was that five KU athletics staff members and a consultant sold or used at least 17,609 men's basketball game tickets and 2,181 football game tickets from 2005 through 2010. Forensic accountants calculated the total value of the ticket losses at about $1.03 million.
And with federal law enforcement officials still investigating, these revelations may be only the first wave.
"I would not be at all surprised if the government figures are much larger," said Jack Focht, the attorney who led the investigation. "The federal government has the power of the grand jury subpoena, the FBI, the IRS, everybody else. I had four or five attorneys and an audit team to look at records."
The results of the investigation by Wichita law firm Foulston Siefkin were enough to humble KU athletic director Lew Perkins, who said he had no knowledge of the alleged improprieties that occurred but acknowledged that he placed those at fault in a position to do harm.
"I accept responsibility, not for any criminal activity, but because I am the athletic director and it happened during my watch," Perkins said. "I thought we had just about every safeguard in place, but nobody picked up on it. I certainly didn't."
The six people identified in the report are:
* Rodney Jones, whom Perkins promoted to assistant athletics director for the Williams Fund in 2004
* Jones' boss, Ben Kirtland, whom Perkins hired in 2004 to be the head of fundraising for Kansas Athletics Inc. Kirtland had previously worked under Perkins at Connecticut.
* Charlette Blubaugh, whom Perkins hired in 2005. She rose to become associate athletics director of ticket operations.
* Brandon Simmons, whom Perkins hired in 2005. He rose to become assistant athletics director for sales and marketing.
* Jason Jeffries, whom Perkins promoted to assistant director of ticket operations in 2004
* Blubaugh's husband, Tom Blubaugh, who was allegedly approved by Kirtland to be a contracted consultant. The report indicated that Perkins was unaware of Blubaugh's presence on the payroll, despite Kansas Athletics paying him $115,000 from 2007 through 2010.
Spokespeople for the FBI, Internal Revenue Service and U.S. Attorney's Office in Kansas all declined to comment on the investigation.
The Kansas attorney general and the Douglas County District Attorney's Office confirmed they had received copies of the report, but spokespeople said federal prosecutors are taking the lead in the investigation and they would be involved only if asked for assistance.
Jones, Simmons, Kirtland and Charlette Blubaugh did not return phone calls Wednesday. Jeffries could not be reached for comment.
Kirtland is being represented by attorney Robin Fowler, who said he had not had a chance to study the KU report and had no immediate comment. Other lawyers representing some of those named in the report did not return calls seeking comment.
Investigators said they found no evidence that Williams Fund donations were stolen or compromised, nor did they find that donor points in the Priority Points System were manipulated.
KU Chancellor Bernadette Gray-Little and Perkins said they would implement immediate changes recommended by investigators as well as other safeguards to prevent future problems.
Wednesday's press conference — attended by Perkins, Gray-Little, university general counsel Jim Pottorff and Focht, —quickly turned into a discussion of Perkins' job security. Gray-Little, still in her first year as chancellor, was asked how Perkins could go "unscathed."
Perkins admitted that KU may have gotten complacent in recent years.
"Things were going so good," Perkins said. "Ticket sales were up, donations were up, we were winning conference championships, we were winning in football. I saw no red flags. None. Everything seemed to be adding up to a positive."
Perkins said he was first notified of possible problems in late 2009 when federal investigators told him they were investigating the illegal sales of tickets in 2001-03 — before Perkins had taken over as athletic director.
In March, federal agents contacted Nicole Corcoran, Perkins' chief of staff, and told her the IRS was focusing its investigation on Jones' activity from 2006 to the present. The agents were interested in tickets that had been moved to brokers.
During this time, Jones was placed on administrative leave by Perkins. The internal investigation of the operations of the ticket office and the Williams Fund began soon afterward.
The report alleged that Jones had hired a private investigator who contacted Blubaugh in an attempt to have her "work together" with Jones. Blubaugh, who had already resigned Feb. 3, told Perkins that she feared for her safety and said she had hired an attorney.
According to the report, Kirtland accused Jones of trying to convince him to implicate ticket office employee Kassie Liebsch.
Kirtland resigned on April 5, followed by Jones' resignation two weeks later. On April 30, KU announced that Simmons and Jeffries had resigned as well.
The report pointed to Kirtland and Blubaugh as creators of a culture "where the employees feel free to sample the wares without paying for them," and described Jones as "the man to see if you wanted a free ticket to athletic events." As all three were high-ranking officials, other employees felt they had no one to turn to and worried about possible retaliation if they spoke out.
Also mentioned in the report was Lawrence developer and convicted felon David R. Freeman, who reportedly spurred the federal criminal investigation. His broad ties to the KU athletic scene include personal and business relationships with Jones.
In April, Freeman was sentenced to 18 months in prison for bribing a former Junction City official. His attorney, Carl Cornwell, had argued that he should receive probation because of his cooperation with authorities in the KU ticket investigation. Cornwell had said it involved hundreds of thousands of dollars in undeclared cash transactions, going back many years and benefiting numerous people.
Multiple sources have said that Freeman for years has bragged about making a substantial amount of money from KU basketball tickets. All the sources asked for anonymity, saying that speaking publicly about the matter could affect longstanding friendships and business relationships, or could disrupt the criminal investigation.
Perkins said Wednesday that the former employees had taken advantage of a "blind spot" in his department's auditing process. The university's report provided some examples of exactly how the Priority Points System was subverted:
* Simmons and Jeffries sold over $200,000 worth of men's basketball tickets through brokers with Blubaugh's consent.
In one case, Jeffries said Blubaugh charged 20 to 30 seats to two accounts that the investigators determined to be phony. The last two years, Jeffries said he marked off 56 tickets, which Blubaugh took directly out of the vault. Jeffries gave the tickets to Simmons, who allegedly sold them to an Oklahoma ticket broker.
* Blubaugh told Simmons and Jeffries to move records about 2008-09 basketball tickets to Memorial Stadium, where she, Kirtland and her husband would "destroy" them. She then said when the records could not be found, they could blame it on construction at the stadium. The report said the records are missing.
* The ticketing software used by KU allowed general accounts to be opened without identifying the recipients of complimentary tickets. These accounts included names like "RJDD," which stood for Rodney Jones Donor Discretionary. Investigators found that $197,695 of men's basketball tickets from the RJDD account were sold to brokers. Blubaugh also took other steps to make tracking tickets in the software difficult.
* Jones allegedly established a quid pro quo with a landlord to receive an apartment at a reduced rated in exchange for priority points. The landlord contacted KU after Jones was put on leave and was told he had not been given the points.
* Blubaugh indicated by e-mail that she would give out eight free tickets to a KU-Kansas State football game after her neighbor had inquired about tickets.
* Kansas lost to Michigan State in the 2009 Sweet 16, and therefore had tickets available for the Elite Eight. Two ticket offices were opened — one run by Liebsch and the second by Blubaugh. The tickets were sold and Liebsch brought back to KU a bag containing $3,400 cash. Liebsch waited for Blubaugh to turn in her half of the cash, but Blubaugh allegedly did not.
It shouldn't be shocking that Perkins didn't know about the alleged illegal scheme, Focht said, because some of the best auditing firms in the country worked on KU athletic accounts and missed it as well.
"There is no question that our ticketing control, oversight and auditing had a blind spot," Perkins said. "We didn't see it coming. Those are all answers. They are not excuses."
As they now wait for the results of the federal investigation, university officials said Wednesday they planed to implement immediate changes to prevent future wrongdoing in their ticket operations. Among the recommendations in the report were:
* Strengthening internal controls for the handling and distribution of tickets. The new system would include clear segregation of duties within the ticket office, a "dual key" system for gaining access to the ticket inventory, a tracking system for complimentary tickets, monthly ticket reconciliation, and limiting employee access to the ticket management.
* Hiring a full-time auditor to monitor donations, tickets and travel.
* Establishing a hotline for whistleblowers.
* Enhancing transparency during basketball Select-a-Seat events, similar to the process recently implemented for football seat selection.
Perkins said he didn't foresee any NCAA violations resulting from the alleged scheme. Calls placed Wednesday to NCAA officials were not returned.
KU officials also emphasized that they would take legal action to recover the money lost, and would aim to recover their fans' trust, too.