LOS ANGELES (CN) - Alabama Gov. Robert Bentley and other "white Republicans" made a "political sweetheart deal" with an L.A.-based auditor that issued a report accusing liberal Alabama State University of conflicts of interest, mismanagement and waste, ASU claims in court.
Alabama State University sued Forensic Strategic Solutions in Superior Court, alleging negligent and intentional interference with actual and prospective economic relations.
Neither Alabama nor Bentley are parties to the lawsuit.
In the lawsuit, Alabama State notes that it is a center, in Alabama, of liberal politics and the study of civil rights, but that "white Republicans" dominate the Legislature.
Against this political backdrop, the ASU Board of Trustees decided in 2012 to replace the president of the university, the complaint states.
It continues: "The governor of the state and other white Republicans decided to use this event to take control of ASU and to prevent the trustees from exercising their lawful responsibilities. One tool the governor decided to use to accomplish this result was to select FSS to issue a so-called forensic audit report that would either negligently or intentionally interfere with the economic relations of the plaintiff."
Alabama State claims Alabama paid $650,000 to the auditor to conduct the forensic examination.
"Based upon the high dollar amount paid and the number of FSS employees assigned to the ASU audit, it appears this auditing contract can be reasonably characterized as a political sweetheart deal for FSS," the complaint states.
Forensic Strategic Solutions' 36-page report did not cite any evidence that money is missing from the more than $1.5 billion ASU received and spent during the 6-year audit period, the school claims.
It adds: "In other words, because FSS could not find anything directly wrong after reviewing $1.5 billion in managed funds, it simply concluded that ASU must be hiding something. A credible and qualified forensics auditing firm would have found, under the circumstances, that ASU had no stolen, missing, or unaccounted for funds during the audit review period and actually did nothing wrong."
Nor had previous audits ever uncovered any wrongdoing or mismanagement, the university claims.
Since 2008, Alabama State says, it has maintained a public website that records every check the school has written to vendors.
The auditor claimed that $2.5 million in contracts were issued with conflicts of interest - which ASU disputes - but adds that even if it were so, that constitutes less than 0.2 percent of the money handled during the audit period.
Forensic Strategic Solutions claimed that Trustee Marvin Wiggins, former Trustee Lawrence Lemak and Trustee Elton Dean issued contracts worth thousands of dollars to relatives. "However, nowhere in the report does it find that these trustees sought or received a personal benefit from the contracts listed," the lawsuit states.
Alabama State doubts the report's claim that Dean, a married man, was in relationship with a female vendor. "The rumor was made public by FSS and the governor in an apparent attempt to smear Dean's name and good character," the complaint states.
Moody's rating agency downgraded the school's bond rating last week from A3 from A2. The university laments the loss, claiming its rating was "one of the primary building tools the university has used to escape the suffocating effects of the State of Alabama's history of discrimination."
"ASU just completed a campus-wide construction program in excess of $300 million for new and renovated physical facilities," the complaint states. "The university was able to finance this expansion because of its excellent credit rating, which FFS has now undermined."
Alabama State's 17-page lawsuit takes more than a few swings at Alabama politics and at the auditor.
For instance: "(W)hite Republicans have become the dominant party in Alabama politics. In the election of 2012, every statewide election in Alabama was won by a white Republican, and a majority of the seats in both houses of the State Legislature were won by Republicans, all of whom are white.
"ASU recognized its need to be involved with the white Republican establishment in Alabama and in 2011, retained Luther Strange, who was then the leading Republican lobbyist in the State of Alabama. Mr. Strange served as a consultant for ASU until shortly before he became attorney general of the state. While ASU submits that the payments to Mr. Strange were entirely proper, it is of some note that FSS made no issue of the payments from ASU to Mr. Strange."
As for the auditor, Alabama State says: "FSS is a small forensic accounting firm with only four analysts, one office manager, and one outside 'consultant and technical advisor.' Prior to the ASU engagement, the firm admittedly has never conducted a forensics audit of a university. FSS either knew or reasonably should have known that it did not have the experience or adequate resources to perform an adequate and meaningful audit of a major institution of higher education like ASU when it assumed its responsibilities. Governor Bentley selected FSS for this forensic auditing contract in December 2012 without a formal bid process. Indeed, it appears from the result that FSS was selected by the governor of the State of Alabama to conduct the audit because FSS would produce the results desired by the governor. ...
"FSS is not ranked among 'Accounting Today's' Top 100 accounting firms for 2012 or 2013, many of which have forensics auditing departments and capabilities. In fact, the firm enjoys no national ranking by any forensics auditing professional association, organization or publication."
Alabama State seeks actual, compensatory and exemplary damages. Its lead counsel is by Kristin Libby with Whatley Kallas in Los Angeles.
Bentley's office said it had not seen the lawsuit.
Forensic Strategic Solutions did not immediately respond to a request for comment.
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