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A Kick in the Hindsight




A Kick in the Hindsight
A Kick in the Hindsight



http://www.pitch.com/Issues/2006-08-03/news/follow.html 

By David Martin 
Aug 3, 2006

An independent investigation prompted by a Pitch article has determined 
that the Kansas Technology Enterprise Corporation could have conducted a 
more thorough background review before it invested $500,000 in state money 
in Kozoru, an Overland Park company.

The Pitch reported that Kozoru founder John Flowers lied about his 
education when he applied for KTEC funding in 2004 ("A Million Little 
Pixels," May 4, 2006 [1]). Flowers claimed that he held graduate degrees 
from the University of California-Berkeley and the University of 
Texas-Austin. The Pitch found no record that Flowers attended either 
institution.

Flowers made other dubious claims. Kozoru's KTEC application stated that 
he helped create the original version of 777-FILM. Moviefone founder Russ 
Leatherman told the Pitch through a spokesman that he'd never heard of 
Flowers.

On May 4, the day the Pitch story appeared, KTEC announced that it hired 
the law firm of Gilmore & Bell to assess its investment process. KTEC is a 
state-owned corporation that spends lottery and racetrack proceeds on 
economic development.

According to a three-page memorandum released July 24, Gilmore & Bell 
determined that KTEC followed its procedures. Yet the evaluation faulted 
the agency for not conducting a more rigorous background check of Flowers. 
Investigators determined that KTEC staff relied heavily on second-hand 
information and skipped opportunities to speak with Flowers' references.

"With the benefit of hindsight," the report states, "it appears that this 
portion of the due diligence process for the Kozoru investment could have 
been more complete."

Gilmore & Bell did not propose substantial changes to the way KTEC 
conducts business, prompting KTEC officials to hail it as a validation. 
"We have and will continue to strive to develop an investment program with 
high professional standards," President and CEO Tracy Taylor said in a 
statement.

But KTEC, it turns out, did not want a sweeping investigation. The Gilmore 
& Bell memo spends two paragraphs describing the limits of the 
investigation. Most significantly, the lawyers did not evaluate the 
accuracy of the Pitch article or the information Flowers provided when he 
received funding.

Kevin Carr, KTEC's chief operating officer, declined to elaborate on the 
reasons that the evaluation was so narrow in scope. The report, he told 
the Pitch, speaks for itself.

[1] http://www.pitch.com/Issues/2006-05-04/news/feature_4.html 



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