EDWARDS and JUDY HODGSON
"MY USUAL PRACTICE IS TO BE BRIEF," Judge John Feeney warned those in court last week as he thumbed through the two-inch-thick file of defendant John Frederick Sterns prior to sentencing.
"The immediate financial damage has been quite substantial. Mr. Sterns clearly inflicted a great deal of damage."
However, the judge continued, that dollar figure -- $124,000 -- did not include the long-term harm to Humboldt State University's ability to raise funds in the future, the damage done to its integrity as an institution, personal damage to the lives of Sterns's coworkers, the reduced availability of scholarship funds for needy students and the diversion of hundreds of hours of staff time to untangle Sterns's web of deceit.
"It's impossible for any of us to quantify our deep feelings of betrayal and frustration," Feeney said directly to Sterns as Sterns stood clad in a jailhouse-orange jumpsuit handcuffed to a fellow inmate.
At one point even the prosecutor, Deputy District Attorney Rob Wade, thought the judge might send Sterns to state prison, which would have been highly unusual for a first-time offender with mental problems. (After his arrest last year Sterns was diagnosed with "schizoaffective disorder," characterized by severe mood swings and some of the psychotic symptoms of schizophrenia.)
After all, Sterns had no prior criminal record, had acknowledged his wrongdoing at an early stage -- immediately after his arrest -- and he had already begun to repay HSU.
In the end Feeney ordered Sterns to serve the maximum time allowable in the county jail -- 365 days -- and to pay restitution to HSU for its out-of-pocket losses (so far, Sterns has paid $46,000 of the $124,000 he owes the university). With credit for time served, Sterns is scheduled to be released as early as February, when he will begin five years of probation. The maximum sentence could have been eight years and four months in the much harsher environment of a state prison.
At least one HSU official recommended sterner punishment. Sean Kearns, director of university communications, said in a letter written in March that Sterns "should spend three years in prison, an amount of time roughly commensurate with his tenure at Humboldt State." Additionally, Kearns said Sterns "should be fined $300,000, roughly the equivalent of three years' pay and benefits he received."
For a look behind the sentencing of John Sterns, the Journal spent Monday in the Humboldt County Clerk's office with the same file folder Feeney used to reach his decision. Included with the preplea sentencing report were 25 letters in support of the defendant from friends, family, former co-workers and a college roommate. Also in the file were damning letters documenting damage from HSU co-workers and alumni. HSU President Alistair McCrone, on the record for the first time about the Sterns affair, wrote the court that, "The credibility of the fund-raising process and the University's ability to raise funds in the immediate future have been compromised." (The McCrone letter is available here as an Acrobat Reader PDF).
Here are some highlights from the Sterns file:
Long-term effects: "To put it bluntly our credibility is shot on both state and local levels. People have long memories, they won't forget what has been done by someone in such a prestigious position."
-- Gwynna Morris, past president of the CSU Alumni Council, member HSU Alumni Association.
Administrative foot-dragging: "While the impact to the campus has been documented, much of what is known has not been disclosed, and much of it will never be known. This is partly because the former vice president charged with dealing with it was loathe to acknowledge the depth of it."
-- Sean Kearns, director of University Communications, Humboldt State University.
Clean up: "The monetary repercussions have been calculated to date, but the long-term negative consequences are ongoing and will continue for years to come. We have been left to make the apologies and the corrections. We have been left to try to construct meaningful and honest relationships with the donors who gave in good faith and were dishonored in the misappropriation of their gifts."
-- Judith A. Wyland, Sterns's administrative assistant from September 1999 until his termination in March 2001.
Missed opportunity: "Behind smoke and mirrors, Sterns brought no significant funds to Humboldt State during a period when philanthropy in higher education across the nation was very robust. The losses represented by these missed opportunities during a boom period cannot be recovered. When the picking was ripest, Humboldt State was essentially absent."
-- Sean Kearns
The report and letters present a fuller picture of the man guilty of defrauding HSU, a man who engendered as much love and support from acquaintances as he did animosity and loathing from his co-workers.
"I fully believe that he is of criminal and evil mind and spirit and will continue to do more of the same if given the opportunity," wrote Mary Wells, HSU senior development officer. Yet Ruth Shapiro, who worked for Sterns at the Asia Foundation in San Francisco prior to his arrival at HSU in 1998, said in a letter to the court that "these actions are so out of character, that I can only believe his illness has had a terrible effect on him."
Since his removal Sterns has tried to make amends, working as a consultant for a family friend, going to counselling and taking medication.
There was one slip, though, last November. When he was applying for a new job he once again falsified information on his résumé -- more flagrantly than he did when originally applying for employment at HSU. His errors were caught, however, and Sterns entered into another round of counselling and medication for his illness, according to the court file.
Sterns's attorney, Marion Miller, speaking in court just prior to sentencing, said her client is a sick man, characterizing his behavior as not unlike "Dr. Jekyll and Mr. Hyde."
Since the Sterns case never went to trial, much of the information regarding exactly how he manipulated the system, deceived so many people for so long and kept his subordinates in line has not been made public. The Sterns file chronicles a pattern of behavior from 1998 to March 2001 where Sterns moved to consolidate control, punish insubordination, and advance himself personally. The file also reveals a serious lack of oversight on the part of his superiors -- HSU Vice President Don Christensen and ultimately President Alistair McCrone.
"How did Sterns do it?" writes Communications Director Kearns of his superior. "Two answers: 1. Very methodically. 2. He was allowed to do it."
Sterns dismantled the very structure of his own departments by insulating his subordinates from the rest of the university and browbeating those who stepped out of line or threatened his primacy.
"John Sterns did everything he could to make me leave, since I was one of few people who could reveal his wrongdoings," wrote Wells. "He made my work life miserable." She described how he had denied her status and pay commensurate to her ability, gave her gratuitous negative feedback on good work and restricted her access to information.
Other co-workers echoed Wells: "He is a mean-spirited and manipulative man," wrote Pamela Allen, the former HSU director of alumni relations who also worked under Sterns and eventually left the county for employment elsewhere.
He also elevated less qualified staff members so they'd be more likely to be at his "beck and call," and discontinued publication of the weekly faculty-staff newsletter and the alumni magazine, The Humboldt Stater leaving funds available to spend elsewhere.
According to a special audit ordered by the Chancellor's Office following Sterns's arrest last year, Sterns pocketed some of the money, mostly false travel reimbursements. The rest of the funds he shifted to other projects and purchases, increasing his own reputation as a fund-raiser and his popularity with the faculty for his ability to find money for equipment purchases.
"He presented himself as a wunderkind, falsifying reports, falsifying fund-raising levels, falsifying contracts with potential donors and speaking in circles that spiralled upward," wrote Kearns. "Perhaps because they thought he was making them look very good, the former vice president and president apparently were not inclined to question his actions seriously."
HSU was honored by the Council for Advancement and Support of Education, a national organization, in 1998 and 1999 for its fund-raising successes which were based on falsified reports filed by Sterns, claiming he had increased donations by 78 percent.
Although investigators said HSU officials cooperated during the investigation, the Sterns file suggests that cooperation may have been less than enthusiastic by Sterns's immediate supervisor, Christensen, who attempted to minimize damage to the university's public image. In one instance, Sterns emptied a scholarship fund, which was established by a retired professor, of $10,000. It was quietly replenished from other discretionary funds by Christensen and the professor was never notified.
Once it was realized that funds had been misappropriated, attempts were made to fix things. Kearns, in his letter, said, "The university was left having to shunt funds repeatedly from one account to another to cover the extravagances and deceptions of Sterns." There has never been any evidence that top university officials, to protect their own reputations, tried to cover-up Sterns's misdeeds.
In the end, after Sterns's confessions -- "a defense attorney's nightmare," according to probation officer Angie Circe, who prepared the preplea report for the court -- the university was left on shaky ground; Sterns was left in debt and in jail.
It was clear Judge Feeney struggled with his decision, weighing the defendant's lack of criminal history and his documented mental illness against the damage caused by his activities. It was also clear that the judge was moved by the passionate and revealing letters that asked that Sterns be sent to prison.
"I believe John is morally bankrupt," wrote Wyland. "His charm and intelligence must not be a barrier to the consequences of his crimes. He should be barred from having any job that employs holding the public trust."
Radio Station KHSU survives
THE CRIMINAL ACTIVITY OF JOHN STERNS wreaked havoc not only with the university funds, but with the long-term viability of auxiliary university programs consolidated under Sterns' control during his tenure. One program, radio station KHSU, the campus affiliate of the Corporation for Public Broadcasting and National Public Radio, was particularly hard hit.
When Sterns came on board he replaced Roger L. Hawkins, a Eureka accountant who had been performing financial audits for the station, with one from San Francisco. That accountant never existed. Sterns himself created the facts and figures and gained access to funds that he alone controlled.
In one instance, the court file revealed that $7,600 of fictitious travel expenses paid to Sterns came out of the KHSU general fund.
After Sterns was indicted, Hawkins was rehired to audit and to reconstruct the books Sterns had fabricated. The cost was more than $50,000 above and beyond the estimated $11,000 in lost staff time and miscellaneous expenses.
"In short, KHSU's ability to carry out our mission of serving the community is severely hobbled by our funding problems and the administrative wreckage around us," wrote Terry Green, KHSU station manager, in a letter to the court regarding Sterns.
The station had to lay off three of its seven full-time employees in the wake of the debacle.
"The fiscal uncertainty and atmosphere of anxiety and chaos resulting from Mr. Sterns's actions have been extremely demoralizing to KHSU's professional staff and volunteers," wrote Charles Horn, the station's development director.
Station officials had feared they would also lose or have to repay critical public funding from the Corporation for Public Broadcasting. The corporation sent its own auditors to examine the books, but in the meantime those funds were not halted and the station is still broadcasting. (The audit found that despite Sterns's deceptions, he had not done as much damage to the station as he did to other parts of the university).
In a wave of sympathy from listeners, KHSU recently concluded a successful spate of fundraising, pulling in a combined $120,494 during the fall and spring drives.
"We were without federal funding for most of this year (because of Sterns) and our listeners really helped pull us through," said Charles Horn from his office in a phone interview.
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