Petrelis Files

The mainstream media, except for the Los Angeles Times which broke this story on July 31, has ignored the story of how the Department of Health and Human Services audited a federal grant to black gay AIDS expert Phill Wilson and discovered that $1 million had been mismanaged.

Following the example set by their mainstream counterparts, the gay and AIDS media have also failed to report on the audit and Wilson's role that brought it about.

Wilson, who usually has something to say to every reporter who calls him for a quote, has been unavailable for comment about the audit for almost a month.

Kudos to the University of Southern California's newspaper the Daily Trojan for investigating the audit and Wilson.

Now, if only gay, AIDS and mainstream media outlets would report on this we might get some answers from Wilson about how the federal grant was badly managed.
^^^




University and federal government dispute responsibility over failed AIDS research program. Audit recommends repayment of more than $1 million to the government.

By Zach Fox and James R. Koren
Published: Wednesday, August 18, 2004

The Department of Health and Human Services released a federal audit last month recommending that USC pay back more than $1 million in federal funds that were either misappropriated or poorly managed during a HIV/AIDS treatment educator training that was shut down in 2001.

The audit report states that the program failed to meet its primary goal of training peer treatment educators for minority communities, that money for the program was misspent and improperly accounted for, that USC failed to take care of the program's co-principal investigator's conflict of interest and that the program did research on human subjects without getting the necessary authorization.

The report said that the university made poor decisions in appointing personnel because Phill Wilson, the co-PI, had no experience in research, and the PI did not have experience with HIV/AIDS programs, was an associate librarian and did not actually participate in the program.

As a result, the report recommends that the university repay $1,024,308 of federal funds spent on the program.

The PI was Lynn Sipe, said Neil Sullivan, vice provost for research.

"The objectives were not accomplished primarily because USC used inexperienced personnel to implement critical aspects of the program," the report stated.

"I don't view that we assigned (them to the project). (HRSA) awarded a person they thought had the credentials," Sullivan said. "Lynn Sipe and Phill Wilson's credentials went in with their application. We don't assign them that, they do that on their own initiative."

Conflict of interest

Wilson had a conflict of interest since the research program subcontracted $500,898 worth of work to the African-American Aids Policy and Training Institute, a non-profit organization of which Wilson was the sole founder, director and president.

"Our people started having problems with this fellow, Phill Wilson," Sullivan said. "He's very aggressive, belligerent. He was a bad actor. He isn't the kind of guy that you want working on this project."


According to the audit, he was hired for the program at USC in January 2000, and the Health Resources and Services Administration, the granting agency, expressed concern about a conflict of interest in March 2000 at which point USC failed to take the proper steps to remedy the conflict.

The university does not play a role in hiring those in charge of any federally funded research projects, Sullivan said.

HRSA granted the federal funds for the program and asked HHS to perform an audit when HRSA shut down the program in July 2001 as a result of an on-site visit that raised concerns.

Currently, HRSA is doing their own review of the HHS audit report to see if it is appropriate, said Donald White, a spokesperson for HHS and the Office of Inspector General.

After HRSA expressed concern over the conflict of interest in March 2000, Wilson responded in October 2000 by resigning as president of AAAPTI but then took a role in the organization as chairman of the board and retained managerial responsibilities, the report said.

"Such a change appeared to be in name only," the report by HHS states.

Sullivan said that it was USC, not HRSA, who was the "whistleblower" on the conflict of interest. USC notified HRSA of the conflict of interest and HRSA said that they wanted the project to continue before they received evidence of the conflict, Sullivan said.

Even when HRSA had evidence of the problems within the program, they were slow to respond, Sullivan said.

"The feds (HRSA) weren't immediately responsive. We thought they would jump on this and shut off this guy's money and shut it down. They were really slow in responding to this. That more than anything caused this thing to continue longer than I think it should have," Sullivan said.

Wilson continued to manage AAAPTI, a violation of federal regulations, and it was the university that was responsible for ensuring regulations were followed, the report said.

"We believe the co-principal investigator's conflict led to program funds being spent on subcontractor activities that were unrelated to the training program," the report states.


Wilson's project was given office space at the University Archives, where University Archivist Claude Zachary was working daily.

Zachary said that he never met Wilson once throughout the 23 months that the program was being run and never saw anyone use the office space.

Wilson was not available for comment and did not return multiple messages. Sipe was traveling in Peru and also unavailable for comment.

Unapproved research

USC first recognized problems within the research program when the University Park Institutional Review Board, a USC check on research programs involving human subjects, realized that Wilson had not submitted the proper consent forms to ask the peer treatment educators questions about their treatment, sexual orientation and sexual behaving, Sullivan said.

UPIRB determined that such questioning of the educators, many of whom were HIV positive, constituted testing on human subjects, according to the report.

Wilson, however, disagreed and he "proceeded to contact, recruit, enroll, test and gather information from the peer treatment educators," the report states.

In order to allow the research aspect of the program to continue, Wilson would have had to get an approved consent and release form from the UPIRB.

The participants did sign a consent form, but not one approved by the UPIRB, which should be taken into consideration as a mitigating factor, according to a letter from Laura LaCorte, senior associate vice president of the office of compliance.

This violation was one of many contributing factors to HRSA's request for repayment of funds from the program.

The money

Because the research on the peer treatment educators was not approved by the UPIRB, HHS said the costs were unallowable.

With an original budget of $2.5 million, USC spent $1,266,882, most of which has already been reimbursed to the school, according to the report.

The report states that 85 percent of the money spent, $1,082,554, were not allowable expenses.


LaCorte's letter said the university does not agree with the amount of money the audit says is owes to the government.

The program, starting in September 1999 and originally slated to run for 31 months, was supposed to set up a training center at USC, develop a curriculum for training peer treatment educators, start mentor and internship programs, evaluate the program and duplicate the program nationwide, according to the report.

However, when it was shut down 23 months later in July 2001, the program had, "made limited progress in enrolling and providing training to 41 of the 50 expected first-year program participants," the report states.

The training the participants did receive had unclear goals, an illogical training sequence and incomplete documentation, no mentor or internship programs were started, the program was never evaluated by the participants and the program was not duplicated elsewhere, the audit states.

Furthermore, according to the report, because Wilson was not a faculty member, he was unaware of many potentially helpful resources, such as USC curriculum review committees, and the AIDS training center.

The audit found that workers from AAAPTI had been paid with the program's money for organizing an AIDS march, as well as setting up town-hall meetings in other states.

"One employee had moved out of state in April 2000. The individual appeared to no longer be working on the program full-time. However, salary payments were made through June 2000 and claimed under the HRSA award,"the audit reported.

USC responds

As far as keeping tabs on the project, almost all federally funded research programs have to submit reports on what they are doing to the government agency that supplied the money, which in this case would be HRSA, Sullivan said.

LaCorte's letter also questions the auditor's calculation of the amount of funding used to do unapproved research.

There is also some disagreement about expenditures that may or may not have been retroactively approved by HRSA.

LaCorte's letter states that some expenditures that HHS now wants USC to cover were approved by HRSA, but the audit says there is no record of retroactive approval for any disallowed funds.

Another point of contention is that both USC and HHS performed audits of the program's dealings with AAAPTI. USC's audit, done by the firm PricewaterhouseCoopers, showed that USC owes $28,775, according to the report.

The audit performed by HHS shows that USC needs to pay back $1,024,308 and should absorb another $58,246 in costs that had not yet been reimbursed to the university.

"We analyzed the PricewaterhouseCoopers report to determine if we could rely on it and determined that we could not," the report states.

The university plans to appeal to HRSA, who is currently reviewing the HHS audit, to reduce the amount it will have to pay back.

"We also would appreciate the opportunity to discuss this matter further with HRSA since the sponsor was actively involved with this project and aware of certain expenses associated with the project," LaCorte's letter said.

The complete audit report by the HHS is available online at http://oig.hhs.gov.

- Staff writer Kara Nichols contributed to this report.