A Little Side Hustle (Gwen Moritz Editor’s Note)

Jeffery Moran leads PinPoint Testing, which offers blood testing and consulting services.

Eric Besson, a reporter at the Arkansas Democrat-Gazette, did some heavy lifting for his June 2 article explaining how the No. 2 administrator of the Arkansas State Crime Lab came to be selling tox-screening test kits to her own agency.

Cindy Moran, the lab’s assistant director, personally owns only 12% of the stock of PinPoint Testing LLC, which has been calibrating equipment and selling “ToxBox” screening kits to the Crime Lab — with and without the inconvenience of bidding — for the past couple of years. But it’s notable that Moran’s husband is the CEO of PinPoint, so the Moran household certainly has a vested interest in doing more business with the taxpayers who employ Cindy Moran.

I can’t begin to explain in this space all the mitigating and aggravating factors in what would seem to be an obvious conflict of interest. On Facebook, this relationship status would be “complicated.” But it’s notable that both the Crime Lab and the state Department of Finance & Administration recognized the conflict and made adjustments so that the Crime Lab could continue to buy Moran’s company’s product while Moran continued to collect her state salary.

For reasons I don’t understand, the Crime Lab doesn’t buy these toxicology screening kits directly from PinPoint. Instead, the contract is with a national supply company called Fisher Scientific, the sole bidder, which in turn agreed to supply PinPoint’s ToxBox product at the request of one customer — the State of Arkansas. But Fisher doesn’t actually stock PinPoint’s product; PinPoint ships directly to the Crime Lab.

Besson did yeoman work, but he was not able to find out how much of a cut Fisher takes for acting as middleman. However much it is, it’s pure waste. If it’s absolutely legal and ethical and in the state’s best interest for the Crime Lab to contract with a company owned by its assistant director, and if no bidding is necessary on the specific item being purchased, why pay extra for a middleman?

Every time I turn around there’s another example of a public servant who seems to be getting a little something extra. Sometimes they are straight-up crimes like those perpetrated by Jon Woods, the former state senator who, ironically, had a hand in making the so-called “ethics amendment” much more favorable to legislators than to taxpayers.

But sometimes they are deals, like the one between the Crime Lab and PinPoint, that feel just a little too cozy while apparently being completely legal.

A few years back, the College of Pharmacy at the University of Arkansas for Medical Sciences had an exclusive deal to license its technology to a company founded by a friend of the dean, at the dean’s suggestion, that then hired the dean’s husband. UAMS was supposed to earn royalties on profits, but — surprise! — there were never any profits after the employees got paid.

And it was all perfectly legal and in compliance with UAMS conflict-of-interest rules. It just wasn’t of any benefit to the public institution that developed and owned the asset that others were selling, and it didn’t pass the smell test with administrators at UAMS who didn’t have a direct interest in it.

Speaking of UAMS, how about that audit of its Myeloma Institute? As our Mark Friedman reported last month, employees spotted reg flags long before an audit discovered that a $29 million deficit had been building for nine years.

The official explanation is “accounting error,” but it seems to be the same accounting error over and over, under both former directors, Dr. Bart Barlogie and Dr. Gareth Morgan: The deficits were never entered in the financial statements at the end of each fiscal year. Convenient, no?

Here’s the part of that story that blew my mind: The audit was triggered by a decision to merge the Myeloma Institute into the UAMS Rockefeller Cancer Center, but that decision may have cost millions in donations.

Why? Staffers told the auditors that Dr. Morgan complained about the merger to at least one major donor, who then pulled his or her funding. Two other donors also cited the merger when reneging on their pledges.

Morgan seems to have wanted donors to pressure UAMS to leave the Myeloma Institute alone. I hope they might reconsider now. UAMS needed to bring all of its cancer programs under one administrative structure in order to get a National Cancer Institute designation, but the subsequent audit shows that Myeloma Institute really needed better oversight all around.

Email Gwen Moritz, editor of Arkansas Business, at GMoritz@ABPG.com and follow her on Twitter at @gwenmoritz.