Gregory J. Kamer Nicole A.

Young
Carol Davis Zucker Kaitlin H. Paxton
Scott M. Abbott Neil C. Baker
Edwin A. Keller, Jr.
Jen J. Sarafina Of Counsel
R. Todd Creer Jody M. Florence

Representing Employers in Labor and Employment Law Matters

CONFIDENTIAL
MEMORANDUM
TO: Chancellor Thom Reilly; Nicholas Vaskov, Esq., General Counsel
FROM: Scott M. Abbott
RE: Dr. Len Jessup
(Our File No. 18-123)
DATE: March 5, 2018

This memorandum is submitted in response to the recent request by the Nevada System of
Higher Education (“System”) for an assessment of Dr. Len Jessup’s recent conduct, in executing
a Memorandum of Understanding between the Engelstad Family Foundation and the University
of Nevada, Las Vegas Foundation, as a potential ethical violation and how such violation, if any,
implicates Dr. Jessup’s continued employment with the University of Nevada, Las Vegas.

BACKGROUND FACTS:

Dr. Jessup is currently employed by the University of Nevada, Las Vegas (“UNLV”) as
President. Dr. Jessup’s employment with UNLV is governed by an employment agreement which
is styled as a Supplement to Terms of Employment for Dr. Len Jessup, President, University of
Nevada, Las Vegas (hereinafter referred to as “Agreement”). This Agreement specifically
incorporates language entitled “Provisions for Discipline of Presidents” as Exhibit A to the
Agreement.

Dr. Jessup’s Agreement with UNLV states a term of employment from January 5, 2015
through December 31, 2019. This Agreement, in addition to other benefits and perquisites,
provides annual base compensation of $525,000.00 to Dr. Jessup.

On or about January 22, 2018, the System’s Chancellor, Thom Reilly, delivered to Dr.
Jessup an Annual Performance Evaluation for Dr. Jessup’s 2017 work performance. In that
evaluation, Chancellor Reilly detailed several weaknesses in Dr. Jessup’s performance. The
evaluation concluded with an assessment that Dr. Jessup’s work performance was below
expectation and required immediate improvement as noted in the evaluation. Chancellor Reilly
and Dr. Jessup discussed the evaluation on January 29, 2018.

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Attorneys at Law
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After Chancellor Reilly’s delivery of and discussion regarding the Annual Performance
Evaluation, Dr. Jessup executed a Memorandum of Understanding between the Engelstad Family
Foundation and the University of Nevada, Las Vegas Foundation (“MOU”) on February 7, 2018.

The MOU is intended to provide financial underwriting for the planning, construction and
operation of a new Medical Education Building at UNLV’s School of Medicine Shadow Lane
Campus. The Engelstad Family Foundation, as the donor, has pledged a gift toward that objective
for up to $14,000,000.00, provided that UNLV and/or the UNLV Foundation can secure matching
funds through December 31, 2022 (the “Pledge Period”) from other private, non-governmental
sources. The donor’s gift payments are scheduled in certain intervals depending on how much in
matching funds are obtained by UNLV and/or the UNLV Foundation. In relevant part, the MOU
contains the following language:

Donor is making the gift to the Fund with the understanding and on the condition
that Barbara Atkinson serves as the Dean of the School of Medicine and Len Jessup
serves as President of UNLV (“the “Current Administration Condition”) for the
duration of the Pledge Period (as defined below). If either the Dean of the School
of Medicine or the President of UNLV changes, Donor reserves the right to
discontinue, modify, withhold any future payments, or cancel the Engelstad Family
Foundation Medical Education Building Matching Gift Pledge, in its sole
discretion. The UNLV Foundation acknowledges and consents to the Current
Administration Condition.

Both Dr. Atkinson1 and Dr. Jessup signed the MOU, the latter as of February 7, 2018, under the
following language:

Acknowledged and Accepted by the Board of Regents of the Nevada System of

Higher Education, on Behalf of the University of Nevada, Las Vegas.

It is my understanding that no one within the System, including the Board of Regents, the
Chancellor, System General Counsel and UNLV General Counsel, was aware of the MOU
condition personally relating to Dr. Jessup’s continued employment through 2022 in exchange for
the gift pledge at the time of its execution.

PRELIMINARY ASSSESSMENT OF ISSUES:

Dr. Jessup’s execution of the MOU in his capacity as the President of UNLV is extremely
troubling in two major respects. First, the MOU, as detailed above, specifically confers a
significant financial benefit on Dr. Jessup by conditioning the gift on his continued employment
with UNLV through December 31, 2022. Dr. Jessup’s current Agreement with UNLV provides a
term of employment that is expressly stated to conclude as of December 31, 2019. The MOU,
therefore, guarantees Dr. Jessup an additional three (3) years of employment unless UNLV wants
to risk cancellation of the gift pledge if it determines to terminate Dr. Jessup’s employment prior
to December 31, 2022. Based solely on the base compensation Dr. Jessup would receive during

1
The analysis set forth herein focuses solely on Dr. Jessup as requested, not Dr. Atkinson.

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Attorneys at Law
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that additional three-year period (to the extent it remains at its current level), Dr. Jessup has secured
for himself the sum of $1,575,000.00 in executing the MOU.

Second, the timing of Dr. Jessup’s execution of the MOU appears to be a preemptive strike
launched in response to his unfavorable Annual Performance Evaluation. Dr. Jessup signed the
MOU on February 7, 2018, a mere nine (9) days after Chancellor Reilly discussed Dr. Jessup’s
below standard work performance. Rather than taking the opportunity of that evaluation
discussion to focus on the needed improvements for his performance, it appears that Dr. Jessup
seized upon an opportunity to condition a sizeable financial gift to UNLV on his continued
employment for three (3) additional years.

While Dr. Jessup, when asked, will likely state that he did not suggest or request that the
gift embodied by the MOU be conditioned on his continued employment, the fact remains that he
signed the MOU in his official capacity of President knowing of the significant financial benefit
being conferred upon him. This conduct raises serious questions about Dr. Jessup’s ethics.

POTENTIAL NEVADA ETHICS LAWS IMPLICATED:

Chapter 281A of the Nevada Revised Statutes addresses the subject of ethics in
government. For the purposes of that chapter, a “public officer” is defined to include any person
who serves as “[a] president of a university, state college or community college within the Nevada
System of Higher Education.” NRS 281A.182(1)(a).

In codifying a code of ethical standards for public officers and employees, Chapter 281A
states, in relevant part:

***

2. A public officer or employee shall not use the public officer’s or employee’s
position in government to secure or grant unwarranted privileges, preferences,
exemptions or advantages for the public officer or employee…. As used in this
subsection, ‘unwarranted’ means without justification or adequate reason.

3. A public officer or employee shall not participate as an agent of government

in the negotiation or execution of a contract between the government and any
business entity2 in which the public officer or employee has a significant pecuniary
interest.

NRS 281A.400(2) & (3).

A pecuniary interest is defined as “any beneficial or detrimental interest in a matter that consists

2
The statute defines a business entity as an “organization or enterprise operated for economic gain…” NRS
281A.040. As a result, the donor’s Foundation would likely not be encompassed within this definition.

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of or is measured in money or is otherwise related to money, including, without limitation: 1.

Anything of economic value; and 2. Payments or other money which a person is owed or otherwise
entitled to by virtue of any…contract or other agreement.” NRS 281A.139.
To guard against potential conflicts of interest by public officers, the statute also imposes certain
disclosure requirements. Specifically:

… [A] public officer or employee shall not approve, disapprove, vote, abstain from
voting or otherwise or otherwise act upon a matter:

***

(b) In which the public officer or employee has a significant pecuniary interest;

without disclosing information concerning the … significant pecuniary interest … that is sufficient
to inform the public of the potential effect of the action or abstention upon … the public officer’s
or employee’s significant pecuniary interest. … Such a disclosure must be made at the time the
matter is considered.

NRS 281A.420(1).

It should be noted, however, that the statute provides an express exception for full- or part-
time faculty members or employees of the System:

A full- or part-time faculty member or employee of the Nevada System of Higher

Education may … benefit financially or otherwise from a contract between an
agency and a private entity, if the contract complies with the policies established
by the Board of Regents of the University of Nevada pursuant to NRS 396.255.

NRS 281A.430(3).

Chapter 281A provides a process by which an individual can request the issuance of an
opinion by the Commission on Ethics (“Commission”). The Commission may render an opinion
interpreting statutory ethical standards and applying them to a given set of facts and circumstances
if the requesting party submits: (1) the request on a form prescribed by the Commission; and (2)
all related evidence deemed necessary by the investigatory panel to determine whether there is just
and sufficient cause to render an opinion in the matter. NRS 281A.440(2). No proceedings may
be initiated solely upon an anonymous complaint.

Once proceedings before the Commission have commenced and the Commission
determines that there is just and sufficient cause to issue an opinion, the Commission shall hold a
hearing and render an opinion. The public officer who is the subject of the request is permitted
the opportunity to respond to the allegations, and to be represented by counsel in any hearing
conducted. NRS 281A.440(3), (6) and (11).

In rendering its opinion, the Commission may determine that the public officer has
committed a willful violation of Chapter 281A. A violation is willful if the public officer acted

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“intentionally and knowingly” or “was in a situation where this chapter imposed a duty to act and
[he] intentionally and knowingly failed to act in the manner required by this chapter.” NRS
281A.170. In determining whether a willful violation has occurred, the Commission shall consider
several factors, including: (1) the seriousness of the violation, (2) the number and history of prior
warnings, (3) the cost to conduct the investigation, (4) any mitigating factors, (5) any restitution
or reimbursement paid, (6) the extent of any financial gain resulting from the violation, and (7)
any other matter justice may require. NRS 281A.475(1).

If the Commission determines that a willful violation has occurred, it may impose a civil
penalty of up to $5,000.00 on the public officer for a first willful violation. NRS 281A.480(1)(a).
In addition, the determination of a willful violation shall be deemed malfeasance in office, and the
Commission has the exclusive right to file a complaint in court seeking removal of the public
officer. NRS 281A.480(4)(c)(1).

Finally, the statute provides that in addition to any other penalties imposed by law, a public
employee who has committed a willful violation is subject to disciplinary proceedings by his
employer. NRS 281A.480(6).

ASSESSMENT OF PROPOSED COURSES OF ACTION:

Dr. Jessup’s Agreement expressly states that he serves at the pleasure of the Board of
Regents. See Agreement at Paragraph 10. Exhibit A to the Agreement further states that the
Agreement may be terminated for cause by the Board of Regents or the Chancellor. Exhibit A
also enumerates certain types of conduct that constitute cause for discipline or termination. Such
conduct includes, in relevant part:

j. Personal or professional conduct which shows that the President is unfit to

remain in the position or which has an ascertainable harmful or adverse
effect on the efficiency of the institution.

See Exhibit A at Paragraph 3. The remaining examples of cause would not be applicable in this
situation involving Dr. Jessup’s execution of the MOU.

If the System is inclined to terminate Dr. Jessup’s employment as President, it should be

aware of its continuing obligations under the Agreement. As an initial matter, it is my
understanding that Dr. Jessup does hold tenure with UNLV. If that is accurate, the Agreement and
Exhibit A thereto state that upon a termination for cause, he shall be reassigned to a full-time
academic faculty position. Upon such reassignment, the System would be required to pay Dr.
Jessup his base salary as President ($525,000.00) for the balance of the term of the Agreement
(until December 31, 2019). Base salary would not include any housing or automobile allowance,
host account, other perquisites, or salary supplements, bonuses, deferred compensation, or other
payments funded by a foundation.

The System will need to determine at this juncture what action, if any, it should pursue
against Dr. Jessup. As detailed herein, there is a mechanism for the System to initiate proceedings
against Dr. Jessup before the Commission on Ethics regarding a potential violation of Chapter

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Attorneys at Law
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281A of the Nevada Revised Statutes. If that course of action is followed, Dr. Jessup may face
considerable risk, particularly if he is determined to have committed a willful violation of the
statutory ethical code. Such a finding would be extremely detrimental to Dr. Jessup’s professional
reputation, considering that he would be deemed to have committed malfeasance while in office.
While we cannot predict the content of any opinion by the Commission regarding Dr. Jessup’s
conduct, a willful violation remains a distinct possibility. This analysis is based on (1) the express
benefit conferred by the MOU in terms of three (3) additional years of employment for Dr. Jessup,
and (2) the timing of his execution of the MOU, less than 10 days following his discussion of his
below standard performance with the Chancellor.

If the System does intend to remove Dr. Jessup as President, there is great risk that the
pledge memorialized by the MOU will likely be canceled. The donor may likely nullify the MOU
regardless of whether Dr. Jessup is removed as President now or at the conclusion of the stated
term in his Agreement. That, of course, is a serious consideration to be given by the System in
this matter.

Equally serious, however, is the conduct of Dr. Jessup and whether his third-party
beneficiary status under the MOU renders him unfit to continue to serve as President. While Dr.
Jessup may claim that he did not negotiate his continued employment as a condition for the donor’s
gift, the optics are appalling.

Unless Dr. Jessup implausibly claims that he did not read the MOU prior to signing it, he
knew that he was receiving a substantial benefit in the form of continued employment as President
for a full three (3) years following expiration of his current employment term. Dr. Jessup signed
the MOU in his official capacity as President, despite his pecuniary interest in its terms. In so
doing, he attempted to handcuff the System from removing him as President for any reason prior
to December 31, 2022.

Dr. Jessup’s execution of the MOU, in view of his patent conflict of interest, is made even
more egregious given its timing. The Chancellor in late January 2018 presented and discussed
with Dr. Jessup his Annual Performance Evaluation. That discussion signaled to Dr. Jessup that
the Chancellor had serious concerns that Dr. Jessup’s work performance had fallen below
standards in several respects. Knowing that his position as President was likely in jeopardy if he
did not start making significant improvements, Dr. Jessup instead – a mere nine (9) days later –
signed the MOU. In so doing, Dr. Jessup guaranteed for himself three (3) years of continued
employment (beyond his current employment term) unless the System wanted to risk losing a $14
million donor pledge.

Dr. Jessup’s recent behavior, independent of his pre-existing performance shortcomings,

raises serious issues of ethical standards, as well as the potential violation of the System’s internal
policies and guidelines. Regardless of whether the System opts to initiate proceedings with the
Nevada Commission on Ethics, it will need to decide if Dr. Jessup is no longer fit to serve as
UNLV’s President. If that is the decision, it may be of mutual interest to Dr. Jessup and the System
to embark upon negotiation of a separation package.

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