This story originally ran in two parts. See Congress investigates below for the beginning of the second part.
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A limited-liability corporation owned by a former IU Student Association executive received $18,309 of mandatory student fees last year to develop a GPS bus-tracking system.
The company was set to gain another $15,000 from IUSA’s budget this year until it was dissolved in December — when the owner made it clear he never had any intentions of making a business.
While the company existed, most people inside IUSA had never heard of it. Even IUSA President Michael Coleman didn’t know who owned it.
None of this was disclosed to Congress or in a conflict of interest report with IU. It’s also not clear when University administrators charged with overseeing the student government became aware of the private corporation.
Last month, a petition was filed with the IUSA Supreme Court about possible unethical actions. The petitioners, including a former member of the bus-tracking team, were threatened with defamation suits, called “crazy” by executives and not invited to the formal congressional hearing investigating the accusations.
The petition filed Feb. 18 brought some serious concerns to light, including possible violations of University policy and state law.
It’s not up to this newspaper to say whether such violations occurred — there are proper venues for that both inside IUSA and the University.
But the congressional hearing that dismissed all allegations of wrongdoing was not done with full disclosure on behalf of the student body, whose funds make up all of IUSA’s operating budget.
The project that IUSA executives hail as one of the organization’s most successful and innovative ideas in recent memory is clouded in confusion and miscommunication.
THE IDEA
“I would encourage you to serve as a check on the executive branch. For years and years now, IUSA has tended toward a president-centric mindset.”
— Luke Fields, outgoing IUSA president speaking to incoming Congress, April 14, 2009
Outgoing Student Body President Luke Fields had harsh words at the last meeting of the 2008-09 Congress. He criticized a too-powerful executive branch and chastised a passive Congress.
Incoming 2009-10 Student Body President Peter SerVaas wasted little time after being elected before combing through IUSA’s budget. SerVaas freed up $40,000 of the $97,000 budget for projects to benefit the student body.
One of those initiatives began under transportation chief Ilya Rekhter, who looked into acquiring a GPS tracking service for campus buses.
It became clear that hiring an outside company to implement the system would cost about $200,000 the first year and $80,000 annually — far beyond IUSA’s means.
So Rekhter and SerVaas decided to make the system themselves, something never done before in IUSA. Both IU administrators and IUSA members said there are no processes or guidelines in place for a student government that creates its own product.
“What we did is nothing short of amazing,” Rekhter said. “The first six to eight months we were kids in a basement figuring out how to make it happen that IUSA could afford.”
So Rekhter and members of a School of Informatics and Computing capstone project teamed up to make their own system.
In April 2010, Rekhter registered the corporation LiveArrive with the state of Indiana.
Also that month, the team LiveArrive LLC, which consisted of Rekhter and then-President Peter SerVaas, won $4,000 from a Kelley School of Business competition called Innovations Developed for Entrepreneurial Action.
Their idea used a cell phone’s GPS capability to map buses.
On April 23, 2010, IUSA sent a $15,000 check to Rekhter and his LiveArrive bank account. Rekhter graduated soon after and took a job as a health care consultant while continuing to manage his GPS bus-tracking system at IU.
By September 2010, his team had succeeded in providing real-time locations of IU buses, though the system was far from perfect.
Even though he developed a system from scratch for a fraction of what other companies charged, Rekhter denied any plans to sell it, though congressional minutes from Oct. 26 show that Rekhter said he was “trying to make the bus system into a business” and that it would be sold to others.
Rekhter said he never told that to Congress and that the minutes are wrong.
“By no means did anybody ever have a thought in the back of their minds saying, ‘Hey, we’re going to start a company out of this,’ or anything like that,” Rekhter said. “We were creating a system for IU and that was the most effective way to pay bills — that’s LiveArrive.”
Few, if any, members of IUSA’s Congress had heard of LiveArrive LLC, much less passed any resolutions about the company, until it dissolved in December 2010.
In January, Rekhter denied plans to sell the product elsewhere, although he said he deserves the right to do so.
Meanwhile, Rekhter tried to formalize an operating agreement between himself and IUSA. After months of trying, Congress passed a resolution Feb. 8 giving IUSA ownership of all physical hardware and Rekhter ownership of all intellectual property, a power Congress does not have.
In a Feb. 20 interview, Rekhter said he was beginning to talk to IU Research and Technology Corporation, which can claim 65 percent of intellectual property for IU if the product was created with University funds or resources.
Rekhter said his IU system is “a product that’s halfway functional that could, maybe, someday, theoretically be made into a company that could, theoretically, make a couple thousand dollars.”
He and SerVaas agreed that the product would not be commercially viable for some time and not without more investment from Rekhter personally.
“I keep laughing when people see it as, like, already a business or successful product,” SerVaas said.
THE FACTS
Brady McManama, transportation supervisor for IU-Purdue University Indianapolis, said he remembers meeting with SerVaas and Rekhter last year when IUPUI picked a bus-tracking vendor.
Rekhter said he and SerVaas were asked to attend the meeting and were there independently and that no implementation or pricing was discussed. SerVaas said he went on behalf of IUSA.
“We were actually looking to move quicker than what they truly had it ready to do so we ended up going with a different company, but one that’s similar to what they did,” McManama said about the LiveArrive system.
Thomas Miller, a former IDS employee, later filed the impeachment petition about the company. E-mails Rekhter sent to Miller showed Rekhter intended to sell his product in the summer of 2010.
Rekhter e-mailed Miller in July 2010 about giving Miller equity in the company. When asked who owned equity last fall, Rekhter denied any knowledge or existence of equity ownership.
In August 2010, Rekhter e-mailed Miller in preparation for an IT conference in late September. He wrote about “a company run by current and former IU students” called DoubleMap, a nickname for the LiveArrive system.
SerVaas also presented with the DoubleMap team at the conference but was listed as a representative from IUSA.
In October, Neil Kelty, IUSA’s chief of staff, started a discussion about GPS bus tracking systems on www.BigTenStudents.com.
“A former student (along with a team of international programmers) built us a system for $15,000 and we have a service contract around or under $10,000/yr,” Kelty posted, encouraging others to e-mail him if “you would like more info on how to bring this to your campus.”
In February 2011, the website www.uofm.doublemap.com surfaced. The design was identical to www.iub.doublemap.com.
Screenshots of the website before it was taken down Feb. 22 show this was a demo for DoubleMap at University of Minnesota though no representatives from UofM’s student government or transportation department said they remembered talking to any students from IU. Rekhter said the site was used to test new features before they were implemented at IU.?“You need some sort of URL to test that on,” Rekhter said. “We just picked UofM.”
The amount of money put into the system last year has also been frequently misquoted. On top of the $15,000 IUSA gave to LiveArrive’s bank account, IUSA personally reimbursed Rekhter for more than $3,300 of the system’s initial parts.
IUSA put $18,300 of last year’s budget toward the system. The bank account that received the $15,000 was audited by the University in August after Rekhter learned IDS reporters were looking into the company.
In all, $37,300 of University funds will have gone to the system by the end of this semester.
Meanwhile, neither Rekhter nor SerVaas filed any conflict of interest statements to IU.
Marie Kerbeshian from IU Research and Technology Corporation, which handles intellectual property claims, said reports should be filed even if there is the appearance of a conflict of interest, “which can be equally as concerning for universities.”
Beth Cate from IU Legal Counsel said reports like these are designed to “try to avoid someone who could be on both sides of a transaction.”
Some of these concerns were presented in Miller’s petition filed Feb. 18 with the Supreme Court.
The petition was signed by Miller, IDS columnist Connor Caudill and Landon Kellogg.
The petition said Rekhter and SerVaas did not disclose that they were simultaneously working as executives within IUSA and members capable of benefiting from state funds given to LiveArrive LLC, a potential class-D felony.
On Feb. 19 the petitioners met with SerVaas, Rekhter, Congress member Alex Groysman and House Speaker Steve Ross in the Indiana Memorial Union Starbucks.
At the meeting, Rekhter said if Miller didn’t sign the revocation, then defamation charges could be filed against him.
Rekhter also told Miller two people alleged Miller had plans to start his own bus tracking system, a claim Miller denied and said was absurd.
When asked about the signed statements, Rekhter said, “If I said it, it was off the record, so it has absolutely no relation to your story and I won’t confirm it.”
After several hours of debate, Miller, Caudill and Kellogg revoked their petition from the Supreme Court, though Miller said he reserved his right to re-submit at another time.
The petition was withdrawn at about 12:15 a.m. Feb. 20. The Supreme Court had planned to discuss the petition at 6 p.m. that night.
Instead, the Court had individual sessions Feb. 22 with the three petitioners to determine if the revocation was submitted willfully. After those meetings, the Court accepted the revocation but said this in its ruling:
“The Court does not reach a finding in regard to whether or not any intimidatory tactics were ever used against the petitioners.”
CONGRESS INVESTIGATES
“The major role of Congress is to speak on behalf of the IU student body... Make sure that students have a seat at the table.”
— Luke Fields, outgoing student body president, April 14, 2009
Before the start of the Feb. 22 IU Student Association Congress meeting, representative Alex Groysman and speaker Steve Ross stepped out into the hallway. When they re-entered three minutes later, members of the Big Ten ticket were speaking.
A few minutes later President Michael Coleman arrived, and he and Ross stepped out. They would return six minutes later with Vice President Peter SerVaas, who normally doesn’t attend Congress meetings.
Two members of the IUSA Supreme Court talked quietly in the back of the room, watching the scene unfold.
They would recuse themselves two hours later when the court met to discuss possible acts of intimidation against the three petitioners who filed to impeach the executives.
Instead of a full Congress meeting, members broke into assigned committees after the 2011-12 IUSA executive candidates finished speaking.
Sometime between these two events, these IDS reporters were approached by both SerVaas and Ross about a meeting happening after committees.
Ilya Rekhter, they said, would be joining via video chat for a Congressional Central Committee — or CCC — hearing to formally investigate allegations made in the withdrawn impeachment petition.
Rekhter was transportation chief under SerVaas’ 2009-10 administration and oversaw the implementation of the DoubleMap bus tracking system, which he still manages.
Most members of Congress did not know about the CCC’s first meeting of the school year later that night.
Even some who attended had never heard of the committee, which is made up of the five standing committee chairpeople and serves as a check on the executive branch, according to the IUSA bylaws.
One of the original petitioners, Thomas Miller, said he requested to speak to the full session of Congress before the agenda was changed to committee meetings.
Later, he was told he could not address representatives because guest speakers are not allowed in committee meetings.
Miller was not informed of the investigatory hearing, which was open to the public, leaving no one there to defend the impeachment petition.
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“Hi, honey,” said Jen Peterson, vice president for Congress, as Rekhter’s face flashed on the projector screen. He joined the meeting from Washington, D.C., where he works.
Once the 17 IUSA Congress and executive members settled, Representative Groysman spoke first and explained to committee chairs facts from his investigation that contradicted Miller’s petition.
SerVaas took the floor next and explained his only tie to DoubleMap — the Kelley School of Business IDEA Competition where he, Rekhter and others won $4,000. SerVaas said he had no financial stake in the company and that he filled in to do the introduction when one of the original members backed out.
Then Peterson, Student Body Treasurer Sierra Hsieh and President Michael Coleman explained their limited knowledge about DoubleMap.
Later, Congress member George Thomas asked questions bothering him since last fall.
Specifically, Thomas asked why the business motives and system costs changed so much throughout the school year.
“It was always the plan to have IU pay for the $15,000 ... that was always the plan, correct? It didn’t change?” Thomas asked.
“In the beginning you told Congress, we thought you told Congress, that it would be free. Then you came back and said we have to pay these maintenance fees,” Thomas said. “Maybe you said that in the beginning and we just didn’t understand.”
Peterson interjected, explaining how IU would always pay for annual data charges and maintenance and nothing extra to Rekhter and his team.
“Correct me if I’m wrong, but, you know, another campus may buy this program from you for, you know, X amount, 20 years down the road — we would never have to pay that,” Peterson said.
Later in the hearing, questions about the two company names came up.
Double Map and LiveArrive LLC — “Neither of those exist today, correct?” asked Speaker Steve Ross.
“Absolutely not,” Rekhter said. “No.”
“See the resolutions told us they did. That’s why we are all confused at that,” representative Thomas said. “We thought we were moving a company for you to go and sell it. And I guess we’re not.”
“Someone needs to proofread those damn resolutions because they’re always wrong,” Thomas said in frustration while others laughed.
Eventually the committee voted to open questions to the public - which was only IDS
reporters.
“If I may, Ilya, just to clarify — There is no DoubleMap product out there either in current stage or some sort of testing phase?” asked IDS reporter Ben Phelps.
“The question is, is there a current product named DoubleMap in operational or testing phase?” Groysman repeated for Rekhter to hear.
“At any other university?” Phelps added.
“No, no, the only DoubleMap is at IU, IUSA,” Rekhter said. “It’s not a product that’s being sold anywhere, it’s not a company. It’s DoubleMap at IU.”
Sometime shortly before, during or after the CCC meeting, Rekhter took down the site UofM.doublemap.com, which appeared to be a test system at the University of Minnesota.
Rekhter said the system was used to test new features before they’re implemented on the IU system. He said he took it down because too many people were asking about the website.
At the end of the meeting, Groysman faced the members with his arms stretched. He was satisfied with the facts, and so was everyone else present — there were no more questions.
“The motion is to dismiss all accusations against the executive branch,” Ross said and called on the committee.
One by one the four present committee members dismissed the charges, and the 50-minute hearing was over.
Since the meeting, SerVaas, Rekhter and IUSA historian John Gillard wrote editorials in the Feb. 27 issue of the IDS.
Rekhter wrote that IU’s Legal Counsel determined “the University does not have any ownership rights over the intellectual property related to the bus
tracker.”
He added that in good faith he’s donating all intellectual property to code developed during his time in IUSA back to the student organization.
The only original petitioner who could still re-file the petition, Thomas Miller, said he decided against resubmitting it.
In an e-mail sent Feb. 28, Miller said the harms mentioned had been addressed when Rekhter donated the intellectual property to IUSA.
Meanwhile, Vice President Peter SerVaas left for Moscow last week for a study abroad program. In an e-mail sent Tuesday, SerVaas said he was finished with IUSA.
When asked last November about the LiveArrive bank account, SerVaas said IUSA wasn’t perfect.
“IUSA has its flaws,” SerVaas said. “We’re just students doing this in our spare time.”
