The 'potential for conflict of interest' within the Board of Trustees

When Malcolm Turner was nominated to serve on the UNC Board of Trustees, his role at DraftKings, the sports gambling company, caught the attention of some UNC System Board of Governors members. 

“The fact of the matter is that DraftKings is promoting sports betting on college sports, and I just do not think that’s appropriate,” BOG member Art Pope said in an April 2021 meeting. 

Under the 2006 State Government Ethics Act, trustees — and other state employees — are required to file a statement of economic interest annually for evaluation. Turner, like every current member of the BOT except for Perrin Jones and newly appointed Ritch Allison, whose evaluation hasn't been made public yet, was identified by the State Ethics Commission as having the “potential for a conflict of interest.”

At the time of his appointment, sports gambling wasn’t legal in North Carolina. According to the BOT website, Turner serves as the head of strategy and corporate development for DraftKings. He was formally appointed to serve on the BOT by a 17-6 vote, with the promise that he would recuse himself from athletics-related matters. 

According to Stephen Arbogast, professor of the practice of finance at Kenan-Flagler, conflict of interest policy is standard in corporate America, and is meant to prevent instances of preferential treatment. 

“It's typically a disclosure and approval process which is intended to safeguard people,” he said. 

What do our trustees have in common?

Five of the trustees were flagged for their financial interests in real estate. Trustee Vinay Patel was cited as having “numerous” properties and for being principal of SREE Hotels LLC, which manages 25 hotels across three states. 

The majority of potential conflicts are business-related; four trustees own stock in publicly-owned companies, and six were flagged for their relation to specific companies.  Jennifer Llyod’s SEC evaluation named her role as proprietor of Hark the Sound LLC and Beat Duke LLC, which are both described as “real estate ownership, design, and development companies.”

In an email to The Daily Tar Heel, Lloyd said the LLCs are not operating businesses.

“They are simple LLCs that hold title to personal real estate and personal vehicles,” Lloyd wrote. “I love Carolina so I could choose any name for the LLCs (that wasn’t already in use), and I chose these!”

Four trustees own or work for consulting firms, while two are partners at a law firm. One of Trustee Jim Blaine’s firms, Martin and Blaine the Differentiators LLC, was mentioned in the SEC’s report because it previously held a contract with the BOG. According to the 2021 contract, the firm was paid $15,000 a month for their “policy advice and assistance.”

Trustee Blaine did not respond to request for comment by the time of publication. 

What constitutes a full-on conflict of interest?

According to a statement from University Media Relations, the BOG manages and enforces ethical standards according to their policy 200.7 on Duties, Responsibilities and Expectations of Board Members.

The policy states that trustees may not “act as a registered lobbyist on behalf of any lobbyist principal in any matter or issue that is adverse to the interests of the UNC System, a constituent institution, or a University-affiliated organization.”

The SEI review noted that Patrick Ballantine is a registered lobbyist. According to his filings, he has registered for a number of principals. In 2022, 2023 and 2024,he was a principal for Sports Betting Alliance, which advocates for legalizing online sports gambling. 

DraftKings is also registered in North Carolina as a lobbyist principal. The sports betting giant has been sued in multiple states this year alone. Two suits claim that the company's marketing is deceptive and intentionally targets users who are already addicted to gambling through their invite-only VIP program. 

Neither Ballentine nor Turner responded to request for comment by the time of publication. 

Evaluation process

In a written statement, Kathleen Edwards, the executive director of the SEC, explained the process of potential conflict evaluation. 

“The SEIs are reviewed by staff and then potential conflicts are noted based upon the disclosures made and the authority of the board in question,” Edwards wrote. “The evaluation is intended as an initial overview of potential conflicts but is not an exhaustive list of conflicts which may arise during the board member’s term.”

The commission itself consists of eight members, four Republicans and four Democrats. They evaluate the SEIs for over 300 boards every year. Edwards said they don’t have the capacity to monitor each individual member for compliance.

“We do investigate complaints alleging violations of the Ethics Act’s conflict of interest standards and provide detailed advice when requested by officials under our jurisdiction on adhering to those standards,” Edwards wrote.

Recently appointed Trustee Ritch Allison has filed an SEI, but the evaluation from the commission is not yet available. At the time of publication, there is still a vacant spot on the board left by Bradford Briner who was recently elected as the North Carolina State Treasurer. 

Arbogast said conflicts of interests are not uncommon, or inherently problematic, they just need to be monitored. 

“It’s possible to have a potential conflict of interest, as long as the proper process is applied,” he said. “That’s the essence of it, and like any policy, it really depends upon execution.” 

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