In October 2003, after seven years as chancellor at UCSD, Robert Dynes became president of the University of California. To pay tribute, a self-described "old friend" rose from his seat in the U.S. House of Representatives. "I have personally observed Bob's term as chancellor and seen the determined focus of his administration to uphold the integrity of this fine university," said Randy "Duke" Cunningham.

"Bob set high standards for himself and his administration as well as innovative ways to meet them. This is truly the sign of someone who is a special leader. I am not just saying this because I am his friend; others see this quality in him as well."

Two years later, as Cunningham was pleading guilty to bribery after selling congressional favors to the highest bidder, Dynes was facing his own problems. Headlines questioned undisclosed bonuses paid to UC's top administrators. State senators would soon question Dynes's leadership ability. In an era of state budget shortfalls, the University of California was in transition. Venture-capital financiers were taking over much of the university's research agenda, and administrators' bonuses, according to one state senator, reflected "corporatization." Dynes was well connected, with a wealthy wife and father-in-law who was closely tied to California's financial establishment. Collaboration with industry was Dynes's vision for the university's future.

Randy "Duke" Cunningham was not alone in his fondness for Dynes. The San Diego establishment loved Dynes when he was UCSD chancellor. He had cozy relationships with Qualcomm's Irwin Jacobs and with Padres owner John Moores. The Union-Tribune was enthusiastic about Dynes and the direction UCSD was taking. "Dynes, a physicist by training, keenly understands that close cooperation between academia and high-tech entrepreneurs is the surest way to accelerate the new economy," effused a December 2000 editorial.

When it was announced that Dynes would become president of the entire ten-campus university system, the U-T was even more effusive. In an editorial headlined "UC makes a splendid choice for chancellor," the paper said, "Dynes spent 22 years at AT&T Bell Laboratories before joining UCSD. His considerable experience in the private sector gives him a healthy appreciation for the bottom line."

Wrote Neil Morgan, "Outspoken and courageous, Dynes will be a scrappy president of the University of California, putting his job on the line every day. Even under the pressure of taking on a sprawling public giant and overseeing a budget of $15 billion, his idealism explodes in every conversation."

The paper played up Dynes's purported humble beginnings. "A first-generation college graduate of Canadian descent, he has risen to the top of his profession by dint of hard work and determination. During his proactive chancellorship, UCSD has flourished."

But Dynes was not a self-made man. After leaving a messy first marriage in New Jersey, he had wed an heiress to one of California's wealthiest and most powerful dynasties, dating from San Francisco's Gold Rush days.

Frances Hellman, a Dartmouth College graduate, had worked for Dynes at AT&T Bell Labs. In 1987 she left to become an assistant physics professor at UCSD, and in 1991 Dynes followed her to the university. Three years later, Dynes rose to chair the physics department, the next year he was appointed senior vice chancellor of academic affairs, and the following year, in May 1996, Dynes was named UCSD's chancellor, succeeding Richard Atkinson, who had been elevated to UC president.

Two months later, in July 1996, Dynes filed for divorce from his first wife, Christel. They had been married almost 30 years. In January 1997, Christel filed an emotional counter-complaint against her husband. It revealed that the couple had been living apart for the prior 6 years. "On or about January 1, 1991, ever since which time and for more than 12 months last past, [Robert Dynes] has willfully and continuously deserted [Christel Dynes]."

The case was settled a year later, in January 1998. Dynes agreed to pay monthly alimony of $6000 and turn over the couple's house in Summit, New Jersey. She kept the 1997 Ford Explorer and a 1984 Honda Prelude; he got the 1997 Mercedes-Benz and a 1987 Mazda. It was mostly small-stakes stuff. Clearly Dynes had not become wealthy working at AT&T Bell Labs.

Five months after the divorce became final, he took a new bride. "Dynes and physicist Frances Hellman will wed in May," wrote U-T columnist Neil Morgan. "The daughter of a San Francisco financier, she's become a hard-line Padres fan."

But Frances Hellman, then 43, was far more than a baseball lover. She was F. Warren Hellman's daughter, and in California's big-time social and political circles, that was saying something.

Warren Hellman, 65, is the great-grandson of a founder of Wells Fargo Bank, an heir to the Levi Strauss denim clothing fortune, and one of the richest and most powerful businessmen in the state. Among his many wealthy associates is San Diego Padres owner John Moores, with whom he has invested in some of the high-tech start-ups clustered around UCSD.

A graduate of UC Berkeley, Hellman has long been a major player in the secretive internal politics of the University of California. He is famous for making multimillion-dollar charitable contributions to his alma mater. He has been a frequent contributor to the campaigns of politicians like Assembly Speaker, later San Francisco mayor, Willie Brown and Governors Pete Wilson and Gray Davis.

Hellman has also stage-managed some of the university's most controversial moves, such as the 1997 merger of medical facilities at UCSF and Stanford, which critics said squandered tax dollars and reduced health-care choices for the poor. Hellman, through his San Francisco firm Hellman & Friedman, manages billions of dollars for a host of investors, including the massive California Public Employees' Retirement System -- CalPERS for short. In that role Hellman weathered charges that campaign contributions he and other family members made to state officeholders were intended to induce the CalPERS board to steer additional investment business to Hellman's firm.

Thus, when Dynes married Frances Hellman, university insiders couldn't be blamed for assuming that Dynes's power was due to the behind-the-scenes influence of his father-in-law, Warren Hellman, though the mainstream media never picked up on the connection and Dynes himself did his best to obscure it. His 1999 statement of economic interests, required under state law, contained no reference at all to Frances Hellman's holdings.

Only after a reporter complained to the UC conflict of interest office did Dynes file an amended statement in January 2000 that revealed his wife's interest in two Warren Hellman investment partnerships, Hellman & Friedman Management III and Locust Street Group III, L.P., each valued at more than $100,000, plus millions more in common stocks, such as EchoStar Communications, Convergys Corporation, and Forest Laboratories.

When later asked why his initial filing had omitted Frances Hellman's assets, the chancellor of UCSD said, "I didn't at the time know -- I had just recently gotten married -- and so originally it just had my own on there, and after questions it was made clear to me that I had to include my wife's, which I didn't realize." And why, once he discovered that he was required to list his wife's assets, did he delay filing the amendment? "It just took time," Dynes replied. "I asked some people to work through it all, to work out the forms, and it just took time to do that. No other reason than just bureaucracy."

Dynes had become UCSD chancellor during a time of major change in university philosophy. Cutbacks in taxpayer support and new federal laws encouraging so-called public-private partnerships between venture capitalists and faculty members had given rise to a money-driven research culture. No longer did scientists design experiments only to test accepted theories or laws. Instead, research had to have a financial payoff.

The turning point had come in 1980 with the passage of the Bayh-Dole Act, which gave universities patent rights to inventions that their faculty members had developed using federal grants. "The university generally retains the patent to a given innovation, licenses it for a fee to one or more commercial enterprises, and industry then attempts to use the invention to develop profitable products," explains Dr. Jerome Kassirer in his book On the Take: How Medicine's Complicity with Big Business Can Endanger Your Health.

"In turn, for their involvement in generating the invention or discovery and helping to develop a marketable product, profits that derive from licensing the patent are required by law to be shared with the inventor." Thus, adds Kassirer, professor at Tufts University medical school, adjunct professor at Yale medical school, and editor in chief for more than eight years of the New England Journal of Medicine, "The academic scientist, lured by the promise of royalties, became an entrepreneur, and universities became more like big businesses than centers for learning how to cure the sick."

The problem gets even worse, Kassirer maintains, when corporations directly fund university research. "Financial incentives can and do influence how study questions are framed and the very design of experiments. Studies show that industry preferentially supports trial designs that favor positive results." Other pitfalls of the new relationship between corporations and universities, he notes, "include withholding information to delay dissemination of an undesirable result, and keeping research results secret even beyond the time needed to file patents, presumably to protect proprietary information."

"The very nature of the contractual relationship between physician investigators and drug companies can be problematic," Kassirer says. "As a condition of the contract, researchers may be forced to sign away their right to monitor and control data, to analyze the data, and even to notify institutional overseers if something goes wrong."

A complacent local press encouraged the shift at UCSD. "Some regents refer to 'the Atkinson miracle' as he and his successor, Bob Dynes, have made UCSD a revolutionary new research university studied and envied around the world," wrote U-T columnist Neil Morgan in December 2001. "It embodies a quiet revolution from the identity-challenged 1960s: Gushers of private-public funding as universities and industry seek to probe jointly the world's course amid chaotic change."

Smart operators swarmed onto the La Jolla campus, opening their checkbooks for enterprising faculty members who might come up with the next "killer application" -- an invention that would make the professors and their investors rich.

Two early examples of what was to come were Irwin Jacobs and Andrew Viterbi. In 1968 Jacobs, a professor of engineering at UCSD, and Viterbi, a professor of engineering at UCLA, started Linkabit, a small electronics company specializing in then-esoteric satellite communications software used by the Pentagon.

Linkabit was sold in 1980. Five years later, Jacobs and Viterbi set up a fledgling venture with several former Linkabit employees. Viterbi joined the faculty of UCSD's engineering school in 1985, the same year that the new company was born. Its name was Qualcomm.

For the next nine years, during the critical period in which the firm perfected its cell-phone patents, Viterbi remained a professor of electrical engineering and computer science at UCSD. During this period, he filed many patent applications for the new technology used by Qualcomm.

In 1991, UCSD chancellor Richard Atkinson became a Qualcomm board member. Over the years, as Qualcomm grew and the value of its stock soared into the stratosphere, so did Atkinson's personal fortune. By January 2000, Atkinson, still a board member, owned Qualcomm shares worth $238 million, based on a company filing with the federal Securities and Exchange Commission.

In late 1999, a reporter questioned whether some of the cell-phone patents owned by Qualcomm had been misappropriated from the university. The pervasive influence of the new culture of money was evidenced in a confidential report drafted by top UC officials in October.

"During the winter of 2000, allegations arose from a segment of the media regarding compliance with the University of California Patent Policy by a former professor at UCSD, Dr. Andrew J. Viterbi," said the report, authored by Robert Shelton, the university's vice provost for research; David Miller, its associate vice chancellor; and Terence A. Feuerborn, who had recently retired as the university's officer in charge of technology transfer. "The specific allegations involved questions regarding the ownership of a patent that was issued in 1992 listing Dr. Viterbi as a co-inventor.

"The patent in question is entitled 'System and Method for Generating Signal Waveforms in a CDMA Cellular Telephone System.' Qualcomm, Inc. is identified as the owner. The allegations assert that Dr. Viterbi, as a faculty member at the time of the invention, should have reported the invention to the University and that the University may have some rights to the issued patent. It was further asserted that the technology embodied in the patent contributed significantly to the financial success of Qualcomm, and that the University should have shared in that success."

The report said that the investigation had grown to include Viterbi's daughter Audrey, a former assistant professor at UC Irvine who later went to work for her father at Qualcomm, and Jack Wolf, a UCSD engineering professor who worked as a consultant to the company.

The report detailed Andrew Viterbi's somewhat unorthodox history -- first as an unpaid and later a salaried part-time professor at UCSD, at the same time a cofounder of and executive at Qualcomm, developing cell-phone patents that would make him and fellow investors, such as then-UC president Richard Atkinson, fantastically rich.

The billion-dollar question was whether the university would prove beyond a reasonable doubt that Viterbi came up with his inventions while working at UCSD. Unfortunately for state taxpayers, the investigators said they could not. Because Viterbi had failed to disclose his patents to the university as required by UC rules, it was difficult to tell for sure who owned the lucrative inventions. With UC president and Qualcomm board member Atkinson looking over the shoulders of the investigators, many UC insiders believed that the conclusion was preordained.

The investigators noted that of the ten patents Viterbi had obtained, three had been awarded between April 1992 and May 1994. "Since these patents were received while Dr. Viterbi was a faculty member, the Committee determined that the inventions involved should have been reported to the University to comply with the requirements of the Patent Policy and the Patent Agreement signed by Dr. Viterbi."

The panel conducted no interviews and relied on citations that Viterbi himself provided from his published work. Panel members concluded that Viterbi never spent any of his time inventing while he was on the premises at UCSD. "The generally consistent way in which Dr. Viterbi is identified with Qualcomm, and that Qualcomm is the source of support for the research, suggests that Dr. Viterbi conducted his research at Qualcomm and restricted his activities at UCSD to teaching."

As for Jack Wolf, the UCSD engineering professor who was a consultant to Qualcomm, the investigators said: "Professor Jack Wolf is named as an inventor or co-inventor on 9 patents assigned to Qualcomm that were not reported to the University. The evidence available to the Committee suggests that these patents occurred as the result of 'permissible consulting,' but the Committee recommends that Dr. Wolf's research activities be reviewed by the UCSD Office of Technology Transfer to fully determine whether or not the University has any rights to these patents."

"That has all been cleared up," said Wolf, reached at his UCSD office this week and queried about the allegations against him. "The research I do at the university has nothing to do with the patents in question." Asked whether UC had done any follow-up reports regarding the issues raised in the Viterbi document, he replied, "I am not aware of any."

Critics had long claimed that UC was deliberately derelict when it came to enforcing its patent policies. With so much money to be made, and so little university oversight, they said, it was natural that professors would fail to remember their disclosure obligations.

As UCSD chancellor, Dynes vowed that his efforts to monetize university research would go even further than Atkinson's had. He expressed his mercantile philosophy of education: "We're not just here to do what I call 'curiosity-driven' research (as much as I value curiosity and believe it is integral to the process of discovery).... Our faculty and students produce an average of three new inventions every single day."

In October 1999, Dynes announced that research funding provided by corporations had jumped 50 percent from the previous year, to $116.3 million. "This was the first year UCSD ever raised more than $100 million from private sources," he boasted in a news release. "This level of support is crucial to the university and helps us continue our legacy of conducting renowned research and developing world-class projects which will have a profound impact on not only the San Diego community but also worldwide."

At about the same time, another player arrived on the scene. In November 1998, California voters elected Gray Davis their new governor. A bland Democrat who had risen through the ranks as a staffer for Governor Jerry Brown, Davis was a prodigious fund-raiser who understood the art of the quid pro quo. Among his backers was John Jay Moores, the Texas-born-and-bred venture capitalist who owns the San Diego Padres.

In 1998, Moores contributed $166,000 to the Davis campaign and gave the candidate free rides around the state on his private jet. The next year Davis appointed Moores to a 12-year term on the University of California's board of regents. A month after that, Moores gave the Davis campaign another $100,000.

The plum job on the board of regents involved more than just prestige; Moores, who made his first fortune in software and was always on the prowl for new deals, now sat at the epicenter of California's burgeoning high-technology boom. He would not wait long to make his move.

In July 1999, according to a filing with the Securities and Exchange Commission, Regent Moores and Chancellor Dynes joined the board of Leap Wireless International, a company Qualcomm had spun off the previous year. Leap was supposed to promote Qualcomm's cell-phone technology by building phone systems in small cities around the country. University policy required Dynes to get permission from UC president Atkinson prior to joining any corporate boards, but when asked by a reporter to produce documentation of Atkinson's consent, the university balked.

In November 1999, a UCSD spokeswoman flatly denied that Dynes was on the Leap board, despite the SEC filing. Later that month, the university released a letter from Dynes to Atkinson. "I am writing to request your permission to join the Board of Directors of Leap Wireless International on December 10, 1999," it said. "The annual time commitment away from campus would include my attendance at four half-day board meetings as well as an occasional one-hour conference call. I will use accrued personal vacation time for all absences connected with my board membership."

In a subsequent interview, Dynes acknowledged that a university public-relations woman had "misspoken" and that he had indeed been on the Leap board since July 1999. "I actually talked to the president before joining the board and asked him verbally," he recalled. "I think [the answer] was yes." The November letter was necessary, he added, "because we didn't have a paper trail of it, and there were questions that I think you asked and realized that a verbal trail -- that a paper trail was better than a verbal trail. But the verbal trail was there."

Dynes remained on the Leap Wireless board until 2004. According to his statement of economic interests, filed in March 2005, he received between $1000 and $10,000 in director's fees from the company during his last year.

Dynes dismissed allegations by university critics that taking a position on the Leap board created a conflict of interest for him or detracted from his work as chancellor. "I don't see that as a conflict. I think part of the university's responsibility is to be of service to the community and to nourish the economic health of the community, and part of the nourishment of the economic health of the community is to work with industry, work with schools, work with everybody. It's part of our responsibility; it's part of our public responsibility."

In April 2003, Leap, loaded up with more than $2.4 billion of debt, went bankrupt, blaming a downturn in the demand for its "Cricket" flat-rate wireless services following the burst of the dot-com bubble. Critics claimed that the company had been badly mismanaged and the board of directors was a front; a bankruptcy-court judge ruled that the company was "hopelessly insolvent." Stockholders were wiped out. Leap emerged from bankruptcy in August 2004, but by then both Dynes and Moores were gone from the board.

Dynes and Moores had other ties. In September 1997, Dynes had been an outspoken backer of a new taxpayer-subsidized baseball stadium for the Padres. As a member of a task force set up by San Diego mayor Susan Golding to study the desirability of a new venue, Dynes said, "I worry that Major League Baseball cannot be economically viable in San Diego. That's a serious problem for the community. I really don't want to see the Padres leave." He voted for a task force resolution that concluded, "The Padres cannot generate the revenue necessary to become economically viable and remain competitive in Qualcomm Stadium."

Dynes's father-in-law, Warren Hellman, also enjoyed a close business relationship with Moores. In October 1999, Hellman's investment firm and Moores paid an undisclosed sum to buy a small but rapidly growing South Carolina outfit called Blackbaud, Inc., which created accounting software for nonprofit organizations. Hellman's son Marco became chairman of the board.

When asked about the Blackbaud deal in a January 2000 interview, Dynes said he'd never heard of it and was unaware of any other investments Moores and Hellman had made together. By then, Securities and Exchange Commission records showed, the two men had jointly invested in at least one other venture, Mitchell International, a San Diego-based data provider.

In November 2004, Hellman and Moores purchased Vertafore, a software provider for insurers. In July 2005, Hellman & Friedman and JMI Equity, an investment firm controlled by Moores, acquired DoubleClick, Inc., an Internet-related firm, from its stockholders for $1.1 billion.

When it came time to pick a new university president to replace Richard Atkinson, who announced his retirement in November 2002, Moores, then chairman of the regents, appointed himself and several board allies, including Governor Gray Davis, to the selection committee. Word circulated that the fix was in: Moores favored Hellman's son-in-law for the job; the appointment of Dynes was preordained, and no one else had a chance. Candidates began dropping out in droves.

In June 2003, after a secret vote of the regents, it was official: Dynes had been chosen to run the university. "There aren't many people in America who have done what he's done," said Moores. "He's a remarkable combination of scientist, academician, and administrator."

The decline of Bob Dynes has turned out to be even swifter than his rise. Less than three years since he became president of the University of California, the friendly press is suddenly a thing of the past. His troubles began with a series of articles published last November by the San Francisco Chronicle. They revealed that the university had quietly given high-ranking employees $871 million in undisclosed bonuses, administrative stipends, moving allowances, and other cash compensation, in addition to salaries and overtime.

The paper also reported that under Dynes, UC had added hundreds of high-paying administrative jobs, padding the payroll at the same time the university was boosting student fees, increasing class sizes, and freezing pay for thousands of already low-paid clerical and janitorial workers.

Since then, other exposés have rained down like hail: UC provost M.R.C. Greenwood, Dynes's number two, quit under pressure after it came to light that the university had hired her son and a business partner. Then it was revealed that she was on a 15-month sabbatical, collecting $302,000 annually, after which she would take a $163,800 teaching job at UC Davis.

UC Davis vice chancellor Celeste Rose was also forced out, then given a two-year $205,000 annual home-office job with no specific duties. She had threatened to file a race and gender suit against the university, and critics said the job was a stealth settlement. "Two years' pay to sit home, watch TV, and do nothing," said state senator Abel Maldonado, a Dynes critic. (On February 22, Dynes admitted that the critics were right: "In my view, this was a settlement agreement that should have been approved by the regents.")

UCSD chancellor Marye Anne Fox, like Frances Dynes a Dartmouth College alumna, got $248,000 in sabbatical pay that was actually owed her by her previous employer, North Carolina State University. In her spare time, Fox serves on ten corporate and nonprofit boards, making more than $300,000 in addition to her $359,000 annual salary.

On February 8 Robert Dynes was called to testify before the state senate's Education Committee. He started by saying he was sorry. "First of all, I take responsibility for the fact that the University of California has not always met its obligations to public accountability in matters of compensation and compensation disclosure. And I believe I owe you, the members of the legislature, an apology for that shortcoming."

But Dynes did not remain apologetic for long. He soon began talking about how little money University of California officials made in comparison to academic chiefs at other universities. "Total compensation, as the Chronicle of Higher Education defines it, for university heads around the country includes amounts of $724,000 at the University of Michigan; $720,000 at the University of Delaware; $693,000 for the University of Texas system; and $625,000 at Rutgers University, to cite just a few examples of public institutions.

"As a point of comparison, the UC president's total compensation, using the Chronicle of Higher Education definition, is listed at $423,000. The point here is not about me, but about the nature of the competition we face -- and that competition is apparent throughout the ranks of the university.

"One might argue that we need to be competitive for the best faculty, but not necessarily the best administrators," Dynes continued. "I happen to believe that it is all one package -- that the faculty must be supported by the very best staff and administrative structure available if they are to be fully successful.

"It is perhaps true that at times we have been so committed to competitiveness and excellence that we have not been as mindful of the other responsibilities that come with being stewards of a public institution. That does not excuse anything we have done improperly, but it is an important piece of context."

The senators weren't buying it. Democrat Gloria Romero asked Dynes whether anybody had been fired as a result of the compensation mess. He mentioned former Provost M.R.C. Greenwood. "We heard what happened to her," Romero responded as the audience snickered.

Later, Republican senator Abel Maldonado pointed out that the university has long been plagued with scandals over the salaries paid its higher-ups, even before Dynes. "They're still doing it the same old way," he said. "Guess who's paying the bill? Taxpayers. Now they're telling me they have an internal audit. They need to be audited, but they need an independent audit."

Maldonado has proposed a bill that requires the California Postsecondary Education Commission to perform a biannual audit of executive compensation at the UC, Cal State, and community college systems.

"President Dynes said in the hearing that he would be happy to work with the commission," Maldonado said. "So, President Dynes, please come out and support my proposal."

But Dynes paid little heed to the people's representatives. He didn't have to. Politicians come and go, and their campaigns are largely dependent on contributions from rich corporate types who are some of the chief beneficiaries of university research.

At a second senate Education Committee hearing held on February 22, Senator Romero voiced her frustration. "The outrage over this has been not only the corporatization of the University of California, but its ability to get away with it. I hope that there are resignations, firings, and that people are shown the door." But the UC president said any action would have to wait, pending completion of a consultant's study he had commissioned.

When Senator Maldonado asked Dynes to grade his performance as UC president, Dynes said he'd "have to go over the report card" and then hesitated. "Incomplete," called out Jackie Speier, a Democratic member of the panel.

"I think it's a fair question to ask how you would grade yourself," Senator Romero said. "Maybe you'll come back to us with that at some point...but an incomplete at the end of the day doesn't pass." The committee adjourned after agreeing it would meet again in May to hear further testimony.

As the compensation issue continued to gather headlines throughout the month of February, regent chairman Gerry Parsky, a wealthy Republican financier from Rancho Santa Fe, stepped forward to offer a face-saving way out.

It wasn't exactly tough love that Parsky had in mind for his fellow San Diegan. He asserted that Dynes was overworked and needed the help of a "chief operating officer" to run the day-to-day operations of the university. "Let's leave open the possibility that someone could be in charge of administrative matters and not necessarily require the president's approval on all things," said Parsky. That way, Dynes said, he would be free to work on what he called his "vision" for the university. "Somebody," said Dynes, "has to be making decisions about the policies."