University Business - July/August 2011 - (Page 90)

Embezzlement Epidemic Consider the following 13 recent major embezzlement cases that have surfaced at colleges and universities around the United States, totaling more than $16.5 million in direct losses: • Drake University (Iowa), April 2011: Former director of student accounts accused of embezzling at least $470,000 over a seven-year period. The administrator allegedly “manipulated institutional accounts,” which he then converted for his personal use. • Vassar College (N.Y.), April 2011: Former project manager accused of embezzling nearly $2 million over a five-year period. The accused allegedly set up a phony construction company and charged the college for work not performed. to accounts he controlled under the name of an apparent vendor. • Duke University, November 2010: Former head of the Department of Surgery, charged with embezzling $267,000. The person allegedly used his position to order goods and services for his own personal use paid for by the department. • Iona College (N.Y.), October 2010: Sister Marie E. Thornton, former vice president of finance, charged with and ultimately pleaded guilty to embezzling $1.2 million. Thornton, who reportedly had a gambling problem, issued college checks and used college credit card accounts for her own benefit and was also fraudulently reimbursed by the college with phony invoices. • Virginia Commonwealth University, October 2010: Lisa Jones Durham, former coordinator for a VCU community outreach program, pleaded guilty to embezzling more than $144,000 over a three-year period. Durham obtained checks made out to herself under her former name to pay for personal expenses. • St. John’s University (N.Y.), September 2010: Cecilia Chang, former VP for international relations, pleaded guilty to embezzling more than $1 million. Chang created a nonprofit entity, which she represented as affiliated with the institution, and fraudulently accepted donations that she converted for her own benefit. • La Salle University (Pa.), May 2010: Stephen C. Greb, former director of food services, embezzled about $5 million over at least a 20-year period. Greb created a phony food vendor and then authorized fraudulent payments which he pocketed. • Naropa University (Colo.), April 2010: Former accounts payable clerk, accused of embezzling nearly $600,000 over a twoyear period. The employee allegedly pocketed student refund checks by voiding them and reissuing them to herself and a friend. How can educational institutions prevent, detect, and respond to this phenomenon? Research conducted by my firm, Marquet International, Ltd., suggests that most perpetrators hold some type of position with their employer that involves fiduciary duties. Most schemes of this magnitude also span several years—four-and-ahalf, on average, according to our research. At many colleges and universities, simply as a result of their cultural ethos, practical business controls may not be in place to prevent or detect common defalcations. • Kansas City University of Medicine & Biosciences (Mo.), March 2011: Former president, CEO, and trustee, accused of embezzling more than $1.5 million over a five-year period. The official allegedly engaged in a variety of fraudulent reimbursement schemes, including receiving additional compensation. • University of Montana, March 2011: Former residence life employee, accused of embezzling more than $300,000 over a seven-year period. The person allegedly pocketed cash payments made by students. • University of Vermont, March 2011: Former administrative assistant at the UVM Extension program in Newport, Vt., accused of embezzling $45,800 over a five-year period. The accused allegedly deposited checks made out to the institution into personal accounts she and her husband controlled. • New Jersey City University, December 2010: Shaunette P. Ruffin-Moody, former office manager for the university’s student government organization, pleaded guilty to embezzling $502,000 over at least a three-year period. Ruffin-Moody issued at least 219 unauthorized university checks to herself, her husband, Alexander Moody, and three others. • Columbia University, November 2010: Someone formerly affiliated with the university (in an undisclosed manner) charged with embezzling $4.5 million over several months. The person manipulated university accounts and made electronic funds transfers 90 | July/August 2011 Minimizing and Mitigating the Risk Preventing embezzlement involves active policies that discourage employee theft, backed up by proactive auditing procedures universitybusiness.com http://www.universitybusiness.com

Table of Contents for the Digital Edition of University Business - July/August 2011

University Business - July/August 2011
Contents
Editor's Note
Ad Index
College Index
Behind the News
Sense of Place
Viewpoint
Financial Success
Money Matters
Community Colleges
Funding Capture
Models of Efficiency
Thwarting ID Thieves
Embezzlement Epidemic
What's New
End Note

University Business - July/August 2011