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School Officials Participate in Sports Equipment Reconditioning Fraud
Friday, May 13th, 2011
Robert Wechsler
As a postscript to the Jersey Sting,
on Wednesday, according to a
Justice Department press release, the former CFO and CEO of a
company that reconditioned and sold athletic equipment to schools and
universities were indicted
on charges of duplicate payment fraud, the submission of fake price
quotes, and the fraudulent inflation of invoices with respect to
schools mostly in New Jersey.
The company would send an invoice and a statement in such a way that many schools would pay each of them, and the company would not return the duplicate payment. The company would send in quotes from mythical companies so that a school's multiple price quote requirement would be met (school officials actually requested these fake quotes), and the company would effectively get a no-bid contract. The company would give all sorts of gifts to school officials, as well as donations to schools themselves, and pay for them by inflating their invoices and charging for services never rendered and equipment never provided.
One of the more clever schemes the company participated in with schools was to provide a way for schools to use up all the money in their athletic budget by the end of the fiscal year by drafting fraudulent documents that would make future purchases appear to have occurred during the present fiscal year. And then the company would not let those responsible for paying bills know about this scheme, so that the work was paid for again the next year.
Two school officials pleaded guilty to charges related to this fraud a couple of years ago, but no further school officials were indicted on Wednesday.
According to an article in Wednesday's Jersey Journal, among the charges relating to school officials, one gets into campaign finance. The company is charged with making a $450 contribution to a city council candidate who was a school athletic director, but the candidate did not report the contribution. Another Jersey school official purchased $2,300 in clothing on his account with the company, and it was billed to the school district as "repair work on pitching machines."
This case provides a good complement to the Jersey Sting, which involved primarily elected officials. Employees in positions of trust, without proper oversight, can get caught up in the same sort of conduct.
Robert Wechsler
Director of Research-Retired, City Ethics
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The company would send an invoice and a statement in such a way that many schools would pay each of them, and the company would not return the duplicate payment. The company would send in quotes from mythical companies so that a school's multiple price quote requirement would be met (school officials actually requested these fake quotes), and the company would effectively get a no-bid contract. The company would give all sorts of gifts to school officials, as well as donations to schools themselves, and pay for them by inflating their invoices and charging for services never rendered and equipment never provided.
One of the more clever schemes the company participated in with schools was to provide a way for schools to use up all the money in their athletic budget by the end of the fiscal year by drafting fraudulent documents that would make future purchases appear to have occurred during the present fiscal year. And then the company would not let those responsible for paying bills know about this scheme, so that the work was paid for again the next year.
Two school officials pleaded guilty to charges related to this fraud a couple of years ago, but no further school officials were indicted on Wednesday.
According to an article in Wednesday's Jersey Journal, among the charges relating to school officials, one gets into campaign finance. The company is charged with making a $450 contribution to a city council candidate who was a school athletic director, but the candidate did not report the contribution. Another Jersey school official purchased $2,300 in clothing on his account with the company, and it was billed to the school district as "repair work on pitching machines."
This case provides a good complement to the Jersey Sting, which involved primarily elected officials. Employees in positions of trust, without proper oversight, can get caught up in the same sort of conduct.
Robert Wechsler
Director of Research-Retired, City Ethics
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