The UW System Regents took UW-Madison administrators to task Thursday for a lack of controls that allowed a former Division of University Housing employee to allegedly defraud the university of an estimated $115,000 in property and cash.
The alleged fraud came to light when the former employee was seen carrying TVs out of a university building. An internal investigation found ongoing fraud over two-and-a-half years through the use of two purchasing cards with limits of $200,000 each.
“This would have gone unnoticed if he were not seen walking out with a television. That part of the story is shocking,” said Regent Janice Mueller, a member of the Board of Regents Audit Committee which met in advance of the Board of Regents meeting at UW-Madison. “Everything about this situation is disappointing at best.”
Laurent Heller, vice chancellor of finance and administration at UW-Madison, told regents that the case had been forwarded to the Dane County District Attorney for possible criminal charges. The employee was quickly terminated, he said.
The gaps in procedures that allowed the issuance of the two purchasing cards with higher than usual limits may not be limited to the housing division, however, Heller said.
Heller remarked on the large number of employees at the UW-Madison campus and the difficulty of completely eradicating theft.
“Our critics say we are out of control,” remarked Regent Gerald Whitburn. He told campus administrators that a clear directive must be sent to employees that no theft will be tolerated. “The tone from the top is incredibly important. We hire people every day. Tell them: ‘This is how you lose your job.’”
The UW System has come under criticism from legislators for fund reserves in the past, is in court challenging unauthorized guarantees of the university’s credit on building projects by the UW-Oshkosh Foundation, and just this week was admonished by the state audit bureau to remedy longstanding gaps in its information technology security.
Campus officials became aware of the suspected criminal activity early in 2017, Jeff Novak, UW-Madison’s director of University Housing said in a statement. Madison police were quickly notified.
“The behavior in this case is deeply concerning to us and is not representative of the Housing Division and its employees. Any abuse of the resources entrusted to us by our residents, guests and the university cannot be tolerated,” Novak said.
UW-Madison Police Department investigators have recommended multiple felony charges against the individual to the Dane County District Attorney’s office. The university will not release the name of the employee until a charging decision is made.
In the months following the discovery of wrongdoing, University Housing and the Division of Business Services hired an outside auditor to review all related business practices and help establish new financial controls in the hope of preventing such abuses in the future, the statement by the university said.
Business Services initiated several changes to campus procedures and control practices for purchasing cards and receipt policies. Additional control improvements are being considered.