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Fraud Awareness Week Special Report
Second in a Two Part Series Highlighting State Auditor Mary Taylor’s Special Investigations Unit Successes Stories
As part of Fraud Awareness Week, Auditor of State Mary Taylor is asking all Ohioans to be a watchdog and report government fraud. All year long, the Auditor of State Special Investigations Unit (SIU) is working hard to successfully fight government fraud in Ohio.
“The SIU is a team of experts who are committed to protecting your tax dollars from fraud, waste and abuse,” said Taylor. “All allegations of criminal activity are taken seriously and can lead to a successful conviction of the perpetrator. I am very proud of the work that the SIU does and will continue to make their work a priority of my administration.”
This year, eight people have been criminally charged and six have been convicted of fraud related crimes as a direct result of investigations performed by the unit. Additionally, the office has released 13 special audits, or audits with a specific, narrow focus, that have identified $386,619 in findings for recovery or misspent tax dollars.
As a follow up to the cases released earlier this week, the below cases are examples of criminal activity identified by the Auditor of State SIU in recent years.
City of Fairfield
Audit released 6/27/2006
SUCCESS: This case identified $335,514 in misspent tax dollars.
During the city’s regular financial audit, auditors found that bank accounts did not match the amount of money received by the city utility department. A special audit was then conducted to review the city utility department revenues. It was revealed that Mary Lawson, utility department supervisor and 16 year employee, was responsible for misspending $335,514 in public funds. She provided a written statement to the city of Fairfield police department admitting the crime.
Lawson pled guilty to one count theft in office and one count tampering with records. She was sentenced to six years in prison, of which five years were suspended. Lawson made full restitution at the time of sentencing.
Cleveland Academy of Math Science and Technology
Audit released 9/18/2006
SUCCESS: This case identified $3,646,821 in misspent taxpayer dollars.
Former State Representative Jim Trakas and the Ohio Department of Education (ODE) requested that the Auditor of State examine the Cleveland Academy of Math Science and Technology (CAMST) due to inaccurate enrollment reporting.
In order to begin an audit, the Auditor of State’s office used records from the school’s bank to recreate a financial history. The recreated documents allowed auditors to conduct a financial audit which showed that the school submitted fraudulent monthly reports to ODE. The reports stated that the school had as many as 681 enrolled students, while the actual number of students attending CAMST was approximately 100. The audit revealed that school executives received funds from CAMST without supporting documentation. The inflated enrollment and undocumented spending resulted in $3,646,821 in misspending.
Federal questioned costs in the amount of $336,775 were also issued for federal funding that could not be supported by documentation. The federal funding was related to the Public Charter School Subsidy Program, the School Breakfast Program and the National School Lunch Program.
Former school employees, Shirley Haynes and Mark Olds were indicted for criminal activities related to CAMST. Haynes was sentenced to 24 months in prison and three years probation after release. Olds was sentenced to 92 months in prison plus 3 years probation after release. Both Haynes and Olds are required to pay restitution.
Northern Ohio Rural Water
Audit released 9/21/2006
SUCCESS: This case identified $102,437 in misspent taxpayer dollars
The Auditor of State’s office received allegations that work was performed at the home of Anthony Quebodeaux’s, Northern Ohio Rural Water (NORW) General Manager, with NORW employees, equipment and material paid for by the organization. Sources also alleged that he kept NORW tools and equipment at his residence for personal use, received gifts from vendors, used NORW credit cards for personal use and did not properly record and deposit water fees.
The audit report verified the allegations against Quebodeaux and also confirmed that he had used NORW funds to build a deck on his personal residence.
The audit report showed that Quebodeaux and James Ruggles, a fiscal officer of NORW, were responsible for misspending public dollars. Ruggles served as a fiscal officer of NORW and was responsible for the maintenance of petty cash funds and records. At Quebodeaux’s request, Ruggles submitted false reports to the NORW board and was eventually convicted for this crime.
Quebodeaux was sentenced to eight years in prison and ordered to pay $88,614 in restitution. Fiscal officer James Ruggles was sentenced to two years of probation, 200 hours of community service and received a $5,000 fine.
The Auditor of State SIU receives an average of 550 allegations of fraud or misspending of public dollars each year. To report suspicious behavior contact the SIU office toll free at 1-866-FRAUD-OH (1-866-372-8364), by e-mail at www.auditor.state.oh.us or by mail.
Ohio Auditor of State’s Office
Special Investigations Unit
88 East Broad Street
P.O. Box 1140
Columbus, Ohio 43215
The Ohio Auditor of State’s Office is one of the largest accounting offices in the nation. The office serves more than 5,500 clients and issues approximately 3,400 audit reports each year.