This page includes examples of real frauds that were identified at UC Davis.
Those who commit or condone fraud against the University will be held accountable and the consequences are real. These consequences may include financial losses, termination of employment, and reporting to legal and regulatory authorities. Fraud can also damage employee morale and the University’s reputation.
Case 1 | Pay for Unworked Overtime
What happened – An employee claimed and received pay for hundreds of hours of overtime for hours that were not worked.
Break-down in controls – Management was not appropriately monitoring overtime usage to ensure there was a legitimate need for the time claimed.
Consequences – After an investigation, the employee was issued a notice of intent to terminate, but resigned prior to the termination. The University is considering legal action against the employee. The department where this occurred has put additional controls in place to prevent recurrence.
Case 2 | Altered Travel Receipts
What happened – An employee forged and altered travel and entertainment receipts and steered University business to the employee’s outside business, amounting to a loss of more than $200,000, much of which was charged to federal grants.
Break-down in controls – This fraud was sophisticated, which made detection more difficult. However, if the individuals approving the employee’s travel had greater knowledge about the employee’s work, they may have been able to detect the fraud sooner.
Consequences – The employee resigned before a termination could take effect. This incident damaged the University’s relationship with its federal partners. The University is working with the federal agencies regarding repayment and has referred this matter to law enforcement.
Case 3 | Personal Misuse of P-Card
What happened – After an employee separated, the University discovered that a p-card was used to pay for expenses associated with remodeling the employee’s home.
Break-down in controls – The employee used a subordinate’s p-card to pay for the expenses and then served as the approver. There was no effective additional oversight.
Consequences – The department adopted additional controls. The University referred this matter to law enforcement.
Case 4 | Misuse of Affiliate Sponsorship
What happened – A separated employee was able to obtain affiliate sponsorship and over the course of more than a year spent nearly $300,000 on airfare that was directly billed to the department’s account through UCD’s travel system.
Break-down in controls – Timely and accurate completion of the ledger review was not performed. Additionally, the Decision Support unreconciled travel reports were not monitored. Finally, user access was not authorized by an appropriate level of management. Had account reviews been performed properly and timely the fraud would have been minimized.
Consequences – Nearly all of the expenses were not able to be recovered. Employees who were responsible for the lack of account oversight no longer work for the University. The University referred this matter to law enforcement.
Case 5 | Impersonating University Leadership
What happened – A department received an email from a criminal impersonating a member of UC Davis leadership, which included banking information and requested that UCD update their records to submit direct deposits to the new account. The bank information was updated and a payment was processed to the fraudulent account. The department became aware of the fraud when the employee inquired about a missing paycheck.
Break-down in controls – Due to the executive status of the requestor and urgency of the request the standard process was not followed, compromising the controls that would likely have identified the fraud.
Consequences – With the assistance of UCOP, the police department, and the bank, the University was able to recover the funds.
Case 6 | Existing Vendor Impersonation
What happened – A department received an email from a criminal impersonating an existing vendor, which included banking information and requested that UCD update their records to submit payments to the new account. The bank information was updated and a payment was processed to the fraudulent account. The department became aware of the fraud when the vendor inquired about a missing payment.
Break-down in controls – Controls were not sufficient to ensure that changes to payment distribution methods or addresses were authentic and/or requested from valid sources.
Consequences – Most, but not all, of the funds were able to be recovered. Additional controls have been put in place to prevent recurrence.
Case 7 | Grant Administrator Serves Prison Time
What Happened – A grant administrator for a large award forged purchase orders in order to buy electronics equipment for personal use. The same grant administrator also submitted travel claims for mileage that was not actually incurred.
Break-down in Controls – The grant administrator was a trusted employee, and their transactions were not properly scrutinized by the individuals approving them.
Consequences – Because the fraud involved a federally funded award, the grant administrator was prosecuted and served time in prison. Additionally, the University was responsible for paying back the funds to the granting agency.