Pennsylvania Risk Manager Bills His Own Employer
A central Pennsylvania county Risk Manager is able to illegally bill his own employer – Dauphin County – twelve times over five years. The amount of money that was embezzled was a staggering $490,000. The most amazing conclusion was that no one checked on the bills. They were just rubber stamped and paid.
The first $120,000 was actually billed to a TPA, Inservco Insurance Services. The Risk Manager billed from a shell company that he created in 2007. The Risk Manager then approved the payments through the TPA. I would have thought this would have possibly been very hard to catch as the TPA had been billed for the services.
The next $370,000 is a different story. This is where I think that any oversight would have at least raised questions. The Risk Manager then billed the county directly. The amount billed to the TPA must have been large enough to cause the RM to bill the county directly so as to not raise any eyebrows.
There were many inconsistencies and red flags that should have been discovered:
- The bogus company was generically named Risk Management Associates of PA.
- There were 12 checks in all averaging over $40,000 each. I wonder if that was below some signing authority such as $50,000 per check.
- This happened over five years – if someone would have just investigated the bogus company, the RM’s wife was the owner as registered with the State of PA.
- $100,000 per year is quite a large amount of funds to go completely unnoticed. I am wondering if the County Comptroller at least asked for an IRS W-9 form for vendors.
- I am assuming there are no audits by an outside accounting firm. This would have stopped the scheme very quickly.
Dauphin County will very likely have employee dishonesty coverage as part of their GL (general liability) insurance package. I am not sure this would be covered under that type of policy.
As the RM was not convicted, I left his name off this post. You can follow the link for that information. I will follow up on the story if there are any more articles written on this matter.
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