Our firm was retained by a municipality to perform a conflict of interest investigation. An employee of the municipality was responsible for approving vendor invoices, awarding bids for services and purchasing equipment. The employee was laid off due to restructuring and, subsequently, the municipality discovered that it had made several hundred thousand dollars in purchases from a company that was owned by this employee.
Our role was to quantify the total purchases made from this business, determine whether the employee had reported this conflict of interest to the municipality, if the conflict of interest policy had been violated, identify any possible fraud schemes that may have been carried out by the employee, and identify other vendors owned or controlled by the employee from whom the municipality purchased goods or services.
We reviewed the conflict of interest policy and the employee’s personnel file to understand how conflicts were defined by the municipality, and whether the employee had reported any conflicts. We reviewed various bids arranged by the employee for the purchase of goods and services to determine whether the bids were awarded correctly, or if there was evidence of kickbacks or bid rigging. We interviewed the Chief Financial Officer of the municipality to understand the procedures required to be followed for the setup of new vendors and the approval of invoices. MDD also reviewed the municipality’s vendor database, and identified suspicious vendors requiring further investigation (which involved reviewing corporate search reports to identify the directors and owners of the businesses).
Our investigation uncovered several instances of wrongdoing committed by the employee. We also concluded that no conflict of interest had ever been reported to the municipality, and that none of the items invoiced by the employee’s company were ordered by or delivered to the municipality, meaning that the purchases were fraudulent. As a result of our findings, the employee is now facing criminal charges and a civil lawsuit.