Here is another example of fraud committed by a non-Florida school district staffer. Each of these actual fraud examples are posted here as a "lessons learned" to educate staff and elected officials in the Lake County, FL School District. This is the type of fraud that could occur in the Florida Lake County School District if there is not a strong management and board oversight and internal audit department. Previous news articles indicate a hesitation by elected officials to allow or support full implementation of a strong internal audit and other controls designed to prevent fraud and improve resource management in the District. In this case, the article is a press release from the US Dept. of Justice because the fraudster committed federal mail and wire fraud from her staff position in a South Carolina School District.
Notice that she was able to approve sole source contracts without competitive bidding and got more than $468,000. Again, we see that a favorite method of committing fraud is through the contract or procurement process.
Also notice that the article says that "11 individuals and 10 companies have been charged as part of the Antitrust Division's ongoing investigation into fraud and anti-competitive conduct in the E-Rate program." After reading that, a pro-active management would review the federal E-rate funding program at the Lake County School District (if it is used as a funding source - I do not know) and ensure that strong controls existed to prevent similar fraud.
This blog will continue posting examples and recommendations to encourage improved fiscal and management integrity of the School District.
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Issued April 20, 2006 and from
http://www.usdoj.gov/atr/public/press_releases/2006/215745.htm
FORMER SOUTH CAROLINA SCHOOL DISTRICT OFFICIAL INDICTED
FOR ROLE IN SCHEME TO DEFRAUD FEDERAL E-RATE PROGRAM
WASHINGTON, D.C. — The Department of Justice announced today that a federal grand jury in Columbia, S.C. returned a 12-count indictment alleging that a former South Carolina school district official committed mail and wire fraud in a scheme to defraud the federal E-Rate program. The Department said that the charges stem from fraudulent applications for E-Rate funding that former technology director Cynthia K. Ayer submitted on behalf of Bamberg County School District One in Bamberg, S.C.
According to the indictment, which was returned yesterday, from April 1, 1999, until Feb. 1, 2003, Ayer used her position as the technology director of the school district to award technology contracts to her company, Go Between Communications, by submitting fraudulent applications for E-Rate funding of more than $3.5 million to the Federal Communications Commission's (FCC) Universal Service Company (USAC) without a competitive bidding process. The indictment further charges that, as a result of her scheme to defraud the E-Rate program, Ayer fraudulently obtained $468,496 in payments from USAC. The charges in the indictment include 10 counts of mail fraud and two counts of wire fraud.
"Committing fraud upon the E-Rate program harms already underprivileged school districts," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "The Antitrust Division will continue to vigorously pursue those who cheat the competitive process and take advantage of this federal program."
The E-Rate program subsidizes the provision of Internet access and telecommunications services, as well as internal computer and communications networks, to economically disadvantaged schools and libraries. The program was created by Congress in the Telecommunications Act of 1996 and is administered by the USAC, a non-profit corporation, under the auspices of the FCC.
Including today's filing, 11 individuals and 10 companies have been charged as part of the Antitrust Division's ongoing investigation into fraud and anti-competitive conduct in the E-Rate program. Six companies and three individuals have either pleaded guilty, agreed to plead guilty, or have entered civil settlements. The defendants have agreed to pay criminal fines and restitution totaling more than $40 million. Two of the individuals have each been sentenced to serve six years in prison.
The mail fraud charges, 18 U.S.C. § 1341, carry a maximum penalty per count of five years in jail for violations committed before July 30, 2002, or 20 years in jail for violations committed on or after that date, as well as a $250,000 fine and forfeiture of any property constituting or derived from the proceeds of the offense. The wire fraud charges, 18 U.S.C. § 1343, carry a maximum penalty per count of 20 years in jail, a $250,000 fine, and forfeiture.
The charges announced today resulted from an ongoing federal investigation of fraud and anticompetitive conduct in the E-Rate program. The investigation is being conducted jointly by the Antitrust Division's Atlanta Field Office, the United States Attorney's Office for the District of South Carolina, and with the assistance of the Federal Communications Commission Office of Inspector General.
Anyone with information concerning fraud or anti-competitive conduct in the E-Rate program should contact the Atlanta Field Office of the Antitrust Division at (404) 331-7100.
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