This fraud was allowed to go on for 17 years. How?
Michelle Holt was a DoD employee at Joint Base Langley-Eustis. She was a salaried employee and as such, was entitled to overtime pay if authorized by her employer as well as other forms of holiday and vacation pay and premium pay for holidays worked.
The fraud was first identified by the DoD-IG during a routine audit that identified anomalies in Michelle's time and attendance records. The matter was turned over to investigators (the Air Force Office of Special Investigations (AFOSI) and the Defense Criminal Investigative Service (DCIS)) who ultimately found that from December 2001 to July 2018, Michelle falsely claimed more than 42 thousand hours in unauthorized overtime for hours she did not work as well as other amounts of unauthorized holiday leave, sick leave and annual leave.
In case you're trying to do the math, 42,000 hours equates to 2,470 hours per year. When the normal worker is paid for about 2,080 hours per year (40 hours times 52 weeks), this is almost twice as much as a normal work week. Stated another way, Michelle would have to work 17 hours a day, five days a week for 11 years to book that many hours.
How is this allowed to go on for 17 years? Where was her supervisor? Where were the finance people in charge of managing budgets? Where were the controls in payroll processing? There were serious internal control deficiencies in the process.
According to the Justice Department press release, Michelle accomplished the fraud by making manual retroactive adjustments to protected computer time and attendance systems to add overtime, reverse leave taken and reverse holiday leave. In doing so, she used another employee's log-in information without that employee's knowledge or authorization.
The Government calculated that over the 17 year period, Michelle's enriched herself by $1.4 million. She has been ordered to prison for four years and has been ordered to pay restitution. Good luck getting the restitution - "she used the money she received from the fraudulently obtained overtime and leave payments to buy items for herself and for her family" - and when she's released at age 56, won't have much opportunity to earn enough to ever pay back the $1.4 million. At the court ordered payment plan of $200 per month, it will only take her 7,000 months (or 583 years) to pay it all back.
Contractors, are you vulnerable to such a scheme? Do you have internal controls in place to reduce the likelihood of something like this happening in your location?
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