Last March, a jury found an Idaho man guilty on 28 counts of wire fraud and theft of Government money. The man, Matt Ruck, was a contract administrator for a Moscow, Idaho company called Government Services Corporation although in this case, it is not possible to separate the man and the company. The Company had a contract to supply fuel to DHS (Department of Homeland Security) and took advantage of that contract by billing the Government twice and in some cases, three times for the same product.
Mr. Ruck shouldn't have had a Government contract in the first place as he had been debarred from Government contracting for previous convictions for fraud and theft. He got around that prohibition by finding another fellow to front for him.
Mr Ruck was sentenced last week to five years in prison, three additional years of supervised release and ordered to pay $206 thousand in restitution. His co-conspirator was sentenced to two years probation.
We were unable to determine how the fraud was discovered - the Department of Justice press release did not include that information. It took nearly four years before the fraud was exposed.
We discuss the importance of internal controls to prevent and detect fraud, waste, and abuse. But, when the fraud occurs at the top of an organization and the information flow is limited to just one or two people, there is no internal control system that will prevent fraud from occurring. That is why there will always be the need for auditors, investigators, and external oversight resources.
You can read the two related DOJ press release here and here.