AMMUNITION FOR FRAUD

A recent article published in The Enterprise reports that a Massachusetts Department of Correction (DOC) lieutenant was indicted on charges of financial conflict of interest, two counts of procurement fraud, and three counts of larceny. These charges are in addition to those brought against the lieutenant in 2008 for stealing more than US $100,000 in state money to buy firearms and other law enforcement equipment for personal use.

The new charges stem from the lieutenant’s relationship with a firearms vendor — selected with the lieutenant’s help — who won a contract to provide the DOC with firearms, ammunition, and accessories. The lieutenant allegedly bought sporting goods and other items using a personal line of vendor credit without a DOC purchase order with the understanding that the cost would be deducted from the DOC’s line of credit. Prosecutors also allege that the lieutenant stole and sold ammunition in exchange for credit at major retailers as well as checks made payable to him.

Lessons Learned

An organization’s procurement process is one area most prone to fraud, and specific controls must be in place to deter potential fraudsters. Organizations should:

  • Prohibit members of the contract review committee from having personal dealings with potential vendors.

  • Require controls over the purchasing process to include a three-way matching of the contract or purchase order (i.e., quantity and price) to the receipt and invoice (i.e., quantities and prices).

  • Use the merchant category code to search for personal purchases made with corporate credit cards.


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