CHICO STATE SAYS $1M LOST TO FRAUD
An investigation uncovered numerous acts of financial and professional misconduct in the Chico State Department of Accounting within the College of Business.
“These acts of fraud, abuse, and other ethical lapses occurred between 2014 and 2019, resulting in approximately $1 million of inappropriate compensation and other financial losses to the university,” President Gayle Hutchinson wrote in an email to the campus community.
Four employees have been placed on leave, pending final disciplinary action. Chico State contacted authorities to investigate potential criminal conduct and
will be seeking any restitution to which the university may be entitled, Hutchinson wrote. The individuals have not been named.
This all started back in April 2018 when Chico State conducted an inquiry into a professor’s potential conflicts of interest and misuse of campus resources. In August 2018, an employee in the Office of Research and Sponsored Programs noted that some practices on one of the professor’s grants were out of the ordinary and raised those concerns to administrators.
So, on Aug 24, 2018, Hutchinson requested that the Office of the Chancellor conduct an investigation. The request was endorsed by the chancellor and approved by the chair of the Board of
Trustees’ Committee on Audit. In a letter addressed to Hutchinson on Nov. 6, 2019, the findings of the professor were revealed:
• Misused the campus name and other resources to promote and operate his nonprofit business;
• Misused campus facilities to conduct a for-profit training course without paying for the use of the facilities; • Engaged in multiple roles that made it difficult to determine in which capacity or whose interest he was acting when he solicited donations;
• Used individual retirement account funds to pay for travel expenses related to his nonprofit for individuals who were not students;
• Used University Foundation
funds for similar purposes; • Paid a student to work on his for-profit Turning Risk into Success venture using individual retirement account work-study;
• Falsified invoices in an attempt to receive reimbursement for expenses that he did not have proper documentation for and increased students’ pay in a way that obstructed the true purpose of the expenditure;
• Violated campus policy when he required students to buy his own electronic course materials.
“I am personally outraged that a few individuals have abused the trust placed in them by students, taxpayers, and donors for their personal benefit,” Hutchinson wrote.