I have trouble wrapping my mind around it was well, but I think it makes sense when I look at it this way:
She was in a position of authority to execute purchases. They trusted her with up to $10k at a time. Literally speaking, she WAS the one who was supposed to keep track of issues and potential fraudulent purchasing.
The other end, accountants who paid the bills, trusted that her purchases were valid because she’s the authority. They likely are dealing with hundreds of similar purchases every month, for everything from electronics to books to furniture. Hers would have simply been one purchase of many in a given week or month.
Yale probably didn’t have any independent auditors examining their financial systems. Why would they? They had internal people to keep track, and they trusted them.
So, it adds up to “trusted person in place to authorize purchases did so, and people who pay the bills trusted she was buying what the school wanted, and no one else was in place to make sure it all came out in the wash. Eventually, someone else doing some research on spending patterns at the school noticed and reported it, and it all snowballed from there.”
At least, that’s the simplicity my mind reaches when I try to make heads or tails of these types of fraud cases. It’s probably a lot more complicated than that, but who knows. Every organization has their own complex series of byzantine purchasing rules that would take months for someone from the outside to figure out. Our own is wound so tight I try to have nothing to do with it at all (but we also have far more requirements due to government oversight and purchasing rules).
But just like democracy, it can be made more bearable when it isn’t seen as an absolute thing that must be pursued in its purest form. Social market economies, social democracies, the Nordic model all temper this second worst of all options.
Still don’t buy it, even if she had authorisation to spend 10K, usually that means the expenditure doesn’t have to go to tender or requires a business case as in capital investment purchases
To spend 4 million a year in 10K chunks you need 400 purchases, more than 30 a month. She might have the authority to make the purchase but someone else would have to make the transfer to pay the invoice, unless she used a credit card, in which case someone in finance would get a statement every month…
And the money has to come from someone’s budget and the electronics have to go through inventory and logged in… there are just too many handshakes, everywhere you look there must be someone else involved
In my professional life I have seen things, dodgy deals… but nothing of this size. The usual is to get into the consumables budget (who is going to count boxes of A4 paper or printer cartridges…), sometimes you see equipment purchased for much higher than the market price or computer components that do not match the specs in the quote, enough to “divert” a few hundred here and there. Still risky but if they don’t get greedy it could fly for while
Not really. What is mostly different is modern oligarchs don’t have to hide their wealth as people in power had to in Soviet times. While the infamous goods shortages in the Soviet bloc had a variety of causes, one of the major ones was that many of the produced goods never reached official distribution channels but were skimmed off. Often times the only way to get goods in demand was to “know somebody” who could sell you some of the missing goods under the table.
I don’t know if she had an standing purchase order or placed individual orders, if she always bought from the same supplier or rotated many, what were the commercial terms agreed, payment in cash or bank transfer against PO, payment upfront or 30 days… where did the invoices go, what happened with the sales tax. Is not like she would have a brown envelope with notes to pay in cash and no paper trail…
Whole thing gets more and more complex the more you look into it, that is why I found difficult to believe this is a one woman operation
She also knew what level of transaction the auditor would look for. Most auditors focus on “material” amounts, I can’t say for Yale, but which under the federal government it is $25K. They might grab something smaller as part of a department’s specific testing, but the nature of the purchase probably wouldn’t raise any eyebrows. A bunch of tech for an elite teaching hospital and medical system? It’d be suspicious if they didn’t buy anything.
There was a breakdown (or lack of) in internal controls. Each step of the procurement process should have had a different person overseeing it: request, approval, payment, receipt, and inventory. It appears she performed all or most of these functions, which allowed her to hide the theft and diversion of assets much longer.
Some of the universities I’ve hade to work with have had pretty poor internal controls, so this doesn’t surprise me. It also doesn’t surprise me that it was a whistleblower that finally brought this to light.
All good points, which is why it appears to be a breakdown in internal controls. According to an article I read on NPR, she managed up to all five points of internal controls. As for hiding it, hospitals are multi-hundred million, even multi-billion dollar operations. Four million a year could represent less than 1% total expenditures. They probably have several people in the AP department, processing payments on a regular basis. Don’t know how this was set up, but if she set it up as a preferred vendor with an open contract, AP would probably process the transaction without review, especially if there wasn’t much supporting documentation required as part of the payment. Depending on how frequently AP staff cycled through the system, this sort of thing could be hidden for a while.
The items she was diverting add up to 10K pretty fast: a surface pro can easily hit $2K, an iPad can run to $1000, and there were probably mundane laptops and other office equipment mixed in, but just aren’t as flashy in the news. Five Surfaces for a staff of 100+ would easily disappear, and if it never entered inventory, there’s be almost no way to track it or know it wasn’t there.
She wasn’t just some mid-level admin staff person; she was the director of admin and finance for the department of emergency medicine, essentially the CFO for the Yale Medical System’s ERs, ICUs, IMCU/NICUs. That’s hundreds of staff, scores if not hundreds of beds, multiple floors, and potentially more than one hospital. She was the one who was supposed to be on the lookout for fraud, and possibly manage the internal audit process for her department. She was in a position of trust, which is why when there were questions raised over the years, she was able to provide satisfactory enough answers to keep from deeper inquiries.
She was also probably paid between $350k and $1M a year, so her lavish lifestyle wouldn’t necessarily make anyone suspicious. If her spouse was similarly compensated, she’d be able to literally brag about her buying cars and houses, and no one would bat an eyelash.
I’m already working this up as a case study for my organization’s procurement and anti-fraud trainings.
I agree with you, I reckon this stopped because:
It was a money laundering scheme (or part of one) that reached it’s cycle conclusion. And is always better to have a scapegoat when you cut ties, as having someone charged means case closed, so less likelyhood of further investigations.
A key person (or persons) left the game and stuff started to be noticed.
After time complecency overtook caution and they got found out.
While I wouldn’t be surprised if this was a money laundering scheme involving others, it could also just be her. She would have every reason to rat out her co-conspirators to bargain for lesser charges, or a more lenient sentence. It may be the case here, since the NPR article didn’t mention jail time.
I feel like once you’re in a scheme like this, getting out is probably pretty hard. The company she was shipping the stuff to might threaten to rat her out if the shipments stop - they’re a fence, not known for the most trustworthy of motivations.