The former administrator of a Utah rehabilitation and skilled nursing center was arrested about seven months ago and charged with two counts of money laundering and three counts of theft-all second-degree felonies. He recently accepted a plea agreement and pleaded guilty to a class A misdemeanor of theft and money laundering. All other charges were dismissed. The remaining charges allege that he embezzled almost $170,000 which he used to pay for family vacations, remodeling his home, and other personal items. According to court documents, he faces a maximum jail sentence of two years. His sentencing is scheduled for March 16.
The alleged embezzlement took place between November 2016 and May 2019 while the former administrator was responsible for all of the facility’s operations and departments, which included oversight of the finances and expenditures to operate the facility.
After the accused left the facility to work for another similar company, the owner discovered that the man had used the company’s credit card to buy more than 400 gift cards from numerous and varied entities-a type of money-laundering scheme.
Police reported that he used the gift cards to purchase all sorts of personal items for his family. The amount embezzled using the company credit card over the two-year period was $148,794. He also wrote company checks to himself totaling $62,708 and stole $18,768 from petty cash. Additionally, he used his personal credit card to pay hospitals for $11,550 in healthcare costs and then reimbursed himself for three times that amount through phony statements and invoices.
Compliance Perspective
Failure to have a system that uses generally accepted accounting principles (GAAP) with appropriate checks and balances and an annual audit conducted by an independent Certified Public Accounting (CPA) firm, may be considered neglect of the facility’s fiduciary duty to protect residents’ financial assets and the assets of the facility, in violation of state and federal laws.
Discussion Points
- Review policies and procedures to ensure that a system of checks and balances is in place to prevent one person from being able to both approve invoices and write checks, and further embezzle funds.
- Train staff involved in the facility’s accounting and billing departments to be aware, to question, and to report to their supervisor or through the Hotline any reasonable suspicion of criminal behavior.
- Periodically audit residents’ financial accounts, company invoices, bank statements, and credit card accounts to discover possible misuse and embezzlement of funds.
FOR MORE INFORMATION ON THIS TOPIC: RESIDENT FINANCIAL RIGHTS AND FRAUD MODULE 16 – FINANCIAL INTEGRITY
