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KSU employee charged with defrauding the state

9:19 AM, Mar 29, 2013   |    comments
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KENNESAW, Ga. -- A former Kennesaw State University employee is charged with trying to "defraud the state."

Gerald Donaldson, former executive director of environmental health and safety at KSU, was arrested Thursday night.  He's charged in connection with an area crime ring that created "shell companies" to conduct fraud, including within a unit he managed.

Five others were also charged in the criminal case. Investigators say they were part of a crime ring which defrauded the state of nearly $1 million. 

KSU fired Donaldson back in October after university officials got a tip and uncovered his involvement in fraudulent business transactions. 

University officials worked with state law enforcement agencies and found the fraud also included private organizations and additional individuals outside of the University System. 

The KSU Police Department, the Georgia Bureau of Investigation and the State Attorney General's office found alleged fraudulent purchasing practices that exploited loopholes in the state purchasing process.  These included the creation of false vendor profiles and resulted in payments to fictitious vendors.

"Malfeasance and fraudulent behavior absolutely are not tolerated, and we will prosecute any and all employees who abuse their roles to steal from this institution," said Vice President of Operations Randy Hinds. "We will exercise the full extent of the law to prosecute such criminal activity."

University officials conducted an audit that revealed awarding contracts to shell corporations and billings for duplicate work. 

KSU officials say they put peactices in pace to close loopholes identified in the University's, and the state's, procurement procedures.  they include: 

-Hiring of a new high-level administrator, the associate vice president for operations, to whom the business operation team now reports
-Initiation of an internal monitoring process of all contracts greater than $2,500, and requiring them to have two signatures (the previous one-signature limit was $5,000)
-Rigorous post-award reviews of all contracts from the past two years - nearly 5,000 - that exceeded $5,000; and more than 70 contracts that exceeded $1 million
-Establishment of a low threshold for repetitive contracts with single-signature authorization
-Quarterly aggregation of all contracts under a single person's signature for supervisory review
-Increased scrutiny of vendors and implementation of a more rigorous vendor-approval process
-Implementation of additional controls that separate purchasing activities among more contract and billing reviewers
-Utilization of fraud prevention software

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