***BREAKING*** $1.2M Deposited in "Off the Books" account used to make payments to MCPS employees from 2017-2021*** AND *** $572K in Questionable Credit Card Purchases by MCPS Staff from 2016-2022.

 

    ...In September 2021, MCPS’ Procurement Department identified questionable purchases through its normal review of credit card activity, which was referred to MCPS’ Internal Audit Unit in accordance with MCPS’ Policy for Reporting and Handling Fraudulent Actions by MCPS Employees, Agents, or Contractors. 

MCPS’ Internal Audit Unit conducted a limited review in October 2021 of a 

transportation management employee’s credit card activity. The Internal Audit 

Unit issued a report dated November 17, 2021, which identified questionable 

purchases (such as gift cards, furniture, and purchases shipped to the employee’s

home) made by the management employee. 

    MCPS further discovered the existence of an account maintained by a transportation vendor outside the control of MCPS’ Office of Finance that was funded with amounts owed to MCPS. This “off the books” account was used to make payments to several MCPS employees and to purchase goods and services circumventing MCPS’ established policies and procedures. Specifically, the account was funded with amounts due to MCPS for liquidated damages resulting from the transportation vendor failing to deliver goods timely and credits for certain items included in the original bus procurement contract and paid for that were subsequently cancelled. 

    Based on the results of the internal audit and the discovery of the account maintained by the vendor, MCPS reported the questionable activity to the Montgomery County Police Department. Additionally, MCPS hired an accounting and advisory firm in December 2021 to conduct an independent forensic investigation of the aforementioned account and certain transactions during the period from July 2016 to January 2022. 

    In February 2022, the firm issued a report which identified that approximately $1.2 million had been deposited in the account and that payments totaling approximately $649,000 were made either directly to MCPS employees or for purchases of goods and services purportedly on behalf of MCPS during the period from October 2017 to November 2021. As of November 16, 2021, the account had a balance totaling $535,036. The firm also reviewed MCPS credit card purchases during the period July 2016 to January 2022 and identified purchases totaling approximately $572,000 made by transportation department employees that were considered questionable or required additional review. The firm stated in the report that additional work would be necessary to fully investigate the aforementioned activity. 

    On November 15, 2021, MPCS placed two transportation management employees on administrative leave pending investigation into the questionable purchases. One of the employees was subsequently terminated in February 2022 and the other employee resigned in March 2022. 

    As of April 7, 2022, we were advised by MCPS management that MCPS, the Montgomery County Police and State’s Attorney Office, were still conducting investigations related to these issues. Specifically, MCPS was pursuing collection of the credit balance totaling $535,036 with the transportation vendor, was modifying its process for purchasing buses, and developing procedures for how it accounts for changes to bus specifications; including ensuring that credits from 13 vendors are handled properly. Furthermore, MCPS management advised us that it provided training on proper credit card usage, decreased credit card purchasing limits as necessary, and eliminated credit cards based on limited or no purchasing activity. Finally, MCPS was planning to further review certain questionable credit card purchases identified by the firm...