Karen Herzog, Milwaukee Journal Sentinel
When a former Milwaukee Area Technical College employee used her MATC credit card to pay for a car, a wedding trip, computers, home furnishings and other personal items totaling $259,000, the purchases went undetected until the college’s first internal audit in a decade.
The audit was requested by James Williams, vice president of finance, who was surprised when he arrived at MATC in July 2010 to find the college had not had an internal audit since 2001. He quickly sought a routine audit because a college with a $260 million budget should have one, Williams told the Journal Sentinel on Tuesday.
But while Williams was getting formal approval for the audit, and taking bids for who should do it, former MATC procurement director Kristin Seimits was at the peak of her seven-year spree of fraudulent spending, according to an investigation presented to the MATC board of directors at its regular meeting Tuesday.
Siemits made an estimated $128,000 in fraudulent purchases from June 15, 2010, – a month before Williams arrived – to August 2011, when she abruptly was escorted from her MATC office by security officers and placed on unpaid leave after the audit.
She had not submitted any credit card receipts or supporting documentation since June 15, 2010, according to the fraud investigation by the audit firm, Titus. Williams said he agreed when the auditor recommended the procurement department be the first department audited.
“There were reasons to focus in on that area,” Williams said, declining to elaborate.
But Williams did not suspect fraud and was not responsible for the fraud occurring under his watch, he said.
“She abused her position.”
Seimits, 44, faces two felony charges of theft exceeding $10,000 for purchases charged to MATC from 2005 to 2011.
Board Focuses on Future
MATC board members Tuesday did not ask any questions about Seimits or her supervision during their meeting, focusing instead on what controls have been put in place to prevent future fraud.
The Journal Sentinel asked an independent forensic accountant and fraud investigator about who should have caught the fraud.
Chief financial officers rarely detect it, though that doesn’t let management off the hook, said Tracy Coenen, of Sequence Inc. in Milwaukee and Chicago.
“When there’s fraud, there’s a deliberate circumvention of controls and a coverup,” Coenen said.
Often, fraud is uncovered and reported by a tipster, she said.
But, as the fraud investigation noted, MATC did not have a formal fraud policy or ethics hotline in place.
Seimits had total control over the credit card program, making it easy to “steal and conceal,” Coenen said.
It’s likely that auditors who do annual external audits told MATC that it did not have good controls in place, Coenen said.
But if Seimits was familiar with what auditors looked for, and dollar amounts they flagged, she could have hidden her purchases, Coenen said.
Seimits hid her purchases in 15 different MATC department budgets, according to the Titus fraud investigation. She hid the largest purchases in multimillion-dollar capital projects funds.
By the time she was caught, her alleged fraudulent spending was averaging $10,700 per month, and she had given herself a monthly credit line of $500,000.
Seimits, who was hired in 2003, resigned from MATC in September. Her salary was $90,217.
A red flag was raised in 2009 about use of her MATC credit card, before Williams arrived at MATC. Management had identified “suspect purchases” from 2008 and 2009.
But Seimits told her bosses she shared her MATC credit card number with other employees, according to MATC general counsel Janice Falkenberg.
She received a written warning.