CPS employee allegedly orchestrated $900K fraudulent billing scheme

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Monday, January 5, 2015
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A CPS employee who worked at two high schools managed to orchestrate an almost $900,000 billing scheme, according to the annual inspector general's report.

CHICAGO (WLS) -- The CPS inspector general says he has uncovered a scheme to steal nearly $1 million dollars from Chicago Public Schools. A former employee is accused of fraudulently billing the schools for goods and services.

The alleged scheme and several more alleged wrong doings within the CPS system are part of the annual inspector general's report. With tens of thousands of employees and a multibillion dollar budget, education experts say fraud is nothing new at CPS - however, not on the scale of nearly $1 million.

While Chicago Public Schools has been dealing with an ongoing financial crisis, a CPS employee who worked at two high schools managed to orchestrate an almost $900,000 billing scheme, according to the annual inspector general's report.

"He did a lot of purchases of under $10,000 for five years using a lot of different vendors, and a lot of different reimbursement schemes. So, in total, it became a huge amount of money," said CPS Inspector General Nicholas Schuler.

The fraud allegedly took place at Michele Clark High School on the West Side and Gage Park High School on the South Side. Both schools struggle with enrollment and funds.

Schuler says the employee was the school operation manager, and with the help of other employees and vendors, he allegedly created false purchase orders for goods and services that were never provided.

Given how big high school budgets are, the fraud does not come as a surprise to Sarah Karp, deputy editor of the education magazine "Catalyst Chicago".

"With all that money, there is not as much control. The school operation manager has a lot of power to process reimbursements," Karp said.

The scheme is listed along with several other alleged wrongdoings in the IG's report, including evidence of 12 people, including six CPS employees, who falsified addresses to get into selective enrollment high schools. Kids coming from lower tier schools are not required to have as good of grades as students coming from higher tier schools.

"As long as seats are as competitive as they are, and highly sought after, people will be looking to game the system," Schuler said.

The inspector general says more training and controls need to be done at individual schools to prevent financial fraud.

The employee accused of the $900,000 scheme has resigned. The case is now on the hands of the Cook County state's attorney. CPS says it will try to recover those funds.

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