The Sacramento Department of Utilities director fired eight employees after they were caught using fake receipts to defraud the city of thousands of dollars.
The former employees used the fake receipts since at least 2009, and together had collected $5,000 in city money, according to a city auditor report being presented to the City Council on Tuesday.
The auditor’s office learned of the fraud from at least three separate complaints through the office’s “whistleblower hotline” — a program that lets city employees and residents anonymously report fraud, waste and abuse.
Several employees were getting reimbursed way more than the $200 allotted in their union contracts for steel-toe boots, and were also getting reimbursed for personal items, such as clothes for their children, the complaints alleged.
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The complaints prompted the auditor’s office to launch an investigation, which ended in May.
Some employees used fake safety stamps on receipts to try to pass off other items as safety boots, the report said. On the stamps, the word “safety” was spelled wrong.
Department of Utilities Director Bill Busath made the decision to terminate the eight employees, including at least one supervisor, after receiving a recommendation from the Human Resources department that he do so, he said.
“We sent a very clear message,” Busath said. “This type of defrauding city government is not appropriate and we’re not going to stand for it.”
The supervisor was also receiving city money for non-safety purchases, Busath said. Some of the eight employees had been with the city for a long time, and some were relatively new. He said the employees were fired about a year ago.
The fraud could have been going on before 2009, but the city reimbursement data only goes back that far, the report said.
To prevent fraud from happening again, the department put new safeguards in place for approving reimbursements, and the city started contracting with several safety boot vendors directly, Busath said.
The auditor’s report also recommended the Human Resources Department negotiate stricter reimbursement rules with the other city unions that have agreements for safety footwear and prescription safety glasses. The Human Resources Department became aware of the issue during its latest round of negotiations, but not all labor agreements were updated, the report said.
The city has created a new, detailed policy for the authorized purchase of protective footwear, which is expected to go into effect soon with four employee organizations, according to city spokesman Tim Swanson. The policy will be part of upcoming negotiations with other unions.
City Auditor Jorge Oseguera said the case is one of the more serious ones stemming from the whistleblower hotline, and it highlights the importance of the program.
“I think the value in what we do not only is identifying these things and shedding some light on it, but also serving as a deterrent so employees know they have a resource they can use anonymously to bring these issues forward and that someone is going to investigate it and bring it to the attention of management,” Oseguera said.
The whistleblower complaints about the boots were among the more than 60 complaints the auditor’s office received from April through September — the highest of any quarter since the program launched in 2012, a staff report said.
This article was updated Dec. 6 to correct the name of the Human Resources Department.