Employees fired for squatting in city-owned apartment, defrauding benefits, and taking bribes Hamilton AG finds

More details about individual cases in Hamilton’s fraud and waste report have come out thanks to today’s meeting agenda, including that one of the nine people the city fired for fraud was living in a city-owned unit “without the knowledge or authorization of management.”

Hamilton released its annual fraud report last week, but specific cases remained under wraps until Auditor General Charles Brown’s presentation on Nov. 20. In total the report found $110,000 in fraud and $22,000 waste. Brown cited several examples in this more fulsome report including the worker living in the city-owned unit.

Brown further found that the worker had renovated the apartment “for their personal use and benefit.” While the exact extent of repairs was not shared, Brown found they had cost the city more than $9,900.

Additionally, “another employee accountable for oversight of the unit in question was aware of the personal usage by the other employee and they did not report it to management,” Brown shared. Both of these employees have since been fired.

The AG also recommended numerous changes such as “regular, unannounced checks on City assets, better tracking and inventory management, adequate segregation of duties, review of relevant job duties for the impacted role to review relevant security technology, and to improve cash-handling processes” to prevent this sort of thing from happening again in future.

While this was one of the more unusual examples Brown provided, he found numerous other issues. One of these entailed a Hamilton employee who had an “undisclosed significant social relationship with a long-time City contractor.” This resulted in the contractor receiving “favourable treatment,” per Brown.

This contractor was later found to have a social relationship with two other city employees. The employees received homemade food (provided at work meetings and for the staff members personally), as well as birthday parties at the contractor’s home. None of these gifts or meetings were disclosed to the city.

“Favourable treatment in the assignment of work, pricing, awarding of contracts, and invoice processing was substantiated,” Brown wrote. This amounted to more than $9,000 in waste over 15 months thanks to the “favourable pricing” given to the contractor.

Furthermore, Brown found two employees had been working two job while they were meant to be exclusive to Hamilton. One was working in the private sector while, “also holding a similar position in the same field in the private sector, the duties of which could conflict with their City role.” This employee later resigned.

Another employee was found to have been working for another city while they were on the clock for Hamilton. This occurred over a period when Hamilton’s employees worked from home. However, by the time AG investigators tried to meet with this employee, they had resigned management tried to meet with them to discuss repeated absences.

The employee admitted to working two jobs but claimed they did not overlap. However, the AG has been unable to prove this as yet and the employee has not provided any evidence to their claim. This situation remains under investigation.

In another case, a Plans Examiner has been criminally charged with two counts of breach of trust for allegedly, “entering false information on City of Hamilton documentation and depriving the
City of Hamilton fees owed to it.” The AG has not made any change recommendations as yet pending the completion of the employee’s trial. This began in October and will conclude in March.

One other employee was found to have received cash from users at a city facility who wanted “extra time” on their booking. This employee received up to $1,900 this way over a few years. The AG recommended the city fire this employee, but the employee resigned first.

In another investigation, five employees and one former employee were found to have defrauded the city’s benefits program by falsely claiming orthotics and compression stockings. All six employees went to the same medical provider, who would fabricate documentation for them.

This scheme resulted in $31,000 worth of fraud across all six cases. The city’s insurance Manulife, would “reimburse” the employees for the cost of the stockings. The employees would then give the medical provider a share of the cash.

“All of the benefits plan members personally benefited from these false or misrepresented claims,” Brown wrote, “the plan members either knew or should have known that the claims were false.” So far four of the employees have been fired but the AG didn’t have information about the fifth.

Another four employees were found to have their own fraud schemes. One, who racked up $2,700 in false claims, has since retired. Two others were fired and the fourth was formally disciplined. The last employee is no longer allowed to file benefit claims online.

In one case, the city was defrauded by an outside scammer who posed as a vendor. This imposter told city staff the vendor had moved to a new bank account. When the city went to pay the vendor, the payment was diverted to this new account. However, soon after the real vendor came to the city asking for their payment, exposing the fraud.

The false vendor received a $52,000 payment. The AG investigation is ongoing and recommendations to avoid such mistakes have not yet been made.