Updated 01/04/20
Four Chico State employees were placed on leave after an investigation allegedly uncovered financial misconduct “resulting in approximately $1 million of inappropriate compensation and other financial losses to the University,” President Gayle Hutchinson announced.
In a statement issued Dec. 23, Hutchinson said a campus investigation found that alleged acts of fraud and abuse happened between 2014-2019 in the school’s Department of Accounting, which is part of the College of Business.
Hutchinson did not name the four employees, citing privacy reasons. She said they were placed on leave the day of her announcement, “pending final disciplinary action.” It was not clear when that action could be taken.
The school also referred the matter to the authorities to investigate potential criminal conduct, Hutchinson said.
Butte County District Attorney Mike Ramsey said University police are leading the criminal probe, and his office is providing legal assistance. No criminal charges have been filed.
Ramsey said he believes several employees at the school began facing scrutiny following a “change in personnel” in the College of Business.
Stephen Cummins, interim executive director at University Communications, said the school initiated a fiscal review of spending in its accounting program in early 2019, which was shortly after the arrival of College of Business Dean Terence Lau. The review expanded into an investigation in March 2019.
The investigation focused on a five-year period from July 1, 2014, to June 30, 2019, Cummins said.
An investigative report identified “a range of inappropriate activity that resulted in approximately $1 million in losses to the university in the form of improper compensation and fraudulent and improper spending,” Cummins said. The report also identified “instances of professional misconduct.”
Citing privacy reasons and an ongoing investigation, Cummins said the release of further details is limited.
Before the school’s investigation was completed, the College of Business instituted stronger oversight of spending, Cummins said. Additional measures have been proposed.
Hutchinson, the president, said officials have “identified numerous corrective actions to strengthen our system,” adding that she will work to ensure their implementation.
“I am personally outraged,” she said, “that a few individuals have abused the trust placed in them by students, taxpayers, and donors for their personal benefit.”
This article will be updated to include additional information as available.