How to Unravel a Fraudulent Travel Reimbursement
Dominic A. D’Orazio and Joseph T. Wells
JUNE 2008 - Marin
Jensen seemed to have it all. A self-proclaimed family man, he had
a lovely wife named Julia and two young children. Julia stayed home
to manage the active lives of their kids, while Marin appeared to
be a model employee at the American Logistics Agency. From the exterior,
their lives were picture-perfect.
$400,000 home was nestled on a quiet tree-lined cul-de-sac in
one of the Northeast’s affluent communities. At first glance,
one might surmise that the area consisted of folks who spend a
great portion of their professional lives climbing the corporate
ladder. Of course, it’s no crime for a middle-management
employee to live in such a neighborhood. Certainly, there are
other ways to accumulate the type of wealth needed to afford the
property, but when the Jensens’ lifestyle exceeded their
income, questions arose.
for American Logistics for several years, Marin Jensen rose to
the position of senior logistics management specialist. He was
considered likable, and several program directors wanted to use
his services. During one particular year, he split his work time
between his main office and three other customers. Once his work
for the extra customers was finished, however, Jensen began to
struggle financially. He had become accustomed to the extra cash.
Logistics Agency is a part of the federal government. As an integrated
entity, it develops, fields, and sustains base command and control,
intelligence, surveillance, and reconnaissance systems. American
Logistics deals with research and development, management, and
distribution of equipment to support soldiers fighting overseas.
The company employs about 10,000 people worldwide and is also
supported by thousands of contractors.
federal government entity, in addition to its researchers, procurement
officials, and logistics specialists, American Logistics employs
lawyers, internal auditors, and criminal investigators, along
with a resource management office and a personnel office to ensure
that the agency is properly financed and staffed. It is one of
the state’s largest employers and produces $3.4 billion
annually for the state’s economy.
Jensen’s supervisor, Arthur Kiley had no complaints, until
one Monday when Jensen mistakenly left photocopies of his new
travel order document in the machine. Kiley was the first to notice,
and when he looked at the travel order, he observed that the signature
block had been cut out of a previously signed order and taped
to the new one.
may I ask what you’re doing with this signature taped to
your travel order?” asked Kiley.
that he was simply trying to make the signatures darker because
when he faxed them to the ticketing office, the color was muted.
Kiley pressed on, threatening him with an audit of his past reimbursements
of travel claims if he did not come clean.
By the end
of the day, Jensen had not confessed, so Kiley did a little detective
work. When he looked inside Jensen’s trash can, he found
a travel order with the signature cut out of it, copies of pay
stubs, and copies of other travel orders where the initial “J”
was handwritten by Jensen. The “J” pertained to the
first name of Kiley’s boss, James Heyward, who was the authorizing
official for Jensen’s travel orders and subsequent travel
Samuel Mezzacante at American Logistics’ legal office for
guidance. Upon being informed of the possible fraud, Mezzacante
first contacted the criminal investigators. Next, he called me
in the Internal Review Evaluator Department, and set up a meeting
to examine the evidence. Mezzacante requested our services to
review Jensen’s travel vouchers and determine how many were
In the meantime,
Kiley obtained several of Jensen’s settlement vouchers and
tried to compare the dates of supposed travel to what Jensen was
actually doing on those dates. The settlement vouchers were subsequently
turned over to the Internal Review Evaluator Department.
the Defense Finance and Accounting Service and requested copies
of all vouchers paid to Jensen, going back five years. The next
step was to contact the Bank of Commons, the contractor that managed
the Government Travel Card program. All government travelers are
required to use the Government Travel Card for all official travel-related
expenses such as hotels, car rentals, limousines, airlines, or
Committed Fraud, Will Travel
Jensen’s travel vouchers and receipts, we noticed that on
trips to Springfield, Virginia, he stayed at an unfamiliar hotel
chain. When we contacted its corporate office, they confirmed
that the hotel was located in four cities in Virginia—but
not in Springfield.
contacted Joseph Somers, an evaluator from our headquarters in
Virginia, and asked him to go to the Springfield address listed
on the hotel receipt and verify whether any hotel existed at that
location. When Somers tried to go to the address, he could not
find it. The place simply did not exist.
our director, told us to check every receipt and contact every
vendor to ask for legitimate receipts from the companies involved.
On some claims, Jensen charged car rentals from one company on
his Government Travel Card, while his travel vouchers showed that
he used a different one: Alamo Rent A Car. In all of those cases,
Jensen’s claim for River Run Rent-A-Car was higher than
his actual charge. When we looked at the River Run receipts that
were attached to his vouchers, we noticed that they were always
in the same position on the letter-size paper, which indicated
that Jensen had a template and was printing out his receipts as
he needed them for “proof” of his various trips. We
contacted River Run’s corporate headquarters to ask if Jensen
had used the agency to rent cars for his business trips and were
told that Jensen did not show up in their database as ever having
rented a car. A River Run official also faxed us an example of
a valid receipt. When we compared that receipt to the ones that
Jensen had printed, we realized that the only difference was a
five-digit code that appeared at the bottom of the valid receipt.
This code identified either the person handling the transaction
or a specific River Run agency office.
When we compared
Jensen’s travel claims to his Government Travel Card charges,
we discovered that he had charged train tickets at the station
nearest to the airport, while his travel vouchers claimed that
he took a limousine from his residence to the airport and back.
The cost was always under $75, which would have required him to
submit a receipt to our finance office. So, an $11 charge (cost
of the train ticket) became a claim for $74 (cost of the limousine)—a
net profit of $63 in each direction for each trip that Jensen
voucher claimed that he went to a location in northeast Pennsylvania,
but his Government Travel Card transactions showed that he was
gambling in an Atlantic City, New Jersey, casino at the time.
We thought it unlikely that Jensen was capable of being in two
places at the same time.
Jensen’s claims grew to a larger amount. When we conducted
a review of Government Travel Card transactions, Jensen’s
name came up because he was using the card in restaurants close
to his residence. These types of transactions are classified as
a misuse because there was no official purpose for him to eat
at the local restaurants. While reviewing the travel vouchers,
we noticed a pattern developing: Jensen always left a few days
before his scheduled departure date or stayed a few days after
his travel had ended. After piecing his travel vouchers together,
we noticed that, over a three-month stretch, Jensen was basically
on the road 100% of the time. For example, his travel vouchers
showed him leaving on a Monday and returning on a Thursday. Then
he would leave the next day (Friday) and return Tuesday. Again,
he would leave the next day (Wednesday) and return Monday, and
so on. Obviously, we questioned whether he was actually on travel
status the whole time.
In one part
of the review, we noticed Jensen had scheduled a trip in February—just
a few months back. He made reservations through the government
ticketing office for a plane ticket that took him to Savannah,
Georgia. On the day that he departed for Savannah, he went to
the Delta Airlines counter and charged a round-trip flight to
Savannah through his Government Travel Card. Then he went to the
Continental Airlines counter and had the counter person exchange
his government-issued round-trip ticket to Savannah for a one-way
personal ticket returning from Los Angeles. A few weeks after
returning from Savannah, he called Continental and had the company
exchange the one-way trip from Los Angeles to a round-trip ticket
to Hawaii for July 15. Because that date had not yet come, we
knew that Jensen was planning a vacation. We had to work fast.
course of our investigation, Jensen had his security clearance
taken away from him, which meant that he could not work on any
classified or secret work. Soon after, Jensen’s computer
was taken away from him so that forensic investigators could retrieve
all of his e-mail, along with any files he may have stored on
his hard drive.
security clearance or a computer to do even minor tasks, Jensen
wrote an e-mail during the week of April 11 to Kiley, claiming
he felt that there was nothing to do but resign from American
Logistics. His last day was April 15. We had to get all of our
paperwork to the prosecuting attorney before Jensen could go to
his computer files, the forensic investigator retrieved electronic
files for his fabricated hotel and car rental claims, which is
what the internal evaluators had suspected all along. In addition
to the files, there was e-mail correspondence between Jensen and
his wife, who asked him point-blank when the next travel check
was coming in. They needed the proceeds to pay for the current
month’s mortgage. Once we calculated that the scheme exceeded
$100,000, Agents Huntington and Harter brought it to the attention
of the U.S. Attorney’s Office (USAO).
and Harter, along with local police officers, went to Jensen’s
house at around 5:00 p.m. on July 14 with a warrant for his arrest.
As he was handcuffed and led out of his house, his wife came running
down the stairs to ask, “Marin, what about our trip to Hawaii?”
On the way
to county jail, the two agents asked Jensen why he carried out
this scheme to defraud the federal government. He replied that
he worked harder than most people in the federal government but
was not justly compensated for his work.
day, Huntington and Harter escorted Jensen to the federal courthouse
at the state capital. At Jensen’s arraignment before the
federal judge, his attorney asked if Jensen could go to Hawaii
with his family because they were scheduled to depart that day,
but the judge confined Jensen to the state of his residence. Meanwhile,
his wife took the children and spent a week in Hawaii without
charged with one count of wire fraud, covering more than 150 fraudulent
vouchers and totaling over $150,000. He was found guilty and was
ordered to pay $151,460 to the federal government for fabricating
expense vouchers. He was also sentenced to 20 months in federal
prison and ordered to serve three years of supervised release
upon the completion of the prison term. According to the transcript
filed in the federal court, Jensen took the money over a five-year
period to pay off mounting credit card debt.
to various parties involved in ensuring that Jensen traveled and
performed his duties in conjunction with his travel orders, no
one could unequivocally say exactly whether Jensen had properly
performed his duties. If he worked for Kiley, he would tell customers
A and B that he was working for his immediate supervisor. At other
times, he would tell Kiley that he was working for customer A
or B, regardless of where he was. Kiley had no control of Jensen,
nor did he corroborate with customer A or B to attest that Jensen
was indeed traveling for them. It was sheer luck that Kiley found
the taped travel order in the copier—and sheer stupidity
many red flags appeared during the perpetuation of this fraudulent
scheme, nobody investigated them. For example, when the travel
account for one customer had totally been expended, the budget
analyst did not ask why all of the funds were spent. Individuals
who are responsible for reviewing and authorizing travel claims
must review them for accuracy and legitimacy.
to Prevent Future Occurrences
electronic travel order and travel voucher claim system. Since
this scheme was discovered, American Logistics has started using
a new electronic travel order and travel voucher claim processing
system. Controls are set to detect individuals who might manipulate
the system, like Jensen. Still, the individuals who are responsible
for authorizing travel claims should review them for accuracy
and check for appropriate documentation. Travelers
should submit appropriate documentation (e.g., receipts for any
costs $75 or higher) when filing their travel voucher claims.
Otherwise, the voucher should be returned to the traveler until
he or she can support the claim.
or use a cross-communication system within the organization. All
authorizing officials should take the time to review vouchers
for padded or incorrect claims. A system should ensure that all
departments are notified and capable of reacting when a false
claim is uncovered, so that proper actions can be taken to minimize
damage and weed out individuals responsible for the fraud.
A. D’Orazio, CGFM, is a senior evaluator for a U.S.
Army Internal Review Office in the northeastern United States. He
has assisted criminal investigators on numerous cases involving
white-collar crime and has over 28 years of experience in auditing.
Joseph T. Wells, CPA, CFE, is founder and chairman
of the Association of Certified Fraud Examiners, Austin, Tex. He
is a member of The CPA Journal Editorial Board and can
be contacted at email@example.com.
Note: This case was condensed and adapted with permission
from Fraud Casebook: Lessons from the Bad Side of Business,
edited by Joseph T. Wells, copyright 2007, John Wiley & Sons,
For privacy considerations, most of the names of the individuals
and organizations are pseudonyms.