The Craziest Card Fraud Story Yet
More than $12M stolen over six years. This fraud story exemplifies the saying that truth is stranger than fiction. Ralph Puglisi, a former accounting manager at the University of South Florida, pled guilty to the crime in June. Besides making lavish personal purchases, he used university payment cards to get cash for himself through a unique source. Keep reading to learn more, including the control gaps that allowed this to happen, and how a resource from Recharged Education could have helped prevent the fraud.
What Happened
Puglisi began working for the university in 2006, but apparently did not start his crime spree until 2014. His personal purchases via the university’s cards included home renovations, a relative’s wedding expenses, chartered yachts, and land on St. John in the U.S. Virgin Islands. However, the majority of the stolen funds went to an adult website.
Puglisi laundered money through the adult website profile of a relative’s fiancée. As reported by the Washington Post, he used the credit cards to pay the woman he had recruited. She kept 40 percent of what Puglisi gave her and kicked back the rest via check, minus what they set aside for taxes. For example, in November 2019, she allegedly mailed him a check in the amount of $18,953.28.
It was not until 2020 that management noticed a sizeable increase in expenses. An investigation ensued. Puglisi was terminated, as were his direct supervisor and an internal auditor.
Read More
Here is one of many articles that provide more details: https://www.washingtonpost.com/nation/2021/08/17/university-south-florida-medical-school-embezzlement/
Control Gaps
As gleaned from published articles:
By 2015, Puglisi had complete control of four card programs, including the sole authority to obtain new cards and change spend limits. Needless to say, this is an obvious lack of separation of duties.
Puglisi hid his purchases by making false journal entries, disguising the charges to look like legitimate business expenses. This is another separation of duties problem—he was able to edit transaction information in the accounting system.
Assumingly, no one but Puglisi reviewed or approved card transactions. The role of manager-approver—fulfilled by someone at a higher level than a cardholder—serves as the first line of defense against internal fraud.
Auditing was clearly not done often enough and/or it was ineffective. Further, it appears no one beyond Puglisi ever looked at the card transactions within the issuer’s system, which would have shown the actual vendors used.
Another assumption is that regular budget monitoring did not occur.
Recharged Education Resource
A P-Card risk assessment template, available for purchase for less than $100, includes 115 questions to help you evaluate your program controls. Several of the questions directly pertain to where the university fell short. For example, the template suggests:
Someone other than the card program manager/administrator should provide documented oversight to ensure the PM/PA does not obtain unauthorized cards. A monthly “new cards report” from the issuer can meet this need.
There should be separation of duties to prevent the same person from monitoring relevant general ledger (GL) accounts, and being involved with transaction interface files and payments to the card issuer.
It is likely safe to say that the university did not do a complete risk assessment of its card programs. Is this true of your organization, too? Prevent the agony of an internal fraud case by purchasing the template today or first learn more about risk assessments.
Consider enlisting the help of Recharged Education to do a risk assessment on your behalf. Submit a contact form to request a quote for this service.
Photo by Bill Oxford on Unsplash
Available Products & Services from Recharged Education
Submit a contact form to request a quote for what your organization needs.
Subscribe to the Blog
Receive notice of new blog posts.
About the Author
Blog post author Lynn Larson, CPCP, launched Recharged Education in 2014. With 20 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…