NY College Contractor Allegedly Cost University Approximately $159K
A food service contractor at Stony Brook University in New York is under investigation for allegations of fraud and misconduct, including fraudulent accounting and reporting, and using university funds to pay for employees at off-campus locations, adding up to at least $159,000 in fraudulent charges.
According to The Statesman, a campus student newspaper, catering contractor CulinArt was hired by the public university in 2017 to run an on-campus dining facility. The New York attorney general’s office has opened an investigation into their business practices at Stony Brook. The company has previously been sued for alleged fraud, and agreed to an $18 million settlement with New York public schools in 2012.
Multiple former employees have alleged wrongdoing by CulinArt at SBU, three of which resigned, and one was fired, the newspaper reported. One former employee claims the company violated its profit-sharing agreement, wherein CulinArt was obligated to share any profits above 6% with the university, but never did, and also admitted to accounting fraud in multiple capacities.
Another former employee claims that the company lied about payroll to take advantage of Stony Brook’s Covid-19 policy. When the campus shut down in 2020, the university offered to pay the wages of CulinArt’s on-campus employees. When CulinArt learned of this offer, CulinArt allegedly moved employees that didn’t work on-campus to the on-campus payroll to have their salaries compensated for free.
The Statesman reported that CulinArt charged Stony Brook $19,000 for an employee that never worked at Stony Brook, $2,500 for gas and milage for an unrelated commute, and overbilled by $18,000 on an invoice for Ramen noodles.
CulinArt also billed the university for health and welfare benefits of nonexistent employees, The Statesman reported. The company sent SBU a $460,000 invoice for 162 workers — while 42 of them, or 26%, had already been fired, former employees and internal documents show.
Twenty-six percent of $460,000 is $119,259, bringing the estimated fraudulent cost to $159,000.
Taxpayers should be concerned when public institutions funded by their tax dollars are taking financial losses because of lax oversight of their contractors.
CulinArt hasn’t been accused of wrongdoing by university leadership or by law enforcement.
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