Expense Audit
March 8, 2018

The most notorious expense report scandals of the last 20 years

Josh Anish

Expense reports seem a mundane fraction of reality; all we have to do is lay out work expenses, itemize and submit them, and get reimbursed. Yet for a small subset of folks, the expense report story isn’t so straightforward.

In fact more than a few careers have been derailed by expense report malfeasance, here are the most prominent of the mistepping bunch.

Last month, news broke that Veteran Affairs Secretary David Shulkin misrepresented the facts on his expense reports to accommodate his wife on a trip to Europe. Allegedly, his chief of staff altered his expenses at his request to purport that the Secretary would receive some sort of award in Denmark, so that his wife’s $4300 plane ticket would be paid by the government. No such award was ever received.

UCLA head men’s basketball coach Jim Harrick, just 12 months after winning the Bruins’ 11th national basketball championship, was dismissed in 1996 for falsifying receipts on his expense reports. Two of his players broke NCAA rules by attending a dinner with a recruit at Harrick’s behest; apparently Harrick then attempted to hide their presence by itemizing the dinners as those purchased by the wives of assistant coaches (who weren’t there) on his next expense report.

Andy Miller, the former CEO of Polycom, didn’t directly create false changes on his expense reports. Instead, he lived a lavish lifestyle that he documented on his expenses, but only internally. The problem, of course, is that Miller and Polycom had a fiduciary responsibility to properly report the CEO’s spending habits. In 2012, Miller racked up $115,000 in personal expenses charged to Polycom, despite publicly filing that he received less than $35,000 in perks that year. By the summer of 2013, he was forced to resign.

In 2014, a Department of Highways employee named Steven Hull embarked upon a brazen scheme. He began filing expense reports claiming that he spent several weeks a year in hotels across West Virginia, presumably for professional reasons. Investigators later found those reports to be totally fabricated; Hull wasn’t staying in hotels at all. In fact, he was renting an apartment that set him back a total of $18,144 during a 2.5-year period, the same time span in which he claimed $70,563.14 in hotel reimbursements on his expense reports.

Academics aren’t immune to expense report fraud, either. Chinese national Xi Ning was a leading roboticist simultaneously employed by the University of Hong Kong, Michigan State University, and the Institute of Electrical and Electronics Engineers. And since most people don’t have three salaried positions, Ning was able to (temporarily) take advantage of the situation and live a lavish lifestyle while billing two (or even all 3) institutions for the same expenses. Xi didn’t skimp on the brainpower allocated to his scheme; investigators are alleging more than $400K of expense report fraud over a 5-year period spread across the three schools.

Bad actors will often exploit loopholes in T&E policies to fatten their wallets as well. At the end of last decade, England was rocked by an expose published by The Daily Telegraph highlighting the laxity of Parliament’s back office policies. Apparently numerous MPs were taking advantage of a loophole entitled The Second Homes Allowance which gave members requiring two homes—one in London, and one back with their constituencies—a potential $36,000 grant. A handful of MPs opaquely conflated their first and second homes on expense reports to get portions of the grant as reimbursement for non-essential work done on both houses. Needless to say, this behavior did not go over well with the people of the UK, suffering through a particularly difficult recession at the time.

This quick look into notorious expense report malfeasance reveals a few patterns. The most glaring is a lack of oversight, usually in the form of managers unable (or unwilling) to monitor what their employees are claiming on their reports. The other insight concerns loopholes exploited by employees looking to capitalize on the margins of the rules. Fear that something similar is going on in your organization? Give AppZen’s automated audits a try today.