Fraud can be a very serious legal matter in both the private and public sectors, even when the potential case is an indirect byproduct of other seemingly legal activity. Fraud typically requires some level of intent to violate the law in both situations, but private sector fraud can differ from public sector because even the appearance of impropriety can be an issue when public funds are involved. This can happen at the state and local level in addition to the federal level, and it can also happen in any particular department. It can even include state justice departments such as in Colorado.
An example of potential fraud
There is one particular issue looming within the Colorado state government regarding exactly this potentially criminal activity. At question is the resignation of two particular state officials who had also been working with the department as contracted agents for consulting and public speaking with a significant increase in income as part of the deal. The dual work was supported by a contract that appears legitimate, which would be a basis of any criminal defense. However, the contract was abruptly cancelled by the department when the appearance of fraudulent conflict was made public by the Office of the State Auditor.
What the OSA found was that the two former employees where being paid a regular salary while also performing additional services for the department for “consulting” and speaking engagements at a rate much higher than their individual salaries. The contract compensation was approximately $2.5 million for the additional services which could have been provided as part of their regular job responsibilities. The OSA by law must then transfer the information to the Attorney General for potential criminal charges evaluation.
While there assuredly appears to be a potential fraudulent component to the additional service contract, the truth is that fraud cases can be difficult to prosecute when the questionable activity still falls within the limits of the law. But, this issue also pinpoints the concept that even the appearance of impropriety in the public service sector can raise red flags from law enforcement regarding internal criminal activity.