Questionable Campus Loan Program Spurs Investigation

    A recent campus audit revealed that at least 13 percent of emergency loans granted to UCSD employees between Oct. 1, 2006, and Sept. 30, 2007, were based on fraudulent documents.

    The Employee Emergency Loan Fund, the program in question, provides up to $1,000 in loans to UCSD employees who prove to have an immediate need for funds as a result of unanticipated expenses or emergencies, and who have been denied the necessary monetary aid elsewhere.

    The yearlong audit found that at least 17 of 131 loans were granted based on fraudulent documents prepared by the fund supervisor. Overall, $15,000 was distributed to employees who may not have been qualified to receive the loans.

    According to the audit, however, the financial risk to the university was minimal, as the loans reviewed were either repaid or in the process of repayment via payroll deduction.

    The investigation was initiated after a UCSD Medical Group manager discovered a file that contained several suspect loan fund applications in the supervisor’s office, including seemingly forged documents and templates used to create forgeries, according to Sally Brainerd, associate controller for UCSD.

    “It’s important to note that we caught this problem ourselves, and took immediate and appropriate actions to investigate and conduct an audit,” Brainerd said in an e-mail.

    The loan fund supervisor admitted to completing only one fraudulent document. The audit concluded that she had been involved in many more questionable loans, after they were delivered to her by the union representative.

    Additionally, the audit uncoverd evidence that suggests one UCSD employee may have solicited $45 to $50 in unauthorized processing fees from loan applicants. The employee was trusted due to her longtime employment and position as a representative with the American Federation of State, County and Municipal Employees union, the audit found. Union officials could not be reached for comment.

    The UCSD supervisor who prepared the fraudulent documents was placed on investigatory leave on Oct. 15, 2007, and chose to retire in January 2008.

    University officials declined to specify any disciplinary actions taken against the union representative due to the confidentiality of the matter, noting only that she was referred for “corrective actions.”

    The audit also states that the applicants were unaware of the supervisor’s actions.

    UCSD officials also declined to comment on why no criminal charges were filed against either employee.

    Both the employees and applicants involved in the investigation worked for the UCSD Medical Center. The supervisor and union representative handling the loans were not named.

    The short-term loan program was created in 1970 for UCSD employees with a solid or better performance rating in need of emergency funds, and who were turned down for at least one loan from a bank or credit union. The loans are issued from a UC fund, and the applicants may receive better-than-market rates.
    The program requires written denial of a loan application from a bank or credit union, as well as documents confirming the purpose of the loan. Fraudulent documents found by the audit included loan denial letters and car repair estimates.

    According to Brainerd, the university is not aware of any previous problems with the loan fund program.

    “As a large university, we’re constantly monitoring our systems and looking for ways to improve our oversight, management and operating responsibilities,” Brainerd said.

    To safeguard against such problems occurring in the future, UCSD now requires that applicants provide original documents supporting their loan request at the time that they personally sign the promissory note. A designated department official is required to approve all emergency loans, in addition to the assistant director of Student Business Services.

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