Authorities are investigating a $400,000 scam that had the University Hospital paying "grossly inflated" prices of up to $4.50 each for tens of thousands of pens worth less than a dollar apiece.
A purchasing agent has been fired and the case has been referred to the Salt Lake County attorney for prosecution, said university Police Chief Wayne Shepherd.In addition, the FBI has been contacted to look into the possibility that multi-state crimes may have been committed by a California office supply company, Shepherd said.
Meantime, the hospital has "pallets of pens" with an actual value of about $50,000, for which it paid closer to ten times that much.
One purchase order for 60 gross, or 8,640 pens, cost the school nearly $35,000, said Sgt. Lynn Mitchell. Ultimately, some 20 checks were issued to the company for between 25 and 30 similar orders, he said.
Shepherd declined to name the purchasing agent or the company, pending the outcome of the investigation.
"I can confirm that there is an investigation under way into possible criminal theft or embezzlement within the University Hospital purchasing department," said hospital spokesman John Dwan.
"I want to assure the taxpayers that, if in fact people are culpable, they will be prosecuted," he said.
Shepherd said the purchases involved manipulation of the hospital's purchasing computer system.
"It was a very good job," Shepherd said. "It will take some time to sort it all out. We're talking of figures up to $400,000."
The problem was discovered in February when a University of Utah police officer overheard a conversation about the purchases.
"He was in the right place at the right time, or wrong time, depending on the perspective," the chief said.
That led to an audit of the purchasing department, which showed discrepancies and manipulation of files and orders involving a particular company and agent, Shepherd said. He would not elaborate.
"The way it was handled, it would have been extremely hard to detect without a tip," he said. "Someone would have found out at some point, but by then you could do a lot of damage."
In exchange for the orders, the purchasing agent was given a variety of gifts by the supply company, Shepherd said.
"She got coats, trips, that sort of thing," he said.
The company was also involved in at least five transactions with other university departments, but Shepherd said no irregularities were found in those orders.
Mitchell said the pens were mostly disposable ballpoints. Purchased in gross lots, they would normally cost between 39 cents and $1 each, he said. The purchase orders involve per-pen costs of between $4 and $4.50.