L.A. Controller urges oversight of IT contracts after $3.5 million fraud

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Los Angeles City Controller Ron Galperin called Tuesday for safeguards against fraud, after discovering financial swindling in the Los Angeles Department of Building and Safety.

According to an investigation by Galperin’s office, employees at the Technology Services Bureau created fake invoices and falsified receipts from IT contractors, and paid contractors for work that was never delivered. The alleged fraud amounted to more than $3.5 million, most of which has been retrieved.

Galperin also found that Building and Safety employees made close to $38 million in purchases, many without written justification, and employees racked up millions of dollars in overtime costs without proper supervision. One employee paid a fake consulting firm thousands of dollars for consulting work that never happened

The investigation concluded that background checks for employees with access to sensitive information should be put in place. Additionally, all departments should report annually to the City Council about their IT contracts, and contractors should be required to report city employees seeking bribes or kickbacks.

“The City should adopt policies to prevent fraud and mismanagement from impacting our information technology contracts,” Galperin said. “The dishonesty of a few employees does not define how well the City serves residents, but these incidents make clear that we need to improve our internal operations and restore public trust.”

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