Documents reveal STC management doctored accounting employee files to cover up fraud concerns
Updated: Jul 17, 2020
South Texas College’s internal auditor raises additional red flags
By Jonathan Salinas
A former South Texas College (STC) accounting employee's digital and hard copy files that exposed accounting errors and inconsistencies within the college were inexplicably tampered with and shredded by her superiors. The former accounting employee, who approached Únete 956 with her story, raised multiple concerns about the college’s Dual Credit Program’s financial practices, which she said were susceptible to fraud. Rather than hear her concerns, documents obtained by Únete 956 reveal how STC management doctored her files and then sabotaged her employment.
Throughout her time at the South Texas College Accounts Receivable Department, consisting of monthly renewals through a temp agency, Karen Simpson noticed many things. She regularly received student complaints about loans awarded for which they had never applied. Outstanding school district balances unaddressed for weeks and months. But she was proactive.
Simpson, an accounting student at the University of Texas Rio Grande Valley, took it upon herself to rectify these errors. She empathetically advised Dual Credit high school students saddled with loans they had never requested in the first place, conveying to her superiors how upset the students were at the errors. Far from rewarding student advocacy, Simpson’s superiors asked why she even cared, warning against “opening cans of worms,” she told Únete 956 in an exclusive interview.
Nonetheless, Simpson crafted a standard purchase order form for the college, which she claimed the college did not have before. Eventually, Simpson would go on to create several procedure proposals, in order to address the manifold issues. As a result, Simpson was harassed and terminated in a deceitful manner in August 2019.
In an email sent 8 August 2019, which Únete 956 obtained through a Public Information Act request, Simpson emailed her manager, Marittza Adame, to detail her proposals. Simpson’s proposals took a 5–point approach, addressing “Vendor Directory Forms,” “Vendor Contact Change,” Vendor PO Inquiry Form,” “Business Information Change Form,” and “New Invoice Format.”
Each point addressed how the given subject matter could be better handled. Each bullet point included discussion of the issues which led to Simpson’s proposal at hand. According to Simpson, STC’s transactions with local school districts consisted of casual requests for payments between college officials and school district leadership over phone calls or lunch appointments, instead of standard purchase order forms.
“I have been making collections for different school districts, and I believe if we sent out these blank Contact list forms, we can be more successful in getting accounts to be paid on time. AR will send these to central office to be filled out. I have created one for the administrative units (B.O.) and a second one to be emailed to their respective high schools. These forms can be sent out in excel or posted in our website in case they want to download and send to our A/R Department,” Simpson wrote under “Vendor Directory Forms” in her 8 August email.
Simpson was concerned about getting payments paid on time, which was her job, as an accounts receivable clerk.
Under “Vendor Contact Change,” Simpson wrote that the purpose of creating this form was due to a large volume of incoming calls from high schools advising of changes in principals and principal assistants.
“Independent School Districts have asked if they can go online to submit contact information changes to my department,” Simpson wrote to justify creating a contact change form.
Under “Vendor PO Inquiry Form,” Simpson said she created that document because “it’s hard for me to get any documentation from the different ISD’s that I work with.” She said, “I have to edit the form to the best of knowledge," adding “we need to send this form to the business office at each ISD so they can disburse it to each high school in their district in the beginning of the year and hopefully it can be a requirement by our department for any of our vendors.”
“Business Information Change Form,” Simpson’s fourth heading, also allowed school districts to update their information.
Lastly, but most revealing, under the fifth heading, “New Invoice Format,” Simpson explains the importance of establishing new invoice practices.
“I know that there are different funds that we work with and not all invoices look the same. However, I wanted to present you with an edited version of the one we already have. The reason for this change is due to the constant confusion when I bill to my ISDs. The accounts receivable clerk doesn’t know for what the charges are and who to forward it to. I think it’s important for our department to also keep record of which department and program we are billing for. I also took a note of what the vendors say they can’t locate: invoice, term and date due. They seem to always be confused or miss this information in our invoices. I know there is a detailed process in our College to approve any forms. I hope you can revise them and give me an input on them,” Simpson wrote.
Simpson would never receive input about her work.
Still, Simpson requested a meeting at the highest levels with the incoming Dean of Dual Programs and School District Partnerships, Dr. Rebecca de Leon, who in 2019 replaced STC’s long-time dual credit dean, Nicolas Gonzalez. Simpson figured that the incoming dean should be briefed on the “unprofessional” practices in the department, providing STC’s accounting and dual credit departments a fresh start, under new leadership.
Under Gonzalez’s leadership, according to Simpson, payments and collections of school districts from the college were made informally, in person, without standard purchase order forms, which are customary to education business practice, as mentioned earlier. As a finance student at UTRGV, Simpson says STC was not in compliance with basic finance principles she was learning about in her undergraduate courses, which was concerning because accounting errors if found out would negatively affect her accounting career. These conditions, Simpson says, are susceptible to corruption.
“South Texas College produces a very poor quality of work,” Simpson told Únete 956. “Professionally, they are not respectable. I graduated with an associate’s degree from the college. It’s a community college, so they’re under-staffed, although they also employ non-licensed people to work on their books because it’s easy to control their environment that way. We don’t know, for example, if they [South Texas College] are being controlled by any mafia. Whatever is really happening at South Texas College is not what they have in the books. They just do things the old school way and over-charge students.”
Other documents obtained by Únete 956 through a Public Information Act Request (in an unrelated matter) independently corroborate Simpson’s concern and conviction that the conditions for untoward activities within the college’s finance departments was widespread.
In an April 2018 memorandum to the STC Board of Trustees Chairman, (and member of the Audit Finance and Human Resources Committee) Paul Rodriguez, the college’s Internal Auditor, Khalil M. Abdulluh, informed him that STC “Executive Management” made numerous “informal requests” to change the wording of his final report to the board committee.
Abdulluh described the situation as an “impasse.” He reinforced professional auditing standards and ethics in his alarming letter to Paul Rodriguez, who oversees STC President, Dr. Shirley Reed — South Texas College’s Chief Executive Officer, who herself holds a Masters in Business Administration and should know better than to edit an Internal Auditor’s Report. Such behavior defeats and negates the purpose of the auditor as an independent evaluator, suggesting corrupt purposes.
Attempts to influence Abdullah’s internal audit of South Texas College date back to at least January 2018. In an email to STC Vice President for Finance and Administrative Services, Mary Elizondo, Abdulluah defended his findings under “Student Activities and Wellness Audit Report,” saying:
“All of the recommendations are supported and documented by adequate and sufficient audit evidence and that the audit was done in accordance with IIA [Institute of Internal Auditors] standards.”
“Furthermore," Abdullah continued, "the finalized audit report is the Office of Internal Audit’s independent, objective assessment of the department’s system of internal controls. I hope you can appreciate how uncomfortable it is for me to even feel the necessity to write this e-mail. I feel that it is critical that the audit committee [of the Board of Trustees] receive the exact same version of the audit report that is provided to the President.”
Most alarmingly, Abdullah said “previous audit reports issued by the external/internal auditors allowed management to interject their bias into their reports. However, I do not plan to allow management’s bias to compromise the independence of this or any future audit reports from my office.”
South Texas College management’s tampering of employee files experienced by Simpson appears to be part of a behavioral pattern across college management. Simpson was just one of its victims, though in a position of considerably less authority than Abdullah.
So in a 14 August 2019 email to Marittza Adame, Simpson’s manager, Simpson requested that a co-worker, who could corroborate Simpson’s findings, be present at a meeting with South Texas College’s new Dual Credit dean, Dr. Rebecca de Leon, which Simpson was able to arrange thanks to her employee networking connections she established with de Leon’s office staff. The meeting was set for 20 August 2019. (Remember this date.)
Adame denied Simpson's request, saying, "I would rather not at this point."
Just minutes after sending this email, Simpson wrote a concerning email to the college’s IT services.
“Good Morning IT, I had a quick question regarding file recovery for myself. I had notes I need for a meeting and would like to know if somebody can obtain my notes which are no longer on my desk.”
Simpson needed IT’s help to recover files no longer available on her computer nor her desk. The digital files had been inexplicably erased and the hard copies were in the shredder.
Two days later, on Friday, 16 August 2019, Simpson emailed screenshots to her supervisor, Soledad Ortiz, which showed Simpson’s files ‘last saved‘ at 4:08 a.m. Why would Simpson’s files detailing the college’s problematic financial practices be ‘last saved‘ at 4:08 in the morning? The college isn’t open at that time.
According to Simpson, she was told by a college supervisor that only Simpson’s manager, Marittza Adame, would have access to Simpson’s files from home. Únete 956 reached out to Adame for comment but received no response.
Screenshots show how Simpson's files were doctored. The top picture shows Simpson as the author of the document. The bottom picture, showing a file saved at 4:08 a.m., shows no author nor 'last saved' name.
Not long after emailing screenshots of evidently tampered work files to Adame, Simpson forwarded the email to her personal email address in order to maintain a record of what was happening. Simpson was clearly alarmed.
“Someone in the college has been editing my files and creating issues with my work due to not finishing in a timely manner because of errors. I am sending myself a copy for my records of what I send my supervisor,” Simpson wrote to herself. Simpson believed someone in the college was doctoring her files to sabotage her work and felt the need to document it.
Simpson continued emailing herself. On Monday, 19 August 2019, Simpson forwarded herself her email to Maittza Adame (referenced earlier) in which she outlined the problems she’s found within the Accounts Receivable (AR) Department at STC. I asked Simpson why she felt the need to forward these emails to herself.
“I thought the college would deny anything I said, that they would try to disprove or discredit me,” Simpson said. “I don’t think they were going to disclose the information I uncovered. The college didn’t want me to find out, either. I think they also didn’t want me to file a claim reporting negligence in their recording. If you’re not careful with details, or if you have a lot of errors within the account, which the college did, that’s a big deal."
"Although I’m a student, I like to follow the rules," Simpson continued. Everything I was learning in undergraduate classes was not being applied by the college. I know it won't always be “to the book,” but accounting principles should be followed. I follow strong ethical procedures in my employment. There was negligence in how the college reported its tuition revenues. Not all loans requested by students to pay the school were actually true, and students were usually over-charged for student fees, as well,” Simpson alleged.
One day before Simpson’s meeting with Dean de Leon, Simpson emailed her supervisor, Soledad Ortiz, to request the college’s shredding company open the office shredder in which Simpson said hard copies of her work somehow ended up. Simpson was also asked to turn in work which required the files she could not retrieve, disrupting her work. In the email, Simpson mentions how some physical copies attributed to her did not match her handwriting, noting the digital files' ‘last saved‘ dates and author sections shown above:
“I am very behind if I cannot find my work. I have found that FILES in my K://drive are saved at 4am. Could you let me know if IT has contacted us regarding file recovery,” Simpson inquired August 19 in an email to Ortiz.
Simpson also forwarded herself this email.
Early Tuesday morning, 20 August 2019, a day which Simpson might have suspected would be her last at the college, Simpson forwarded herself whatever files she recovered in preparation for her long-anticipated meeting with Dean de Leon, the new dual enrollment dean. Simpson described the meeting to Únete 956 as an opportunity to "present my research," which she had worked on for months.
In preparation, Simpson emailed Ortiz, her supervisor, that morning in order to explain the procedures she developed for the college’s dual credit program, on which Simpson had focused as an Accounts Receivable worker. What in hindsight reads as a final plea, anticipating her dismissal, Simpson concluded:
“As I mentioned before, I have experienced a lot of changes in department structure since I have been working here. I like working as a team and the environment at the office has changed. I am just proposing to be more organized and have a clean environment since I have been having issues with files and handed outdated procedures. I really like to challenge myself to give input into how to improve things in this department. I know we have a lot of work and it’s been hectic but I am positive changes can be made for the better. Specially for any current AR Staff member.”
Simpson also forwarded herself this email.
As the meeting approached, Simpson was excused to leave the office and head to the meeting location. She was joined by Soledad Ortiz, her supervisor, who walked alongside her. As they approached the meeting room, Ortiz blocked the entrance and informed her she was not needed and demanded Simpson hand her the notes she'd compiled. Ortiz told Simpson that their manager, Marittza Adame, had signed off on pulling out the rug from underneath her.
In what turned out to be Simpson's final email as an STC employee, addressed to Maria G. Reyes, the college’s Dual Credit Program Assistant and Dean de Leon, Simpson explained why she was disallowed from entering the meeting, which she'd arranged and organized in the first place:
“Good morning Ms. Reyes, I changed the response to today’s meeting. I did accept the invitation and really wished that I could have stayed. I wanted to talk to Dr. De Leon and explain all of the issues that my department has when we bill for her department since I had been overlooking all accounts for the ISD’s. Furthermore, I wanted to propose new ideas and create new forms for the Dual Credit Programs Department. I did accept the meeting earlier today but the supervisor told me to sign-out, to head to the meeting. However, as I was heading to our meeting, I was instructed to head back immediately and hand her notes I had for the Dual Credit Enrollment Program. I was told I wasn’t needed in the meeting, that manager Marittza was already advised and was okay with this decision. I did drop off more notes, just in case the information was needed.”
Later that day, Simpson received a phone call from her temp agency, informing her that her employment with South Texas College was over and she should leave the premises.
Karen Simpson believed South Texas College would be forthright and reasonable in response to her well-meaning proposals. The opposite was true. As Únete 956 has reported extensively, STC administration, “executive management,” has been the subject of manifold lawsuits and complaints by faculty and staff throughout its existence.
We informed Simpson about STC attempting to change their own internal auditor's findings. She wasn't surprised. She added, "I don't have an auditor's license, but f I was STC's internal auditor, that [STC's dual enrollment program] is where I'd look."
Simpson heard through the grape-vine that her inquiries and recommendations had reached the highest level of the college, prompting college President Shirley Reed to have allegedly asked, "Who the fuck is Karen Simpson?" We hope to have answered President Reed's alleged question.
We reached out to South Texas College marketing team for a comment through email. We requested interviews with all employees mentioned in these emails, attaching the individuals' emails in our request, so they knew we wished to speak with them. We received no reply.
Other documents recently retrieved by Únete 956 show STC President Dr. Shirley Reed advised the college's Board of Trustees not to respond to our inquiries. We've also received STC's advertisement payments to The Monitor, local television stations, RGVision Magazine and the Rio Grande Guardian — outlets which often heap uncritical and over-the-top praise upon the college in general and President Reed, in particular. STC appears only to speak with media outlets who are on their payroll.
Nonetheless, a conspicuous action taken by the college on 20 August serves as a telling response and testifies to a guilty conscience, in light of Simpson's findings. On 20 August, the college published a "Purchasing and Distribution Services Handbook," laying out South Texas College's finance procedures, as Simpson's research called for.
Although Simpson was deceived and then discarded by STC administration and management, with complicity and duplicity at the highest levels of the college’s administration, she can nonetheless delight in the knowledge that the pressure she placed upon them evidently scared administration not just into concealing the truth but then (as goes the saying in education) covering their ass, or at least trying to.