Friday, August 2, 2013

$1 million payroll scheme reported at Wheaton Franciscan

Wheaton Franciscan logo
Wheaton Franciscan Healthcare said Thursday, Aug. 1, 2013 that a payroll specialist allegedly operated a scheme believed to have cost the company more than $1 million.

GLENDALE — A Wheaton Franciscan Healthcare payroll specialist was arrested Thursday for allegedly operating a scheme believed to have cost the company more than $1 million over a nine-year span.

The arrest came the same day Wheaton Franciscan announced that its finance department had uncovered the “sophisticated process” used by the 49-year-old woman to allegedly manipulate the accounts of hundreds of fellow employees for personal financial gain.

While the operation primarily affected the hospital system, there may be a tax impact for those who had their pay inflated as part of the alleged theft, according to a press release from the health care provider.

Wheaton Franciscan alleges that the payroll specialist used a sophisticated process to add false hours, mostly paid time off hours, to the accounts of random associates. She would then reportedly make an immediate payout to her personal bank account for the value of the extra paid time off and delete the record so it would not be detected.

The 848 current and former employees whose accounts were reportedly manipulated will be informed through letters mailed out by the company on Wednesday night, according to Wheaton spokeswoman Anne Ballentine.

Several employees at the health care provider’s Racine campus at 1320 Wisconsin Ave. said Thursday that they were informed of the reported theft through an email sent out by the company, including Nancy Freitag, 63, of Kenosha, who works as the activity director at Lakeshore Manor, a skilled nursing facility at the hospital.

“My reaction is astonishment that this could happen,” Freitag said. “I’m quite shocked but I have complete trust in Wheaton as a place of employment for myself and that hasn’t been shaken.”

First instances of the theft began in 2004, according to Ballentine, with a total of $850,000 reportedly stolen directly from Wheaton Franciscan. And because the health care provider had in turn paid extra taxes on that money, the total impact of the scheme is currently estimated at $1.1 million.

Included in the company’s letters to employees is information on the steps they will need to take in order to be compensated for any negative tax implications, Ballentine said, adding that the health care provider is willing to cover the costs of tax experts, filing fees or any other tax implication resulting from the scheme.
“We do regret any inconvenience people will go through and we want to minimize that,” Ballentine said.

In the wake of the recently discovered scheme, the company has already corrected the internal control breakdown that the payroll specialist allegedly exploited and conducted a full review of internal payroll controls using internal and external auditors, according to the release.

Wheaton Franciscan has since fired the employee who reportedly admitted to the theft, according to the release.

The investigation into the alleged theft has now been turned over to the Glendale Police Department, according to a release from the department. Police arrested a 49-year-old in connection to the alleged theft but her identity was not released as of Thursday night.

Their investigation was still ongoing as of Thursday and when completed it will be referred to the Milwaukee County District Attorney’s Office for criminal charges, according to the release.

By the numbers

848 – Number of current and former employees affected

9 – Number of years the alleged theft went on

$850,000 – Total amount of money reported stolen directly from Wheaton Franciscan

$1.1 million – Total impact on Wheaton Franciscan including extra taxes paid
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