State audit: Former UI employee stole $57K

The University of Iowa Hospitals and Clinics is strengthening internal controls over purchasing and improving records of items susceptible to theft or loss after a former employee sold tens of thousands of dollars of hospital-owned equipment and pocketed the revenue.

A report on a special investigation conducted by the state auditor's office made public Friday showed the employee's illegal sale of university equipment resulted in a loss of at least $57,026.89.

According to the report, Brian Manary, 35, sold $36,123.39 of UIHC-purchased equipment — like laptop and desktop computers — for $15,462.65, which he deposited into his personal bank account. Auditors also identified $20,903.50 tied to Manary's unlawful transactions that could not be matched to specific UIHC purchases or deposits in his personal bank account, according to the report.

'Because sufficient information as not available to match some equipment sold by Mr. Manary to the original purchase by UIHC, the amount identified is conservative,' state investigators reported. 'Several individuals interviewed stated they purchased computers from Mr. Manary but could not remember how much they paid, when the purchase was made, or any identifying characteristics of the computers purchased.'

When hospital officials learned about the possible theft in June 2013, they launched an internal investigation and contacted the UI Department of Public Safety and the Office of Auditor of State. The state auditor launched an investigation of UIHC internal controls and Manary's transactions from Jan. 1, 2005 to July 5, 2013.

Manary was arrested in August in connection with the allegations and charged with ongoing criminal conduct and first-degree theft, both felonies. He pleaded guilty to first-degree theft in March, and he's scheduled to be sentenced May 5, according to Johnson County Attorney Janet Lyness.

He could not be reached for comment for this story.

Manary's employment with the university hospitals began in January 2005 as an information technology support services technician providing support to the Otolaryngology and Neurology departments. He was promoted to senior information technology support technician in April 2011.

On June 4, 2013, according to the report, a tipster reported 'potential misappropriation of computer equipment.' The woman said she knew Manary through a relationship he had with her daughter, and she had received a computer from Manary as a Christmas gift in 2011, according to the report.

She contacted Dell for help with the gifted computer in November 2012 and was told by a Dell representative that the computer was registered to the hospitals and clinics. Her request to transfer ownership was denied, and she reached out to her daughter to find out 'what was going on,' investigators reported.

When Manary learned that the woman had contacted Dell, he was 'upset' and demanded the computer back, according to the report. He also asked to get back another computer he had gifted to a family member in August 2012.

The reporting woman's daughter asked Manary about an Apple laptop he had given her for her birthday in April 2012, and Manary said he also needed to get that computer back 'because it was a work computer,' according to the report.

After the woman reported her concerns to the hospital, officials launched an internal investigation by, among other things, sending a questionnaire to staff members in departments with which Manary had worked.

Several individuals came forward, and investigators also identified missing computers. Manary was placed on administrative leave June 21, 2013, during the investigation, and he was terminated June 28, according to the report.

Manary could face up to 10 years in prison when sentenced next month. As part of his plea deal, he has agreed to pay back the more than $57,000 to the university, according to UI spokesman Tom Moore.

Based on its investigation, the state has recommended the UIHC strengthen its internal controls by establishing procedures that ensure equipment purchases are centrally controlled and by maintaining inventory records that safeguard equipment susceptible to loss.

'A complete inventory of all electronic equipment, such as computers, cameras, iPads, printers, hard drives and monitors, should be completed and items should be tagged,' according to the report. 'The inventory should include equipment kept at the homes of staff members.'

Moore said the university hospital already has taken action on many of the recommendations.

The state on Friday also issued a report on an audit of several departments related to concerns around the use of procurement cards, inventory, technology allowances, travel, supporting documentation and bonuses.

That audit found some purchases of computers and other items from non-contract vendors were made without supporting documentation showing why the purchases weren't made from contract vendors. It also found that the university departments didn't maintain an inventory list of items worth less than $5,000 — like iPads, iPods and cameras.

'Because the inventory listings do not include these items, departments may not be able to determine when an item has been misappropriated or if the item is being used for personal use,' according to the report.

Employees also didn't always provide supporting documentation for requests of meal reimbursements and other purchases.

Recommendations from that report also include strengthening internal controls over purchases and maintaining appropriate inventory records.

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