Slack checking let fraudster take $1.9m

A loophole in Social Development Ministry checking procedures let Lisa Clement defraud the department of $1.9 million, as well as receive $41,000 in benefits from Work and Income New Zealand while working for them.

Clement, 36, of Wainuiomata, pleaded guilty in Wellington District Court yesterday to four Serious Fraud Office charges of using documents - ministry invoices - with intent to defraud. The invoices were made out to four business entities Clement created.

She also pleaded guilty to 14 charges brought by Work and Income of making false statements to receive benefits, one of which related to her not telling the department she was working for it fulltime from November 2000.

Judge Geoff Ellis remanded her in custody until March 12 for sentencing on all charges. He ordered a reparation report "if that is even feasible".

He refused bail despite a submission by defence lawyer Louise Sziranyi that Clement was still trying to settle her 5-year-old son into school.

Judge Ellis said Clement had a long time to think of the consequences of her offending and the plea she was making.

Serious Fraud Office prosecutor Lucy Wright said Clement applied for her job at Work and Income through recruitment agency Wheeler Campbell, giving a false date of birth, false middle name of Maree and completing a document to declare she had no criminal convictions.

She had convictions for dishonesty offences between 1987 and 1992. She also concealed two bankruptcies and that she was on a benefit at the time. Any of the information would have prevented her getting the job, Miss Wright said.

Clement started as executive assistant to a manager in Work and Income's centre for operational research and evaluation, managing its finances.

She later took on responsibility for contracts and payments.

Miss Wright said Clement believed she had found a "hole" in the Work and Income payment system - once a manager signed off an invoice no one checked it.

About $6 million a year was budgeted for contracts.

Her first false invoice in March 2001 was for $9562.50. She created four business entities, Lisa Donnelly, Information Consultants, Magnum Opus and Information Analysis Services. She opened bank accounts for each one.

Information Analysis Services is the name of a real company which has no connection with Clement other than her use of the name.

Clement would fill out a form to approve payment and send it and an invoice, real or fake, to a manager for approval. She then sent it on to the national accounting centre in Rotorua for payment.

Some invoices needed the approval of the chief executive. To get this, Clement would cut and paste signatures from legitimate contracts but send a copy for payment.

She would submit a real invoice to a manager, then send a fake one for payment or change the amount to be paid. In one case, she got approval to pay $55 for stationery but altered it to $55,000 which was paid to Magnum Opus.

Miss Wright said sometimes Clement would take advantage of her immediate manager's personal issues which resulted in the manager not paying particular attention to invoices put before her.

After a reshuffle, she had a new manager who never checked invoices but just signed them.

Clement manipulated budgets, forecasts and reports to disguise her offending.

It was only discovered when a manager found part of a forged document bearing his name on a photocopier.

Clement's lawyer said she had already paid back $250,000.

Where the taxpayers' money went

* Lisa Clement, also known as beneficiary Lisa Donnelly, spent a total of $275,000 on expensive cars.

* About $150,000 went on household items such as furniture and appliances, $102,000 was paid out for travel and $86,500 was given to family and friends.

* Almost $60,000 went on jewellery, $39,000 was invested, $35,500 was spent on clothing and personal items, $24,700 was spent on childcare and $12,300 went to pay the family's power and phone bills.

* A further $160,000 was spent on "other" items.

* The Serious Fraud Office analysed only payments of more than $1000.

* The smaller transactions amounted to a further $372,900.

- NZPA