York’s lawyers add hundreds of pages of supporting documents to civil lawsuit filed with the Ontario Superior Court of Justice
York is suing a former executive, alleging he participated in defrauding the university of $1.23 million between 2007 and 2009.
Michael Markicevic, former assistant vice-president campus services and business operations (CSBO), along with 18 other individuals and six companies, are being sued by the university for more than $4 million for allegedly defrauding York of more than $1.23 million of public funds by approving false invoices.
Joanne Rider of York media says the alleged activity was a “carefully planned, complex and sophisticated fraud against the university,” adding the accused individuals were in positions of trust and “used their intimate knowledge of York’s procurement policies and procedures to defraud the university.”
York’s lawyers have added hundreds of pages of supporting documents to the civil lawsuit, filed earlier this year with the Ontario Superior Court of Justice, which provide more detail about the allegations against Markicevic and the others.
According to the Toronto Star, Markicevic, a former Collingwood police officer, denies the allegations, saying this is an attempt by senior employees to cut deals with authorities to reduce their involvement in the alleged scheme.
“To the extent that such a scheme was perpetrated by other former employees, I did not participate in it,” Markicevic told the Star. “It occurred entirely without my knowledge, and I have not derived any benefit from it.”
According to Rider, Markicevic had direct accountability for the funds defrauded from the CSBO budget. These funds come from the overall operating and capital budgets, both of which are made up of revenue from government transfer payments and student tuition fees.
“Through a vast and complicated scheme involving a variety of transactions and players, the defendants were able to divert more than $1.2 million in payments from York to themselves or to the benefit of their families, friends, and/or other associated individuals,” says Rider.
York alleges Markicevic received about $250,000 in work done on two family homes through false invoices billed to the university, according to the Toronto Star.
Sworn affidavits detail that the university paid for a hot tub, painting, landscaping, carpentry, and numerous other personal items of Markicevic’s through this “vast” scheme, the Star reports.
Senior managers knowingly approved fraudulent invoices, which included inflated fees or fictitious work, according to the university. Allegedly, participating companies took money from the school and gave it to York officials through bank transfers or during physical exchanges in brown paper bags.
In addition to the $4 million dollars York is seeking in damages, the university is also pursuing a number of court orders including a demand that Markicevic repay almost $700,000 in severance pay, which he accepted when he was fired from York in 2010.
In January 2010, York launched an internal investigation into the misappropriation of York materials, which led to Markicevic’s dismissal.
According to the Star, Markicevic bought a “small imported aircraft after his departure.”
In his statement of defence, Markicevic says off-duty York employees did do some work on his homes, but he paid them for it. Markicevic also says construction services were provided at his homes by a senior York manager who owed him about $45,000, the Star reports.
In June 2012, the Toronto Police Service laid a total of five fraud and money laundering charges against Markicevic and Phil Brown, former director of maintenance.
The criminal suit Markicevic and Brown face is separate from the civil suit. Markicevic faces two counts of fraud and one count of laundering proceeds of crime and Brown faces one count of fraud and one count of laundering proceeds of crime.
Rob Cerjanec, vp operations for the York Federation of Students, says if true, the alleged fraud is completely unacceptable by any university official.
“Conducting any type of business like that, defrauding the university, which in turn, is money from the province of Ontario paid by our tax dollars, and student tuition fees, is absolutely unacceptable,” says Cerjanec.
Rider says since the alleged fraud, the university has strengthened many of its policies.
Some of these changes include a new policy on fraud, theft, and misappropriation; the implementation of a vendor qualification process; a revised purchasing card (PCard) policy clearly outlining the responsibilities of cardholders and supervisors; the strengthening of guidelines for hiring consultants and approving sole source vendors; the modification of the cheque requisition process to require additional documentation; and the implementation of an eProcurement system to restrict procurement to only pre-qualified vendors with pre-determined pricing.
Efforts have also been made to ensure the assistant vice-president and the chief financial officer of CSBO are more directly involved in financial operations through, for example, the establishment of a dual reporting relationship between the two roles.
Further policy changes include the reduction of the number of PCards being issued to CSBO personnel, and the implementation of a system in which zone managers validate work being done in their areas. A new vendor-of-record process was also established to control the vendors selected for construction, renovation and maintenance projects.
Currently, a judge is considering an order filed by York that would freeze Markicevic’s family assets.
Rider says the university is in the process of recovering the funds.
By Tamara Khandaker, Copy Editor
With files from the Toronto Star, Ernest Reid, and Melissa Sundardas
