Former Business Administrator for Knowlton Board of Education Pleads Guilty to Embezzling $70,000 from the School District

TRENTON – Acting Attorney General John J. Hoffman announced that the former business administrator for the Knowlton Township Board of Education pleaded guilty today to embezzling approximately $70,000 from the school district.

Kevin M. Mulligan, 34, of Hasbrouck Heights, pleaded guilty to a charge of second-degree official misconduct before Superior Court Judge Robert B. Reed in Warren County. Under the plea agreement, the state will recommend that he be sentenced to three years in state prison. Mulligan must pay full restitution to the school district and forfeit his entire state pension. He will be permanently barred from public employment.

Deputy Attorney General Mallory Shanahan prosecuted the case and took the guilty plea for the Division of Criminal Justice Corruption Bureau. Mulligan was charged as the result of an investigation by the New Jersey State Police Official Corruption Bureau and the Division of Criminal Justice. Judge Reed scheduled sentencing for Mulligan for Oct. 24.

In pleading guilty, Mulligan admitted that between July and December 2013, he stole approximately $70,000 from the Knowlton Township School District in Warren County by writing fraudulent checks against the district’s bank accounts that were made payable to himself or, in one instance, to someone he owed money. Mulligan began working for the district in June 2013 and abruptly resigned in December 2013.

“Mulligan corruptly used his position to embezzle $70,000 that should have been used for the vital mission of educating students in this kindergarten through 6th grade school district,” said Acting Attorney General Hoffman. “It’s always a serious crime when a public official steals taxpayer funds, but it’s particularly egregious when those who suffer the consequences are young children.”

“By sending this school administrator to prison, we will deter other officials who might consider stealing public monies to address their personal financial problems,” said Director Elie Honig of the Division of Criminal Justice. “We urge anyone with information about the misuse of school funds or resources to contact us confidentially so we can investigate and prosecute those responsible.”

Acting Attorney General Hoffman and Director Honig noted that the Division of Criminal Justice has established a toll-free Corruption Tipline 1-866-TIPS-4CJ for the public to confidentially report corruption, financial crime and other illegal activities. The public also can log on to the Division’s web page at www.njdcj.org to report suspected wrongdoing confidentially.

As business administrator, Mulligan was a signatory on the district’s three checking accounts and was responsible for paying all of the district’s bills and its payroll. The state’s investigation revealed that Mulligan created four fraudulent checks totaling $66,550 that he made payable to himself, but that he entered into the district’s computer system as checks to various approved vendors or recipients, including a check for $43,455 falsely entered as a payment to the New Jersey Municipal Employee Benefit Fund, as well as checks he falsely entered as having been paid to a heating oil supplier, an electrical contractor and a book publisher.

The general account required that checks be signed by the school board president and its treasurer, as well as Mulligan, but Mulligan had signature stamps for them. For each false check from the general account, Mulligan went into the check printing software and changed the name and address of the pre-approved vendor or recipient in the “remit to” section to his own name and address. After printing the check, he re-entered the system to change that section back to the approved party.

Mulligan also wrote a school district check for $1,000 payable to a hockey instructor he hired for a youth hockey camp he operated. In addition, he overpaid himself $600 on his first paycheck, and overpaid himself $1,869 on a check he received as reimbursement for waiving certain pension benefits. He paid himself at the “teacher” rate, when he was entitled to a lesser rate in his position.

The thefts were discovered after Mulligan resigned, when district staff received a canceled check for $10,362 dated December 13, 2013, which was made payable to Mulligan, but was entered into district records as a payment to the district’s heating oil supplier. District staff checked with the vendor, which had not received the payment. The district conducted an audit and discovered additional fraudulent checks made payable to Mulligan. It referred the case to the New Jersey State Police and the Division of Criminal Justice for criminal investigation.

The investigation was conducted for the State Police Official Corruption Bureau by Detective Martin Halligan and Detective Sgt. Kenneth Lutz. It was conducted for the Division of Criminal Justice Corruption Bureau by Deputy Attorney General Mallory Shanahan, under the supervision of Deputy Attorney General Anthony A. Picione, who is Bureau Chief.