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Pittsburg State comments on sentencing of former employee - KOAM TV 7

Pittsburg State comments on sentencing of former employee

Updated:
Michael Muoghalu Michael Muoghalu
PITTSBURG, KANSAS -

Pittsburg State University issued the following statement regarding the sentencing of former employee Michael Muoghalu in U.S. District Court. Muoghalu was sentenced to 18 months in federal prison after pleading guilty earlier this year to wire fraud and money laundering in a scheme that defrauded Pittsburg State University through his administration of a Nigerian graduate exchange program. Muoghalu was ordered to pay $148,430 in restitution.

“We're grateful for the efforts of Internal Revenue Service, the Federal Bureau of Investigation, and the Crawford County Attorney's office in this matter,” said Chris Kelly, associate vice president for university marketing and communication. “Our attention is now focused on implementing new procedures that will help prevent these types of incidents from occurring in the future.” 

To that end, university officials secured the services of accounting firm BKD in June of last year to perform an audit of the university's foreign exchange program. The final report, which is available on the university's website, was completed in December of 2014.

“We wanted an independent review of the program,” said Kelly. “While this review did not reveal major concerns about the program, it did indicate the need to update policies and procedures.”

A university task force is currently working to implement the recommendations. University officials will have the new policies and procedures in place by the fall.

University officials discovered questionable financial procedures involving Muoghalu in May of 2014. He was placed on administrative leave shortly after the initial inquiry and submitted his formal resignation in September of that year.

University officials sought the assistance of the IRS and the FBI to help them investigate the matter.

“We wanted to make certain we knew the full scope of this matter,” said Kelly. “Working together, we were able to bring this matter to an appropriate conclusion.”

A full copy of the BKD audit is available at: [pittstate.edu/office/president/documents/ForeignExchangePolicyReport2014.pdf]pittstate.edu/office/president/documents/ForeignExchangePolicyReport2014.pdf.

# # #

12/10/2014:  Pittsburg State University today issued the following statement regarding the U.S. Department of Justice's indictment of former professor Michael Muoghalu. Muoghalu was charged with one count of wire fraud and one count of money laundering as a result of actions taken while recruiting students for a Nigerian graduate exchange programs.

The indictment alleges that Muoghalu executed a scheme to defraud PSU and caused PSU to refund approximately $148,000 to Nigerian graduate exchange students. The indictment also alleges that Muoghalu “fraudulently directed students to pay a portion of their refunds to him for acting as the students' agent in obtaining the refund.”

“Today's indictment is an important step forward in our efforts to seek restitution for Pittsburg State,” said Chris Kelly, university spokesperson. “We continue to cooperate with authorities in their ongoing investigation.”

University officials discovered questionable financial procedures involving Muoghalu in May during an internal review. Muoghalu was placed on administrative leave on May 20, suspended without pay on June 8 and agreed to resign on September 15.

“We are taking this matter very seriously,” said Kelly. “After discovering the financial questions, we reached out to the Internal Revenue Service and Federal Bureau of Investigation to help us determine the full extent of the matter. We have been assisting them in their investigation and will continue to do so.”

Authorities allege Muoghalu's fraudulent actions began in 2006 and involved up to 15 Nigerian graduate exchange students.

“We have every reason to believe that this incident was limited to a fraudulent financial action undertaken by one individual,” said Kelly.

University officials have obtained the services of an independent external auditor to conduct a full review of policies and procedures related to this incident.

“We secured the services of outside counsel Kyle Fleming who has hired the accounting firm BKD to perform the audit,” said Kelly. “Their audit, which began earlier this fall, is nearing completion. We are looking forward to their final report and recommendations.”

Because this is an active investigation additional questions regarding the specifics of the case should be referred to the United States Attorney's Office in Wichita.

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10/8/2014:  Pittsburg State University today issued the following statement in regards to the ongoing investigation over questionable financial procedures by former professor and MBA Director Michael Muoghalu.

“Although we cannot comment further on the matter itself, we have informed the external investigative agency of our intent to identify the units with which we're cooperating,” said Chris Kelly, university spokesperson. “We must balance our obligation to operate in an open and transparent environment with the caution that is required of an active investigation.”

University officials discovered questionable financial procedures involving Dr. Muoghalu and the MBA program in May during an internal review. Dr. Muoghalu was placed on unpaid administrative leave shortly after the initial inquiry and submitted his formal letter of resignation in September.

Officials with the Pittsburg State Police Department, on behalf of the university, initially contacted the Kansas Bureau of Investigation regarding this matter. The KBI declined to investigate, and subsequently contact was made with the Internal Revenue Service and Federal Bureau of Investigation.

“Our understanding is that their investigation is underway,” said Kelly. “We're cooperating with them and unable to offer further comment at this time.”

University officials have also obtained the services of an independent external auditor to conduct a full review of policies and procedures related to this incident.

“We've secured the services of outside counsel Kyle Fleming who has hired the accounting firm BKD to perform the audit,” said Kelly. “It's best practice to have an outside party lead the process to ensure an independent examination.”

University officials hope to have initial findings by the end of the calendar year.

# # #

9/19/2014:  Pittsburg State University announced today that it had accepted the resignation of Professor and former MBA Program Director Michael Muoghalu. The resignation comes after an internal review involving the program's financial affairs.

“We discovered some questionable financial procedures during an internal inquiry in May,” said Chris Kelly, associate vice president for university marketing and communication. “Dr. Muoghalu was placed on unpaid administrative leave shortly after the initial inquiry.”

The university, which initiated discussions with an external investigative agency immediately following the internal inquiry, is unable to provide additional details at this time.

“We've been asked by the investigative agency to not comment further on the matter and we will respect that request,” explained Kelly.

University officials are cooperating with the investigation, and have obtained the services of an independent external auditor who is conducting a full review of policies and procedures related to this incident.

“We look forward to the auditor's final report and recommendations,” said Kelly.

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