Bid rigging and kickbacks under the bridge


By Edward J. Gaio, CFE
Dylan Murphy, an engineer at a municipal transit district, believed he should get rich with little or no personal risk. After some failed investments, he decided his future was in fraud. The kickback business was lucrative until the FBI caught up with him. Here's his story plus details of the post-trial recovery investigation.

This article is excerpted and adapted from the "Bribery and Corruption Casebook: The View from Under the Table," edited by Dr. Joseph T. Wells, CFE, CPA; and Laura Hymes, CFE, published by John Wiley & Sons Inc. ©2012 Used with permission. Some of the names in this case have been changed.

MayJune-bid-rigging-bridgeDylan Murphy grew up in the countryside of Ireland. He came from a well-to-do family that owned several mines, but as a young man he aspired to immigrate to the U.S. and become a successful engineer. While in his senior year of boarding school he met Susan Ross, the daughter of a wealthy exporter who dealt with many of the mines in the area. After graduating, Dylan and Susan were soon married and decided to move to America to pursue their new life together and attend college.Once the Murphys arrived in their new country, Dylan was accepted to the Rose Hulman Institute of Technology, where he would spend the next four years earning a Bachelor's Degree in Civil Engineering. Given that both Dylan and Susan came from families of means, neither one worked while Dylan was in school. In fact, the Murphys tended to come across as possessing a sense of entitlement when around others, which did not make them very many friends. By the time Dylan graduated, the Murphys had one daughter and another one on the way.

After Dylan graduated, the family moved to a small suburb of Denver, Colo., where he was offered an entry-level position as a resident engineer for the Regional Transportation District (RTD). Over the next 13 years, Murphy worked at RTD with very little upward mobility to show for it. Dylan thought he was an ambitious person, but he was unwilling to take the necessary steps to make himself more marketable. The Murphys' cultural upbringing contributed to their sense of entitlement, and they believed that they should obtain rewards with little or no personal risk.

To make up for his lack of career success, Dylan and his wife pursued different investment opportunities with the hope that they would be propelled into the social status they so desired. The first was opening an Irish pub in their suburban neighborhood; due to their lack of small-business experience, the pub failed in less than two years. The second was investing in rental property in a neighboring community. After a series of poor financial decisions, the rental property went into foreclosure, prompting the Murphys' need for more cash.

REGIONAL TRANSPORTATION DISTRICT

RTD, located in Denver, provides bus and light-rail public transportation to the 2.8 million residents living in the eight-county region that populates the metropolitan area. In 1969, the Colorado General Assembly organized the RTD by combining several bus and trolley services used in Denver and its neighboring communities to form one large public transportation system that would eventually provide service to 40 different municipalities in the area.

Throughout the 1970s, RTD experienced continued growth through a merger with Denver Metro Transit and an expansion of bus service with a series of sales tax increases voted by the public. After 15 years, RTD decided to revive and expand its light-rail train service. In 1994, RTD opened the first of three light-rail corridors, bringing rail transit back to the region. 

Over the next eight years, RTD continued to expand and rehabilitate its light-rail train service to include the addition of two new corridors. In 2001, RTD broke ground with the Transportation Expansion Project (TREP), a multimodal construction venture combining light rail, highway, bike and pedestrian traffic. The TREP project was meant to alleviate the volume of traffic for one of the busiest interchanges in the U.S. As the latest installment of light-rail expansion, the Southeast Corridor would be RTD's crown jewel of the TREP project. It ended up being a success changing the way people commuted in the Metro Denver area, finishing under budget and almost two years ahead of schedule.

FBI INVESTIGATION

I was one of six auditors in RTD's internal audit department. Most of our work consisted of contract compliance and operational processes; very seldom did we encounter any significant fraud during the course of our audits. One November afternoon I received a phone call from my boss, Matt Wilhelm. Special agents from the FBI had contacted our general counsel to notify her that Dylan Murphy was under investigation and was soon to be indicted. 

 


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