UCA lawsuit against employee

Embed Size (px)

Citation preview

  • 8/18/2019 UCA lawsuit against employee

    1/39

     

    DMWEST #14005710 v1 

    Jason D. Boren (#7816)Quinton J. Stephens (#12675)Jackie Bosshardt (#14139)

    Ballard Spahr LLP201 South Main Street, Suite 800Salt Lake City, Utah 84111-2221Telephone: (801) 531-3000Facsimile: (801) 531-3001 [email protected]@ballardspahr.com [email protected]

     Attorneys for Utah Communications Authority

    IN THE THIRD JUDICIAL DISTRICT COURT

    SALT LAKE COUNTY, STATE OF UTAH

    UTAH COMMUNICATIONSAUTHORITY, an independent state agencyof the State of Utah,

    Plaintiff,

    v.

    PATRICIA NELSON, an individual,CRYSTAL EVANS, an individual, andDOES 1 through 5,

    Defendants.

    AMENDED COMPLAINT

    Case No. 160901578

    Judge Paul G. Maughan

    Plaintiff, Utah Communications Authority (“UCA”), by and through its undersigned

    counsel, Ballard Spahr LLP, hereby complains against Defendants Patricia Nelson (“Nelson”),

    Crystal Evans (“Evans”), and Does 1 through 5 (“Doe Defendants”) as follows:

    THE PARTIES

    1.  UCA is an independent Utah state agency.

  • 8/18/2019 UCA lawsuit against employee

    2/39

     

    2DMWEST #14005710 v1

    2.  Upon information and belief, Nelson is an individual residing in Salt Lake

    County, Utah.

    3.  Until approximately February 22, 2016, Nelson was employed by UCA as an

    administrative assistant to UCA’s Executive Director, Steven Proctor (“Mr. Proctor”).

    4.  As an administrative assistant to Mr. Proctor, Nelson was entrusted with

    confidential information and was relied upon by UCA to manage sensitive financial and other

    information of UCA.

    5.   Nelson had been employed by UCA or its predecessor, Utah Communications

    Agency Network (“UCAN”), for approximately seventeen years and had worked for Mr. Proctor

    for approximately 25 years; both Mr. Proctor and UCA trusted Nelson.

    6.  Upon information and belief, Evans is an individual residing in Salt Lake County,

    Utah and is Nelson’s daughter.

    7.  Defendant Does 1 through 5 are individuals and/or entities whose names and

    identities are currently unknown who may have participated in the acts complained of below. If

    and when the true names of Defendant Does 1 through 5 are ascertained, UCA will amend the

    Complaint pursuant to Utah R. Civ. P. 9(a)(2).

    JURISDICTION AND VENUE

    8.  This Court has jurisdiction over this matter pursuant to Utah Code Ann. §§ 78A-

    5-102.

    9.  Venue of this action properly lies in this Court pursuant to Utah Code Ann.

    § 78B-3-307.

  • 8/18/2019 UCA lawsuit against employee

    3/39

     

    3DMWEST #14005710 v1

    GENERAL ALLEGATIONS

    10.  UCA, formerly UCAN, was created by statute in 1997 and is funded by Utah

    taxpayers.

    11.  UCA is responsible for, among other things, managing Utah’s 911 Program,

    enhancing and supporting emergency communications at the State, regional, local, and tribal

    levels, maintaining and operating emergency radio networks throughout Utah, and coordinating

    Utah’s participation in the establishment of a nationwide network dedicated to public safety.

    12.  As part of these responsibilities, UCA operates and maintains equipment

    throughout the State and employs technicians throughout Utah to perform such maintenance.

    13.  Like many state agencies and private companies, UCA simplifies and expedites

    its operations by allowing certain, trusted employees to use UCA credit cards. Because these

    cards are issued to a state agency, purchases made on the UCA-issued cards are not subject to

    sales tax.

    14.   Nelson, as a trusted employee and as Mr. Proctor’s administrative assistant, was

    issued a UCA credit card with her name on it.

    15.   Nelson also had in her possession, custody, and control, a “spare” UCA credit

    card to be used by employees who did not have a personal card and/or if a technician’s card were

    suspended due to some third-party fraud, etc.

    16.   Nelson also had in her possession, custody, and control, a UCA credit card to be

    used for travel by employees who were travelling on official UCA business.

    17.  As Mr. Proctor’s administrative assistant, Nelson was entrusted with maintaining

    UCA’s credit card account including overseeing the distribution of credit cards, receiving the

  • 8/18/2019 UCA lawsuit against employee

    4/39

     

    4DMWEST #14005710 v1

    credit card statement, and assisting in the resolution of any issues with UCA’s credit cards and/or

    credit card account.

    Discovery of Unauthorized Charges

    18.  On or about January 7, 2016, a technician working for UCA discovered a credit

    card statement on one of UCA’s printers and delivered this statement to UCA’s bookkeeper,

    Kathy Trees.

    19.  Once Ms. Trees received the statement, she noticed that the format of the credit

    card statement was different from those she had previously seen.

    20.  Ms. Trees also noticed that this statement had a number of charges attributable to

    a card with a number ending in “0205” that had nothing to do with UCA’s business and were not

    authorized by UCA.

    21.  The credit card statement had a closing date of October 1, 2015. A copy of the

    credit card statement is attached hereto as Exhibit 1.

    22.  Some of the unauthorized charges attributable to the card ending in “0205”

    include:

    VENDOR AMOUNT

    •  www.rosecoatings.com $1,638.00

    •  Michaels $392.61

    •  Petsmart $365.27

    •  ULTA $363.59

    •  Toys R Us $363.19

    •  IVIVVA Fashion Place $346.19

  • 8/18/2019 UCA lawsuit against employee

    5/39

     

    5DMWEST #14005710 v1

    23.  Because Nelson maintained a list of all credit cards and to whom such cards are

    issued, Ms. Trees asked Nelson who had possession of the card ending in “0205.”

    24.   Nelson stated that she did not know who had possession of the card, but she

    would find out.

    25.  The following day, on or about January 8, 2016, Ms. Trees followed up with

     Nelson and inquired as to whether she knew who had been issued the card ending in “0205.” At

    that time, Nelson stated that she did not know because she had given the statement to Mr. Proctor

    to review the unauthorized charges.

    26.  Ms. Trees approached Mr. Proctor to discuss the situation, however, contrary to

     Nelson’s representations, Mr. Proctor did not have the subject statement and was unaware of the

    issues with the unauthorized charges.

    27.  Over-hearing the conversation between Mr. Proctor and Ms. Trees, Nelson

    entered Mr. Proctor’s office and began looking for the subject credit card statement. When it

    could not be found, Nelson agreed to find it and bring it to Mr. Proctor.

    28.  Later that evening, after Nelson had returned home without producing the

    statement, Mr. Proctor attempted to obtain a copy of the credit card statement directly from

    UMB, the credit card issuer.

    29.  Mr. Proctor learned that only Nelson was authorized to obtain information on

    UCA’s corporate credit card account. UMB, therefore, refused to provide Mr. Proctor with a

    copy of UCA’s credit card statement and/or to answer Mr. Proctor’s questions.

    30.  At that point, Mr. Proctor telephoned Nelson to discuss the issue. Nelson

    informed Mr. Proctor for the first time that she was issued the card ending in “0205” and that she

  • 8/18/2019 UCA lawsuit against employee

    6/39

     

    6DMWEST #14005710 v1

     believed Evans’ husband, Nelson’s son-in-law, had stolen the credit card and made the

    unauthorized charges.

    31.  A further review of the October 2015 credit card statement revealed that there

    were also unauthorized charges on a UCA credit card bearing Nelson’s name and ending in

    “0073.”

    32.  For the same statement period with a closing date of October 1, 2015, the

    unauthorized charges on the card ending in “0073” are as follows, as can be seen on Exhibit 1:

    VENDOR AMOUNT

    •  PayPal to *CNSMITH55 $6,254.68

    •  Alterra Pest Control $99.00

    33.  *CNSMITH55 is Evans’ PayPal username indicating that a payment of $6,254.68

    was made on UCA’s credit card account using Nelson’s card and paid to Evans.

    34.  On or about Monday, January 11, 2016, the business day following Nelson’s

    accusations of her son-in-law, Nelson informed Mr. Proctor that she actually believed the

    charges on the cards ending in “0205” and “0073” were her fault, not the result of her son-in-law

    stealing the credit cards.

    35.   Nelson told Mr. Proctor that she and her family had recently returned from a trip

    to the Bahamas and that her daughter, Evans, was having marital difficulties and that Nelson had

    given Evans a credit card to cover her expenses for a short period of time. Nelson said she gave

    Evans the card ending in “0205” accidentally.

    36.   Nelson also admitted that the $6,254.68 was transferred via PayPal to Evans to

    repay her for the expenses associated with the trip to the Bahamas which Evans had paid for on

  • 8/18/2019 UCA lawsuit against employee

    7/39

     

    7DMWEST #14005710 v1

    her American Express card to acquire “points” with the expectation that Nelson would reimburse

    Evans.

    37.  According to Nelson, she was not aware that the PayPal transfer would be paid

    for using UCA’s credit card account.

    38.  At this point, UCA cancelled both the credit cards ending in “0205” and “0073”

    and placed Nelson on administrative leave while an investigation into the facts and

    circumstances regarding these unauthorized charges could be conducted.

    39.  To assist in the investigation, UCA requested from UMB a copy of all the credit

    card statements UMB had in its records for UCA’s credit card account.

    40.  A review of these statements indicated that as early as July 3, 2009 (the earliest

    date for which UMB has records), and continuing through January 7, 2016, at least four UCA

    credit cards, all of which were in Nelson’s and/or Evan’s possession, custody, and control, have

    numerous personal and unauthorized charges.

    41.   Nelson had possession of at least one these cards and made numerous

    unauthorized purchases on UCA’s account.

    42.  Evans had possession of at least one of these cards and made numerous

    unauthorized purchases on UCA’s account.

    43.  In total, these unauthorized charges approximate $800,000.00.

    Discovery of Fraudulent Statements

    44.  During the relevant time period, UMB provided credit card statements to UCA

    via email to Nelson.

  • 8/18/2019 UCA lawsuit against employee

    8/39

     

    8DMWEST #14005710 v1

    45.  Up and until the summer of 2014, Nelson had the primary responsibility for

    collecting receipts from UCA’s employees to substantiate the credit card purchases made on

    UCA’s credit card account.

    46.  This responsibility included confirming that the charges made by UCA’s

    employees were for legitimate and authorized purchases or, in other words, that the purchases

    were related to the employees’ job duties and used to advance UCA’s business and objectives.

    47.  Although this responsibility shifted to Ms. Trees in the summer of 2014, UMB

    continued to provide the credit card statements exclusively to Nelson.

    48.  When UMB provided UCA with copies of the credit card statements for its

    investigation into Nelson’s and Evan’s unauthorized charges, UCA learned that the statements

    that Nelson had been submitting to UCA for payment had been materially altered.

    49.   Nelson and Evans knew that if they submitted an invoice to UCA that included

    their personal/unauthorized charges, not only would UCA not pay the invoice, it would know

    that Nelson and Evans had been making personal/unauthorized purchases on UCA’s credit card

    account.

    50.  Accordingly, Nelson and Evans materially altered UCA’s credit card statements,

    often manufacturing fraudulent supporting invoices/statements to support the altered credit card

    statements.

    51.  For example, attached hereto as Exhibit 2 is a copy of the credit card statement

     provided by UMB to UCA with a statement closing date of January 1, 2013 (the “Accurate

    Statement”).

  • 8/18/2019 UCA lawsuit against employee

    9/39

     

    9DMWEST #14005710 v1

    52.  This statement includes a number of personal/unauthorized charges such as

    Sacramento Beekeeping, Petco, the State Liquor Store, Utah Home Fitness, Nordstrom, etc.

    53.  Attached hereto as Exhibit 3 is a copy of the altered credit card statement Nelson

     provided to UCA for payment for the same time period (the “Altered Statement”).

    54.  Defendants altered the Accurate Statement to create the Altered Statement by,

    among other things, omitting unauthorized personal charges, changing vendor names, changing

    dollar amounts of charges, and adding non-existent charges.

    55.  A review of the Altered Statement, Exhibit 3, shows that, among other changes,

    Defendants made the following changes:

    •  Sacramento Beekeeping became Fast Gas;

    •  Petco became Valmont Site with a different dollar amount;

    •  The State Liquor Store became Codale Electric with a different dollaramount;

    •  Utah Home Fitness became Cummins Power; and

    •   Nordstrom was simply deleted.

    56.  In addition to altering UCA’s credit card statements, Defendants also

    manufactured and/or altered some of the receipts/invoices submitted to support the Altered

    Statements.

    57.  For example, Exhibit 3 includes a charge for $1,468.00 to Star Microwave.

    58.   No such transaction, either in vendor, amount, or reference number appears in

    Exhibit 2.

    59.  In order to support their Altered Statement and disguise their

     personal/unauthorized charges, Defendants submitted the invoice attached as Exhibit 4.

  • 8/18/2019 UCA lawsuit against employee

    10/39

     

    10DMWEST #14005710 v1

    60.  A true and correct copy of this invoice from Star Microwave is attached hereto as

    Exhibit 5 and clearly includes the invoice date of 04/03/12 and invoice number 70676.

    61.  Invoice 70676 was paid by UCA on or about May 29, 2012, by way of a check

     bearing the number 19117, a copy of which is attached hereto as Exhibit 6.

    62.  Defendants altered invoice number 70676 from Star Microwave to make it appear

    as though the $1,468.00 was paid using UCA’s credit card in December of 2012.

    63.  Defendants have been altering UCA’s credit card statements and/or certain

    invoices/receipts in order to conceal the unauthorized personal charges she/they were making on

    UCA’s account at least as early as August of 2009.

    FIRST CLAIM FOR RELIEF

    (Conversion/Theft – Against Nelson and Evans)

    64.  Plaintiff incorporates by reference each of the allegations set forth above.

    65.   Nelson and Evans made personal and unauthorized purchases on UCA’s credit

    card account for which UCA has made payment.

    66.  In so doing, Nelson and Evans have exercised dominion and control over UCA’s

     property.

    67.   Neither Nelson nor Evans had any right or authority to make personal and

    unauthorized purchases on UCA’s credit card account.

    68.  UCA has been deprived of the use of the funds used to pay the unauthorized

    charges in an amount approximating $800,000.00.

    69.   Nelson’s and/or Evans’ conduct was intentional, willful, and with the knowledge

    that such would harm UCA and UCA is entitled to punitive damages.

  • 8/18/2019 UCA lawsuit against employee

    11/39

     

    11DMWEST #14005710 v1

    SECOND CLAIM FOR RELIEF

    (Fraud – Against Nelson and Evans) 

    70.  Plaintiff incorporates by reference each of the allegations set forth above.

    71.  From at least August of 2009, continuing through August of 2015, Nelson and/or

    Evans was/were submitting to UCA for payment, credit card statements which Nelson and/or

    Evans had altered, electronically or otherwise.

    72.   Nelson and/or Evans also submitted to UCA receipts/invoices which had been

    materially altered.

    73.   Nelson and Evans knew that these statements and receipts/invoices were false.

    74.   Nelson and/or Evans submitted these statements and receipts/invoices to induce

    UCA to pay amounts charged to UCA’s credit card accounts which included unauthorized

     personal purchases made by Nelson and Evans.

    75.  UCA, completely unaware that the credit card statements and receipts/invoices

    that Nelson and/or Evans submitted to it for payment were false, did reasonably act upon these

    statements and requests by paying the amounts shown on the false credit card statements.

    76.  In so doing, UCA was harmed in an amount approximating $800,000.00.

    77.   Nelson’s and/or Evans’ conduct was intentional, willful, and with the knowledge

    that such would harm UCA and UCA is entitled to punitive damages.

    THIRD CLAIM FOR RELIEF

    (Fraudulent Concealment/Nondisclosure – Against Nelson)

    78.  Plaintiff incorporates by reference each of the allegations set forth above.

  • 8/18/2019 UCA lawsuit against employee

    12/39

     

    12DMWEST #14005710 v1

    79.  In accepting and retaining custody of credit cards issued by UCA to certain of its

    employees, Nelson represented to UCA that the charges she had made and would make would be

    for legitimate UCA business, to further the needs and objectives of UCA.

    80.  As such, Nelson had a duty to disclose to UCA any use of these cards for

    illegitimate or unauthorized purchases.

    81.  In accepting and retaining custody of credit cards issued by UCA to certain of its

    employees, Nelson had a duty to disclose any unauthorized purchases made on the cards given to

    her.

    82.  In receiving, accepting, and in many instances, reviewing UCA’s credit card

    statements and, thereafter, requesting/making payment for the charges appearing thereon, Nelson

    had a duty to disclose to UCA any and all inaccuracies or misinformation contained in these

    credit card statements as well as any documentation supporting such statements.

    83.   Nelson knew that she and Evans were using the credit cards issued to Nelson on

    UCA’s credit card account for unauthorized purchases and/or that some third-party was using

    these cards to make unauthorized and purchases.

    84.   Nelson knew that the credit card statements and supporting documentation she

    was submitting to UCA for payment had been materially altered.

    85.  The fact of these unauthorized charges and materially altered documents was

    material to UCA and Nelson knew that this information was material to UCA.

    86.   Nevertheless, Nelson failed to timely disclose to UCA that she and/or others had

    made unauthorized purchases on UCA’s credit card account and/or that she and/or others had

    materially altered the credit card statements and supporting documentation provided to UCA.

  • 8/18/2019 UCA lawsuit against employee

    13/39

     

    13DMWEST #14005710 v1

    87.  As a result, UCA has been damaged in an amount approximating $800,000.00.

    88.   Nelson’s conduct was intentional, willful, and with the knowledge that such

    would harm UCA, and UCA is entitled to punitive damages.

    FOURTH CLAIM FOR RELIEF

    (Breach of Fiduciary Duty – Against Nelson)

    89.  Plaintiff incorporates by reference each of the allegations set forth above.

    90.   Nelson, by virtue of her position and responsibilities within UCA, including the

    trust placed in Nelson by UCA to hold and use a UCA credit card and to participate in the

    management, review, and payment of this credit card account, owed UCA fiduciary duties.

    91.   Nelson breached her fiduciary duties.

    92.  As a result, UCA has been damaged in an amount approximating $800,000.00.

    93.   Nelson’s conduct was intentional, willful, and with the knowledge that such

    would harm UCA, and UCA is entitled to punitive damages.

    FIFTH CLAIM FOR RELIEF(Aiding and Abetting Breach of Fiduciary Duty – Against Evans)

    94.  Plaintiff incorporates by reference each of the allegations set forth above.

    95.   Nelson and/or Evans made numerous personal/unauthorized charges and

    fraudulently altered UCA’s credit card statements and supporting documents to disguise their

    fraudulent activity.

    96.  UCA was harmed both by the unauthorized charges as well as the fraudulently

    altered credit card statements which concealed the existence of the unauthorized charges for a

    long period of time.

  • 8/18/2019 UCA lawsuit against employee

    14/39

     

    14DMWEST #14005710 v1

    97.   Nelson and Evans knew that the altering of UCA’s credit card statements and

    supporting documentation was dishonest, violated UCA’s right to receive accurate credit card

    statements from Nelson, and breached Nelson’s fiduciary duties.

    98.  Evans substantially assisted and/or encouraged Nelson in the altering of UCA’s

    credit card statements and the documents supporting these statements.

    99.  As a result, UCA was harmed in an amount approximating $800,000.00.

    100.  Evans’ conduct was intentional, willful, and with the knowledge that such would

    harm UCA, and UCA is entitled to punitive damages.

    SIXTH CLAIM FOR RELIEF

    (Aiding and Abetting Fraud – Against Nelson and/or Evans) 

    101.  Plaintiff incorporates by reference each of the allegations set forth above.

    102.   Nelson and/or Evans fraudulently altered UCA’s credit card statements and

    supporting documents to disguise unauthorized charges that were made on that account.

    103.  UCA was harmed both by the unauthorized charges as well as the fraudulently

    altered credit card statements which concealed the existence of the unauthorized charges for a

    long period of time.

    104.   Nelson and/or Evans knew that the altering of UCA’s credit card statements and

    supporting documentation was dishonest and violated UCA’s right to receive accurate credit card

    statements from Nelson.

    105.   Nelson and Evans substantially assisted and/or encouraged each other in the

    altering of UCA’s credit card statements and the documents supporting these statements.

    106.  As a result, UCA was harmed in an amount approximating $800,000.00.

  • 8/18/2019 UCA lawsuit against employee

    15/39

     

    15DMWEST #14005710 v1

    107.   Nelson’s and/or Evans’ conduct was intentional, willful, and with the knowledge

    that such would harm UCA, and UCA is entitled to punitive damages.

    SEVENTH CLAIM FOR RELIEF

    (Civil Conspiracy – Against Nelson and Evans)

    108.  Plaintiff incorporates by reference each of the allegations set forth above.

    109.   Nelson and Evans combined to make numerous unauthorized/personal charges on

    UCA’s credit card account and to materially alter UCA’s credit card statements and supporting

    documents to conceal these charges and persuade UCA to pay the resultant credit card bills.

    110.   Nelson and Evans had a meeting of the minds with respect to this conduct and

    their intentions.

    111.  As a result, UCA was harmed in an amount approximating $800,000.00.

    112.   Nelson’s and/or Evans’ conduct was intentional, willful, and with the knowledge

    that such would harm UCA and UCA is entitled to punitive damages.

    EIGHTH CLAIM FOR RELIEF(Unjust Enrichment – Against Nelson and Evans)

    113.  Plaintiff incorporates by reference each of the allegations set forth above.

    114.  A benefit was conferred upon Nelson and Evans by way of their having made

     personal and unauthorized charges on UCA’s credit card account and persuading UCA to pay for

    these charges with UCA’s own funds.

    115.   Nelson and Evans have knowledge and an appreciation of the benefit conferred

    upon them.

  • 8/18/2019 UCA lawsuit against employee

    16/39

     

    16DMWEST #14005710 v1

    116.   Nelson and Evans have accepted and retained the benefits conferred upon them

    under circumstances that make it inequitable for them to retain such without payment of their

    value.

    WHEREFORE, UCA requests the following relief:

    A.  An order and judgment against Nelson and Evans, jointly and severally, in an

    amount to be determined at trial but approximating $800,000.00;

    B.  An order and judgment awarding UCA punitive damages against Nelson and

    Evans;

    C.  An order and judgment awarding UCA its attorneys’ fees and costs associated

    with this action; and

    B. Any other relief the Court finds just and equitable.

    DATED this 25th day of March, 2016.

    /s/ Jason D. Boren, Esq.Jason D. Boren, Esq.Quinton J. Stephens, Esq.Jackie Bosshardt, Esq.BALLARD SPAHR LLP Attorneys for Utah Communications Authority 

    Plaintiff’s Address:

    Utah Communication Authority5360 Ridge Village DriveSalt Lake City, Utah 84118

  • 8/18/2019 UCA lawsuit against employee

    17/39

  • 8/18/2019 UCA lawsuit against employee

    18/39

  • 8/18/2019 UCA lawsuit against employee

    19/39

  • 8/18/2019 UCA lawsuit against employee

    20/39

  • 8/18/2019 UCA lawsuit against employee

    21/39

  • 8/18/2019 UCA lawsuit against employee

    22/39

  • 8/18/2019 UCA lawsuit against employee

    23/39

  • 8/18/2019 UCA lawsuit against employee

    24/39

  • 8/18/2019 UCA lawsuit against employee

    25/39

  • 8/18/2019 UCA lawsuit against employee

    26/39

  • 8/18/2019 UCA lawsuit against employee

    27/39

  • 8/18/2019 UCA lawsuit against employee

    28/39

  • 8/18/2019 UCA lawsuit against employee

    29/39

  • 8/18/2019 UCA lawsuit against employee

    30/39

  • 8/18/2019 UCA lawsuit against employee

    31/39

  • 8/18/2019 UCA lawsuit against employee

    32/39

  • 8/18/2019 UCA lawsuit against employee

    33/39

  • 8/18/2019 UCA lawsuit against employee

    34/39

  • 8/18/2019 UCA lawsuit against employee

    35/39

  • 8/18/2019 UCA lawsuit against employee

    36/39

  • 8/18/2019 UCA lawsuit against employee

    37/39

  • 8/18/2019 UCA lawsuit against employee

    38/39

  • 8/18/2019 UCA lawsuit against employee

    39/39