Fraud Investigation Leads to Arrest of Mableton Man, Ex-KSU Manager

Kennesaw State University's former executive director of environmental health and safety was arrested Thursday in connection with a crime ring that allegedly defrauded the state of nearly $1-million.

The Georgia Bureau of Investigation and the Kennesaw State Police Department arrested Gerald Donaldson of Mableton on a charge of conspiracy to defraud the state, according to a statement on the university's website.

Donaldson and five others are accused of creating “shell companies” to conduct the fraud, which allegedly extended from Donaldson's own department at Kennesaw State to private organizations and other individuals outside of the university system.

The months-long investigation started when Kennesaw State employees reported to university officials their concerns about unusual invoices submitted for payment. The invoices normally had been reviewed by Donaldson.

A university audit revealed the awarding of contracts to shell corporations and billings for duplicate work. Donaldson allegedly was responsible for approving the fraudulent contracts and for verifying that the work was completed as specified, Kennesaw State said in the statement.

Donaldson, an employee of the university since February 2001, was placed on administrative leave. One month later, on Oct. 5, 2012, he was terminated after a subsequent investigation. Additionally, Kennesaw State officials referred the case to the State Attorney General's Office, which joined the GBI and the KSU Police Department in the investigation.

“Malfeasance and fraudulent behavior absolutely are not tolerated, and we will prosecute any and all employees who abuse their roles to steal from this institution,” Vice President of Operations Randy Hinds said. “We will exercise the full extent of the law to prosecute such criminal activity.”

Kennesaw State has implemented several new measures to better protect its procurement and contracting processes from fraud, according to the statement.

Donaldson is in the Cobb County Jail on a $750,000 bond.