ACFE Research Specialist
Michelle Holt sent shock waves through a Virginia courtroom in December when, immediately after pleading guilty to scamming the federal government out of $1.4 million, she walked over and hugged the federal prosecutor who had just filed computer fraud and theft of government property charges against her. In a sensational case that has left many people stunned, Holt was found to have bolstered her paychecks with false overtime, holiday and sick pay over a period of 17 years while working for the United States Air Force.
How it began
During her long-spanning career as a civilian secretary for Langley Air Force Base, Holt was regarded as a knowledgeable employee who provided advice to new staff on how to deal with the pressures of a military work environment. She was well respected in the communications support squadron of Air Combat Command, where she worked, which is why many were shocked when it was discovered she had committed a fraud of this magnitude against her employer.
Holt began her scheme slowly at first, using a coworker’s credentials, unbeknownst to them, to log into the Department of Defense’s computerized payroll system and retroactively add a few hours of overtime to her paycheck. After failing to raise any red flags with her first falsified paycheck, Holt grew more confident and began applying subsequent false overtime payments to herself on a regular basis. She consistently paid herself fraudulent overtime, while also sprinkling in some falsified holiday and sick pay every now and then, until her longtime fraud scheme was finally discovered.
An investigation into Holt’s activity was launched when the Department of Defense’s Inspector General’s Office found differences between Holt’s pay and her workplace attendance records. When questioned by investigators, Holt first admitted only to retroactively applying fraudulent overtime for a few months. When investigators later presented her with a spreadsheet detailing her pay tampering over the last 10 years, Holt realized the jig was up and confessed to the long-standing fraud scheme. Rather than using the illicit funds to bankroll an extravagant lifestyle, Holt claimed she used the money to buy items for her family, and pay bills and daily expenses.
Investigators found that from December 2001 to July 2018, there were 42,000 hours of unauthorized overtime applied to Holt’s pay. Even more astonishing was that in recent years, Holt’s fraudulent overtime pay doubled her regular salary. In 2017, for example, Holt’s salary was $51,234, but she took home nearly $120,000 in overtime pay alone that year. Her retroactively adjusted time cards made it appear as if Holt worked an average of 10 hours of overtime weekly, but she once claimed to have worked as many as 137 hours of overtime in one pay period.
Many people, including those who worked alongside Holt for many years, wonder how such a simple fraud could last so long undetected. Government officials blame relaxed internal controls of the overtime system at the Department of Defense, serving as a warning to other federal agencies in hopes of preventing similar fraud in the future. Had regular audits of the Air Force’s payroll been conducted or biometric authorization employed, Holt’s fraud could have been easily detected or prevented altogether.
It is believed that Holt went up and hugged the prosecutor to express remorse after pleading guilty because she loved her career and genuinely felt guilty for what she had done. Holt left her job soon after the investigation began and now faces up to 15 years in prison for her lengthy fraud scheme. This case shows that even the simplest of frauds can produce catastrophic results and that the implementation of seemingly inconsequential review processes can stop these schemes before they even start.