Caltrans: Honor System Led To $1.9 Million Swindle
SACRAMENTO (CBS13) - Investigators say a local man was taking exotic trips, and even bought a home, with ripped-off taxpayer money.
"How do we know they are not ripping off taxpayers? That's a great question, said Caltrans spokesman Mark Dinger.
Caltrans officials say Eric Blaine Hodgson, 43, took advantage of the honor system and stole $1.9 million dollars from California taxpayers by falsifying invoices for years without getting caught.
Hodgson's company, Phenix Print & Image in Elk Grove, was raided by state agents Wednesday.
He was hired in 2008 to create print ads that would advertise new construction contracts to bidders. Caltrans officials said he would create phony ads representing newspapers and publications and turn in the fake ads to Caltrans as proof, and then get a check.
"When we checked the actual newspapers, that's when we discovered the fraud," Dinger said.
That was four years, and nearly $2 million later.
The state says before he was caught, Hodgson allegedly used taxpayer money to pay off his mortgage, purchase toys and comics, and go on exotic trips around the world.
Caltrans says those contractors who use the honor system and only provide documentation can sometimes be problematic for state auditors.
"When it comes to documentation that's supplied to us from our contractors that's where the grey area occur," Dinger said.
