Aug 2, 2025
Cleveland taxpayers are left scratching their heads after an alleged 14-year-long fraud scheme that cost the city nearly three-quarters of a million dollars was discovered.
As WKYC Channel 3 reports, a former office manager at TV20 — the city's public access television channel — is accused of paying $672,050 to a “ghost” employee who didn’t work at the station.
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Cleveland’s HR director provided the police with 14 years of invoices that reportedly show a man, who is believed to be the former office manager’s nephew, was paid for freelance work from September 2011 to February 2025.
However, there are no records of this man working with TV20 as a freelancer.
The scandal raises questions about government spending against the backdrop of the city's ballooning budget, which is up to $800 million this fiscal year.
What is a ghost employee?
Ghost employees are fictitious workers who are listed on a company’s payroll but don’t actually work with said company.
These fictitious employees can result from administrative error — such as failing to remove a former employee from payroll — or deliberate occupational fraud, as may be the case with TV20.
This alleged scheme was finally discovered when Cleveland’s City Hall hired a new director for TV20. The director was reportedly reviewing financial records when several invoices with forged signatures were found, according to the police report.
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Sources told WKYC Channel 3 that the office manager abruptly quit her position when police began investigating the case in the spring of 2025, raising serious questions about Cleveland’s financial oversight and how such a significant fraud scheme could go undetected for more than a decade.
According to the police report, both the former office manager and the man who received the money shared the same address in Cleveland Heights during the time of the fraudulent payments. Neither individual has been named and no formal charges have been filed as the investigation remains ongoing.
When questioned about the city’s internal controls, city officials declined to provide specifics, citing the ongoing investigation. However, the Ohio State Auditor’s Office issued a statement, saying it’s “reviewing the issues that were brought to light during the city's most recent financial audit.”
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Ghost employees costs taxpayers millions
While this alleged 14-year ghost employee scheme is alarming, this is far from an isolated incident.
From June 2018 to May 2023, the Treasury Inspector General for Tax Administration identified 354 potential ghost employees in the U.S. Of those, 93 cases have been adjudicated, with 33 of those leading to successful prosecution that resulted in an average restitution of $1.3 million.
According to the Association of Certified Fraud Examiners (ACFE), government and public administration entities are particularly vulnerable to payroll fraud schemes, including ghost employees and fictitious vendors.
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In a recent report, the ACFE uncovered 296 cases of occupational fraud that took place within government organizations in 2024. The median loss stemming from these cases was $150,000, while the average loss was $2,306,000.
“It's estimated that improper payments and fraud have collectively cost taxpayers trillions of dollars and affect the integrity of many federal programs,” states the U.S. Government Accountability Office on its website.
“They [improper payments and fraud] erode public trust in government, waste taxpayer dollars, and hinder agencies's efforts to execute their missions and program objectives effectively and efficiently.”
The ACFE’s report estimated that organizations typically lose 5% of revenue to fraud each year, with government agencies facing specific challenges due to complex bureaucratic structures that can obscure financial irregularities. All told, payroll fraud accounts for 8% of all reported fraud cases in the world.
If you believe you may have discovered a fraud scheme within government ranks, the Department of Justice provides a hotline for anyone to report suspected fraud involving government funds.
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Cory Santos is a finance writer, editor and credit card expert with over seven years of experience in personal finance. Having lived and worked worldwide, Cory now calls South Florida home, helping consumers find their ideal credit card and offering impartial and approachable advice to help them navigate their best financial lives. Cory joined Wise Publishing from BestCards, with bylines in numerous digital publications across North America, including AOL, MSN, Yahoo Finance, the Miami Herald, St. Louis Post-Dispatch, and more. When he isn't scouring for the latest credit card deals and offers, Cory can be found working on his various historical research projects, jogging, or hanging out with his cats, Bentley, Cougar, and Pumpkin.
