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Attorney General Kamala D. Harris Announces Arrests in State Contract Fraud Scheme

Tuesday, July 23, 2013
Contact: (415) 703-5837

SACRAMENTO -- Attorney General Kamala D. Harris today announced the arrest of three individuals who allegedly engaged in fraud against the State of California by taking bribes, misappropriating taxpayer money and forging documents.

The complaint alleges that Michael Mathison, owner of Veteran Toners Services, supplied inflated quotes to the Department of Fish and Wildlife and the California Department of Transportation (CalTrans) for office supplies. Mathison then produced counterfeit quotes from non-existent competitors with even higher prices. As a result, Veteran Toners Services was awarded the office supplies business at the original inflated price and two department employees – in return for giving Veteran’s the contract – received kickbacks in the form of money orders, gift cards and vacations. 

“These workers conspired to defraud taxpayers for personal gain,” said Attorney General Harris. “We take government fraud very seriously. I thank our state partners for working closely with Department of Justice agents on this case.”

Stephanie Clark, 42, of Fair Oaks, Danny Gray Compson, 62, of Yuba City and Mike Mathison, 50 of San Pedro, were arrested today and face charges of bribery, conspiracy and misappropriation of state funds.  Clark and Compson also face charges of embezzlement by a public officer.

Clark and Compson were booked into the Sacramento and Sutter county jails, respectively, on $75,000 bail each, while Mathison was booked into the Los Angeles County Jail on $250,000 bail.

The arrests came after a year-long investigation by the California Attorney General Office’s Bureau of Investigation after the office received an anonymous tip. The arrests followed the service of six search warrants on Monday and Tuesday, including some at state office buildings. All agencies involved cooperated with the investigation once they were made aware of it.

Clark, who works for the California Department of Fish and Wildlife, took more than 50 bribes for a total of $23,800 over the course of five years, the complaint alleges. Agents discovered more than 50 postal money orders deposited to Clark’s bank account. The agents also uncovered more than 200 separate purchase orders for office supplies and a sampling of 13 of those showed approximately $50,000 in over-charges.

Compson, who works for the California Department of Transportation, also accepted bribes from Mathison. The complaint alleges he submitted invoices worth as much as $5,000 a week to be paid, but he never received the product.

The investigation into any further wrongdoing is ongoing.

The Attorney General works to protect the state against fraud and other financial misconduct through the enforcement of the California False Claims Act. Investigations and prosecutions brought pursuant to the Act have resulted in the recovery of hundreds of millions of dollars in wrongfully obtained public funds.  The False Claims Unit of the Corporate Fraud Section investigates alleged violations of the Act based upon referrals from state, federal and local agencies, tips from members of the public and qui tam complaints, otherwise known as whistleblower complaints.

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