Dive Brief:
- A manager of a University of Iowa machine shop diverted nearly $1 million dollars to personal accounts by using the shop’s equipment and staff to work jobs on behalf of a business he owned, according to findings from a state audit.
- The university put the employee, Brian Busch, on paid administrative leave starting in 2021 after becoming aware of a possible conflict of interest and improper activity. It ultimately fired him on Aug. 28 following the audit results.
- The report advised administrators to improve communication around conflict of interest disclosures and institute new departmental procedures such as inventory counts and spot checks.
Dive Insight:
The machine shop in the University of Iowa’s physics and astronomy department provides a host of services for employees and students, including fabricating, machining, part prototyping and more. It aimed to be financially self-supporting and, along with its work on campus, took jobs from external sources including federal and international science agencies, such as NASA.
In 2018, according to the audit report, Busch approached the department about performing jobs through Xometry, a network of manufacturers that can make custom parts on demand. He pitched the move as a way to keep the shop working on paying jobs during otherwise slow periods.
The university machine shop became a certified Xometry manufacturer in the summer of 2018 and began taking jobs through the platform that fall.
Of the 636 jobs performed by the university machine shop for Xometry customers between September 2018 and September 2021, 587 were paid out to a business Busch owned, called D3T, according to the state audit.
That represents about $951,490 paid to Busch’s firm by Xometry, while just $74,639 went to the machine shop. Moreover, Busch failed to disclose his ownership of D3T to the University of Iowa, auditors found.
Busch diverted funds from those jobs into his personal accounts, according to the report. Auditors also found evidence of numerous untracked hours of staff time as well as text messages from Busch offering to pay employees in cash if they left hours unlogged.
For example, in one text the auditors cited, Busch told a shop employee, “Do you have any room in your schedule for some extra time this week I got a cash bonus situation for you.”
The state-level audit has been filed with Iowa’s board of regents, as well as criminal investigators and the state attorney general.
The university put two other employees on paid leave as it looked into issues at the machine shop. The university terminated one of those employees on Aug. 28. The other left in 2023, prior to the conclusion of the audit.
University of Iowa said in a statement Wednesday that it is investigating “all potential avenues” to recoup paid leave wages from Busch and the other employees.
The university also said that, following the audit, the machine shop has updated its record-keeping procedures around job intake and assignment to ensure work is properly documented.
