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Former SMC executive charged for defrauding college

Published 8:00am Friday, August 15, 2014

The former head of marketing for Southwestern Michigan College has been charged with nearly a dozen counts of fraud by a federal grand jury, for allegedly embezzling nearly $200,000, according to reports filed in U.S. District Court.

Gregory DeRue, of Granger, was charged on nine counts of mail fraud and two counts of money laundering at the U.S. District Court in Grand Rapids on July 24, according to indictment documents from the court.

DeRue is accused of defrauding the college during his tenure as executive director of  marketing, which he served as from January 2011 and May 2013, by brokering and handling a contract between the school and an advertising firm that he owned, unbeknownst to SMC leadership.

According to the indictment, SMC began using DMG Media, a marketing firm from Mishawaka, to handle its television, radio and billboard advertisements, at the recommendation of DeRue.

“He came to us and told us about this media buying firm that buys airtime for pennies on the dollar,” said SMC President David Mathews. “He said we could get twice as much airtime, for a better rate.”

However, the Granger resident never informed the school that he was the president and sole employee of the company, and the only contact other employees had with the company was via email with a purported agent named “Jack.”

During the course of its contract with the group, the college was invoiced $487,427 for services. However, the agency only spent around $279,145 of those funds on contracts with media providers, and charged the college for services that were never provided, according to the documents.

DeRue was eventually fired from his position due to poor returns from advertising, Mathews said.

“We were beginning to see a lack of effectiveness in our TV ads, and we didn’t know why,” Mathews said.

Soon afterwards, members of the college’s business department discovered a number of discrepancies in their dealings with DMG Media, suspecting them of fraud. They began working with the FBI to investigate these claims, Mathews said.

“The whole thing has taken a year since we first contacted authorities, and now finally a grand jury has handed down an indictment,” he said. “We are delighted about that.”

Authorities further allege that the money DeRue illegally obtained from the school was used towards his home mortgage and payments on his 2012 Hyundai Santa Fe.

Authorities have seized over $100,000 of assets from DeRue, who, if convicted, will be forced to hand over the funds to the college.

“We are treating this as theft from the public, which seems worse to me than stealing from a private company,” Mathews said.

DeRue is currently free on bond, and is scheduled for arraignment in Grand Rapids on Aug. 25.

Requests for comment were left with both DeRue and his attorney.

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