Former SMC executive facing prison for fraud

Published 8:54 am Monday, March 16, 2015

The former head of Southwestern Michigan College’s marketing will be spending  the next year and a half inside a federal penitentiary, after being sentenced for multiple counts of fraud against his former employer during an appearance in U.S. District Court Thursday, according to court documents.

Judge Paul Maloney sentenced Gregory DeRue, 48, of Granger, to 21 months of prison for nine counts of mail fraud and two counts of money laundering, during a sentencing hearing held in Kalamazoo.

The judge also ordered DeRue to pay $208,133 worth of restitution, and he will be placed under two years of federal supervision following his release from incarceration.

DeRue pleaded guilty to the charges against him in November. A federal grand jury handed down an indictment against the former marketing director on July 24.

DeRue embezzled nearly $200,000 from the college during his two-year stint as the school’s director of marketing, which he served as from January 2011 to May 2013. He accomplished this by brokering an agreement for television, radio and billboard advertisements between the school and a Mishawaka-based marketing firm called DMG Media, that, unbeknownst to SMC leadership, he actually owned and was the sole employee of. 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 DMG, the college was invoiced $487,427 for services, of which only $279,145 was spent on contracts with media providers. The group also charged the college for services that were never provided.

DeRue was eventually fired from his job after the college noticed a lack of return on its advertising. A subsequent investigation by school officials into their dealings with DMG Media raised concerns that the company had defrauded them, leading them to contact the FBI for further investigation.

A portion of the money DeRue illegally obtained from the school was used toward his home mortgage and payments on his 2012 Hyundai Santa Fe.