An Elk Grove business owner has been arrested on suspicion of grand theft after Caltrans staff discovered what is believed to be fraudulent invoices.
Eric B. Hodgson, 43, was booked into Sacramento County Jail today. Paperwork, business records and computers were seized.
He was arrested following a state Department of Justice investigation that was sparked by Caltrans staff discovering invoices for print advertisements that the state believes never ran in newspapers as promised.
Justice department investigators believe that Hodgson defrauded Caltrans of $1.9 million by using false and fraudulent documents.
It is alleged that he used the money to pay off a mortgage, buy toys and comics and pay for "exotic trips" for himself and his staff.
"We will aggressively prosecute this case and seek to recover every dollar of the public's money that was misused," said Attorney General Kamala D. Harris in a press release.
Hodgson, owner of Phenix Print & Image, was hired by Caltrans to advertise new construction contracts to bidders. The alleged fraud was found during a routine request for information and proof of publication for the ads.
An internal review confirmed the likelihood of fraudulent activity, according to a Caltrans press release. The matter was turned over to the Department of Justice.
The investigation of invoices submitted by Phenix found two print advertising contracts, awarded in 2008 and 2009, that added up to more than $1.8 million. Caltrans ended a third Phenix contract before invoices were paid.