State employee who pleaded guilty to embezzling $850,000 gets jail time

Hani Barghouthi
The Detroit News

A former state employee who pleaded guilty in September to embezzling more than $850,000 will serve jail time and probation, officials announced Tuesday. 

Joseph Pettit was sentenced Tuesday to one year in the Ingham County Jail and three years' probation, announced Michigan Attorney General Dana Nessel and Michigan Department of Environment, Great Lakes, and Energy director Liesl Clark in a statement.

Pettit worked for EGLE for 24 years until he left the agency in January 2020. 

He pleaded guilty in September to two counts of embezzlement over $100,000 and one count of uttering and publishing before Judge Rosemarie Aquilina of the Ingham County 30th Circuit Court.

Pettit also will be responsible for full restitution of the embezzled $855,690 and forfeit his state pension, in accordance with the Public Employees Retirement Benefits Act, the statement said.

“State employees serve the many operations that keep Michigan running for our millions of residents,” Nessel said. “Abusing that responsibility will not be tolerated by my office. I appreciate the hard work that went into securing the plea and, ultimately, accountability for Mr. Pettit’s egregious acts.” 

As an employee for the Oil, Gas and Minerals Division within EGLE, Pettit was accused of setting up a fake vendor scheme that allowed him to divert bond money into those accounts, Nessel said in September. 

People drilling a well in Michigan must apply for a permit and post a bond that the owner eventually gets back when the well changes hands. 

Pettit was responsible for releasing the bonds back to companies and the original owner. He instead created "fake vendors" in the state's payment software to which he would divert some of the money, Nessel's office said.

"The legitimate companies were usually long-term well operators that would have the bonds on file for years or they were defunct companies that forfeited their bonds," Michigan State Police Detective Sgt. Scott Singleton wrote in an April 7 affidavit.

"Either way, the companies would not likely discover that their bond was cashed in." 

In September 2020 EGLE officials became aware of some discrepancies and contacted the Michigan State Police, which conducted the investigation. 

“There are no winners here, least of all Michigan EGLE’s 1200-plus public servants who exemplify the highest standards of ethics and are disheartened to learn a coworker violated those principles,” EGLE's Clark said. “We are doing all we can to prevent any reoccurrence of this type of incident, including strengthened internal financial controls that provide greater checks and balances against fraud.” 

Pettit's felony charges were punishable by up to 20 years in prison and a fine of up to $50,000 or three times the value of the money or property, whichever is greater.