DOWAGIAC, MI – When he took the job as the new executive director of marketing at Southwestern Michigan College in 2011, Gregory DeRue recommended to school officials an Indiana marketing company to handle its TV, radio and billboard advertising.

The problem was, according to an 11-count indictment filed in U.S. District Court, DeRue failed to tell his bosses at the Dowagiac college that he owned the marketing company, DMG Media, and then used it to defraud the school of more than $200,000.

DeRue, 47, of Granger, Ind., is charged with nine counts of mail fraud and two counts of money laundering, in an indictment handed down July 24 by a grand jury in Grand Rapids.

DeRue was hired as the Dowagiac college's executive director of marketing from January 2011 until May 2013 when he was "released from employment," according to the indictment. It was after DeRue was no longer employed at the college that his alleged scheme was discovered.

The indictment alleges that between June 2011 and May 2013, the college used DMG Media as its advertising agency, which billed the school for more than $487,000. During that time, the school dealt exclusively through e-mail with the company's "purported agent, 'Jack.'"

"Defendant DeRue never disclosed that he served as the president and sole employee of DMG Media," the indictment states. It was after his employment had ended that DeRue contacted the SMC and informed officials "he would be handling the college's account with DMG Media."

Despite being billed by DMG Media for almost a half million dollars – more than $460,000 of which was paid to the company – DMG Media contracted with media providers for only about $279,000 worth of advertising, which included a $32,360 commission.

As support for the nine counts of mail fraud levied against DeRue, prosecutors in the indictment detailed nine instances in which the college paid a total of $224,790 to DMG Media for TV advertising on local stations that never occurred.

The money, according to the indictment, was mailed by the school to Mishawaka, Ind., address for DMG Media, which was later found to be a UPS Store where DMG Media rented a mailbox.

Southwestern Michigan College President David Mathews said Wednesday that school officials reported DeRue's alleged scheme to the FBI about a year ago after uncovering financial irregularities.

"They've done a thorough investigation and we're glad that the federal grand jury, when presented with the evidence, has handed down an indictment," Mathews said.

Mathews said the college has learned some lessons from the alleged scheme and has put safeguards in place in hopes of preventing something similar from happening again, including hiring a third-party media buyer that provides monthly invoices of advertising purchases.

"The sad truth is when someone is actively dishonest and actively working to defraud you, there is going to be some period during which you're vulnerable," Mathews said.

He said the college plans to seek restitution in the case.

According to the indictment, DeRue used money he is alleged to have obtained as part of his scheme to pay down his mortgage with a $31,400 payment and to pay off a 2012 Hyundai Santa Fe to the tune of almost $23,000.

Federal investigators seized more than $115,000 from DeRue's bank account and are seeking to have him forfeit the money, as well as the Santa Fe. They also are seeking a money judgment against DeRue of more than $92,500.

DeRue is free on a $20,000 unsecured bond and is scheduled to appear Aug. 25 at the federal courthouse in Grand Rapids for an arraignment and pretrial conference before U.S. Magistrate Hugh W. Brenneman Jr.

DeRue could not be reached for comment.

Rex Hall Jr. is a public safety reporter for the Kalamazoo Gazette. You can reach him at rhall2@mlive.com. Follow him on Twitter.