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In late 2019, Bernalillo County Accounts Payable staff became the dupe of a fraudulent “trick of trust” by paying $447,372 to what they believed to be an approved county vendor.
The ‘fraudster’ was a Kenyan national living in the United States on an immigrant visa who is charged with 11 counts of wire fraud and conspiracy for his alleged role in the scam, according to the U.S. Attorney’s Office in Albuquerque. He faces up to 20 years in federal prison on each count, if convicted.
Oscar Ngeno, 41, appeared remotely before a U.S. magistrate in Albuquerque on March 30. A resident of Rochester, New York, Ngeno was released on $15,000 bond pending trial, surrendered his passport and must comply with other conditions of release, court records show.
The scheme involved a series of nine payments electronically transferred by Bernalillo County to a Woodforest Bank account in Texas, allegedly controlled by Ngeno.
Between Oct. 28, 2019 and early December 2019, the total amount transferred was more than $447,000, according to a federal indictment. That included a transfer of $110,223 on Dec. 4, 2019 — a week after the legitimate provider contacted the county about its late payments and initially received no response, according to Bernalillo County records.
The county’s bank, Wells Fargo, was able to recover $129,094 of the total loss, and one of the county’s insurers reimbursed the county for an additional $100,000. But the insurance companies would not cover the entire claim in part because the loss “was caused by an action that the insured (county) was duped”, according to a September 2020 letter from a law firm. of Boston attorneys who investigated the case.
The county’s net loss was more than $216,000.
A subsequent state audit found that the fraudulent payments were made “due to failure to follow county procedure.”
“The county accounts payable section did not follow procedures to verify the request (for payment) through secondary contact methods,” the auditors said.
According to a February 24 indictment, Ngeno allegedly caused an email to be sent to Bernalillo County on or around October 22, 2019, in the name of “Carlos Boyd”, stating that Boyd was the accounts coordinator. government at CDW. Government Inc., which provides computer hardware, supplies and software to the county.
The email asked Bernalillo County to change its method of payment from check to ACH, or an automated direct payment from the clearing house to Woodforest Bank.
“Staff improperly verified with the contact listed in the email rather than going back to the contact in the vendor’s master file,” Bernalillo County Executive Julie Morgas Baca wrote in a letter to the verifier. of State Brian Colón at the end of 2019.
The county learned of the scam after CDW Government Inc.’s accounting department sent an email on Nov. 26, 2019, requesting over $337,000 in legitimate bills that had not been paid.
After a second attempt by CDW to reconcile the outstanding payments, the county discovered on December 5, 2019, that the email from “Carlos Boyd” had been fraudulent and that the new payment agreement was part of a “trick of trust communicated via email,” reads a letter from the law firm Peabody & Arnold.
“When governments are the victims of fraud, especially fraud as large as Bernalillo County’s, taxpayers and residents are the ones who can be deceived,” said Raul Bujanda, special agent in charge of the FBI’s field office at Albuquerque, in a press release. “The FBI will use all of its resources to pursue those who steal funds that could provide essential services like public safety and health care. We also want to reiterate the importance for government agencies and businesses to learn as much as possible about Internet fraud and how to protect themselves.
Bernalillo County spokesman Larry Gallegos told the Journal that the county has since strengthened its internal controls to include an “enhanced tiered” authorization process, involving four county administrators or managers, to verify the changes in a contractor’s method of payment.
Ngeno could not be reached by the Journal for comment.
Of the $447,000 transferred to the Woodforest Bank account, the indictment states, Ngeno allegedly wrote checks totaling approximately $88,930 to two unnamed co-conspirators.
“As our technologies and banking systems evolve, so do the strategies of thieves and fraudsters,” said Fred J. Federici, U.S. District Attorney for New Mexico. “For this reason, we continue to encourage increased vigilance for unsolicited email inquiries.”
