The "fraudster" was a Kenyan national living in the U.S. on an immigrant visa who is charged with 11 felony 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 for each count, if convicted.
Oscar Ngeno, 41, appeared remotely before a U.S. Magistrate judge 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 an account at the Woodforest Bank in Texas allegedly controlled by Ngeno.
Between Oct. 28, 2019, and early December 2019 the total amount transferred was more than $447,000, a federal indictment states. That included a $110,223 transfer on Dec. 4, 2019 — a week after the legitimate vendor contacted the county about its overdue payments and initially got no response, according to Bernalillo County records.
The county's bank, Wells Fargo, was able to recoup $129,094 of the total loss and one of the county's insurers reimbursed the county another $100,000. But insurance carriers wouldn't cover the full claim in part because the loss "was caused by action that Insured (county) was duped into taking," according to a September 2020 letter from a Boston law firm that investigated the matter.
The county's net loss was more than $216,000.
A subsequent state audit found the fraudulent payments were made "as the result of non-compliance with County procedure."
"The County's Accounts Payable Section did not follow procedures to verify the request (for payment) through secondary contact methods," stated auditors.
According to a Feb. 24 indictment, Ngeno is alleged to have caused an email to be sent to Bernalillo County on or about Oct. 22, 2019, in the name of " Carlos Boyd," representing that Boyd was a government accounts coordinator at CDW Government Inc., which supplies information technology equipment, supplies and software to the county.
The email requested that Bernalillo County change its payment method from check to ACH, or automated clearing house direct payment to the Woodforest bank.
"Staff inappropriately verified with the contact listed on the email rather than going back to the contact in the vendor master file," wrote Bernalillo County Manager Julie Morgas Baca in a letter to State Auditor Brian Colón in late 2019.
The county learned about the scam after CDW Government Inc.'s accounting department sent an email on Nov. 26, 2019, inquiring about more than $337,000 in legitimate invoices that hadn't been paid.
After a second attempt by CDW to reconcile the past due payments, the county discovered on Dec. 5, 2019, that the email from "Carlos Boyd" had been fraudulent and the new payment arrangement was part of a "confidence trick communicated by email," stated a letter from the Peabody & Arnold law firm.
"When governments are victimized by fraud, especially one as large as what Bernalillo County experienced, taxpayers and residents are the ones who can get cheated," said Raul Bujanda, special agent in charge of the FBI Albuquerque Field Office, in a news release. "The FBI will use all its resources to go after those who would steal funds that could provide critical services like public safety and health care. We also want to reiterate the importance of government agencies and businesses learning as much as they can 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 multi-level" authorization process, involving four county administrators or managers, to verify changes in a contractor's payment method.
Ngeno couldn't be reached by the Journal for comment.
Of the $447,000 transferred into the Woodforest Bank account, the indictment states, Ngeno is alleged to have written checks totaling about $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. Attorney for the District of New Mexico. "For this reason, we continue to encourage heightened vigilance with respect to unsolicited email requests."
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