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Five More Kenyans Arrested in Alleged Multi-State Fraud Scheme

Posted by Administrator on November 17, 2009

***If convicted of all charges, three of the Kenyans will face 160 years each in prison while the other two will face 20 years each.

***Auditor Glen Gainer III calls the crimes “terrorist acts”.

CHARLESTON, W.Va. — An international team of scam artists defrauded four states, including West Virginia, out of $3.34 million by creating phony accounts with similar names to vendors with large state contracts, according to a federal indictment unsealed on Tuesday.

Using information about the contracts gleaned from government Web sites, the conspirators created dummy corporations and bank accounts, the indictment alleges. They then wrote to state governments and changed the payments to direct deposit to the fake bank accounts.

Once the funds cleared, they were transferred to various banks in Nairobi, Kenya, according to the indictment.

The alleged conspirators are: Michael M. “Mikie” Ochenge, 33; Robert M. “Robe” Otiso, 36; Paramena J. Shikanda, 35; Collins A. Masese, 20; and Albert E. Gunga, 30. Otiso is from Elk River, Minn.; the rest are from Minneapolis.

Angella Muthoni Chegge-Kraszeski, 33, of Raleigh, N.C., is not named as a defendant in the indictment, but she was charged in the same scam by a federal grand jury in June. On Tuesday, as the others were indicted, prosecutors asked a judge to schedule a guilty plea for Chegge-Kraszeski.

In May, the case made headlines in West Virginia, when state Auditor Glen Gainer III’s office discovered that three payments totaling roughly $2 million had not reached their intended destinations.

The indictment addresses at least one of those payments, a March 20 $919,916 transfer to Deloitte Consulting for providing data systems help to the state Department of Health and Human Resources. Instead of going to Deloitte, it went to Deloitte Consulting, which had been set up by Chegge-Kraszeski in January in North Carolina, the indictment alleges.

Before officials caught on, the scheme netted $919,916 from West Virginia, with an additional $1,288,037 stolen from Massachusetts, $869,546 from Kansas and $301,571 from Ohio, according to the indictment.

On multiple occasions, Chegge-Kraszeski, who had been express-mailed a phony South African passport under the name Christina Ann Clay from Dubai in the United Arab Emirates, flew to Minnesota, where she and the others set up bank accounts with TCF Bank in Minneapolis, the indictment alleges.

On Tuesday, as he praised the work of the U.S. Attorney’s Office in Charleston as “outstanding,” Gainer called the incident a “wakeup call.”

“We are under assault. As far as I’m concerned, these were terrorist acts,” he said.

The alleged conspirators specifically targeted state governments, and used public information to exploit a weakness in states’ payment systems, he said.

“They researched the states. We saw where they went in through the public [Internet] portal,” he said.

West Virginia has recovered roughly $500,000 of the missing funds, but the state’s losses still approach $1 million, he said.

Even the brief success of the scam in multiple states shows that officials need to be more vigilant, he said.

“Because state governments are now a target for international fraudulent activity, we must constantly be reviewing and changing our internal controls,” he said. “The trouble is you’re trying to stay one step ahead of the scammers.”

If convicted on all counts, Ochenge, Otiso and Shikanda face up to 160 years in prison. Masese and Gunga, who face charges of conspiracy to commit money laundering, could spend up to 20 years in prison.

Gainer said he knows that the suspects are all innocent until proven guilty, but if they are convicted, he plans to attend their sentencing hearings. In the meantime, he will continue to upgrade the safeguards in place to protect public funds.

“Our internal controls that we have today aren’t good enough for tomorrow,” he said.

Source: http://www.wvgazette.com

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