Two vendors that do business with the West Virginia Auditor’s Office never received $2 million in payments due to a massive e-payment scheme.
According to an article published in the Charleston Daily Mail, the fraudsters, claiming they were a pair of legitimate vendors, sent requests to the Auditor’s Office asking that the state stop sending checks and begin paying them electronically.
There was no reason to suspect fraud at this point, as the letters arrived on official letterhead with signatures from top executives. In addition, the packet included a sample check to verify the legitimacy of the request. These documents are all most likely forgeries.
The article states that the Auditor’s Office followed the prescribed NACHA rules for verifying a vendor’s bank account before enrolling them to receive ACH payments. These steps, which include making sure the provided Employer ID Number matches the bank account, revealed no indication that the accounts actually belonged to fraudsters.
A total of three disbursements were made before the fraud was discovered. The funds were all sent to a bank account in West Africa. The Audit Department does not believe any of their employees were colluding with the fraudsters and has no plans to punish anyone.
As a result of the incident, the department has implemented tighter fraud controls. For example, two people instead of one must now review all payment change requests. Also, other departments that issue disbursements, including the state Lottery Commission and Parkway Authority – have implemented tighter payment controls.
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