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Treasurer weighs in
Perdue says proper checks, balances a must
West Virginia Treasurer John Perdue says the scam in which nearly $2 million in state funds was taken through electronic transfers is a form of corporate identity theft.
“This was a corporate identity theft, which is more rare, and better checks and balances are needed to stop this type of crime,” he told The Register-Herald during an interview Monday afternoon. “This is a major issue, however, because it causes people to lose confidence in their government.”
Last week, unknown scammers set up phony bank accounts in the name of legitimate state vendors before having West Virginia Auditor Glen Gainer III’s office electronically transfer millions in state funding to the overseas accounts.
“This is under investigation,” Perdue said. “But the correct checks and balances must be put in place to protect the electronic transfer of state funds in the future.”
Gainer’s office reported receiving paperwork asking for deposits in the new accounts and that all the required information to make the deposits was provided.
However, the phony bank accounts were created by scammers. Two $1 million transfers were made and a third was caught by state auditors before it was completed.
Perdue believes his office could be part of the checks and balances needed to stop this kind of scam from happening again.
“The electronic transfer of funds falls totally under the state Auditor’s office,” he explained. “The Treasurer’s office has the security mechanisms in place to help catch these types of scams. I’m sure the Auditor’s office is reviewing its checks and balances to make sure this doesn’t happen again.”
Gainer declined to release the names of the vendors, but Deloitte Services in New York and Memphis-based Sedgwick Claims Management Services confirmed that they were the vendors defrauded in a previously published report regarding the case.
Deloitte has a contract with the state Department of Health and Human Resources. Sedgwick is a vendor for the state Insurance Commission.
Getting away from electronic transfers of state funds and bringing back all paper checks is not the answer, according to Perdue.
“We still do a lot of paper checks, but the same checks and balances can be put in place with electronic transfers,” he said. “Paper checks are very costly to the state.”
Perdue said the saying used to be that it cost the state $50 to write a paper check.
“The machines needed to print that check, the personnel, the paper, the postage, the banks and other cost make it expensive to write a paper check,” Perdue said. “Electronic transfers of funds cost only about seven to nine cents. This is a huge cost savings to the taxpayers of West Virginia. We just need to improve our checks and balances and correct the mistakes made in this case. I’m sure the state Auditor would agree.”
— E-mail: fpace@register-herald.com
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