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BernCo Updates Electronic Funds Transfer Policies

02/05/2020

The accounts payable section of the Procurement and Business Services Department of Bernalillo County has expanded its policies and procedures regarding electronic funds transfer payment processes.

This follows two attempts to swindle the county of money and one successful case of fraud involving a bogus bank account and the use of fraudulent Automated Clearing House (ACH) transactions and a voided check.

Using an online county form posted on the accounts payable external website, scammers created an email address resembling that of a legitimate county vendor, requesting to change its method of payment from a check to an ACH deposit. Attached to the email was a fraudulent ACH form and a forged voided check. After the vendor’s account was updated in the county’s accounts payable system to utilize ACH deposits, nine invoices, dated from Oct. 21 to Dec. 5, 2019, totaling more than $447,000, were deposited into a fraudulent bank account in Texas.

The criminal activity was immediately reported to the Bernalillo County Sheriff’s Department who in turn reported the fraudulent interstate commerce issue to the FBI.

Bernalillo County is ensuring proper payment to the impacted vendor. Bernalillo County carries insurance and is seeking to recover its stolen money.

“We are the unfortunate victims of our own willingness to be a totally transparent government body,” says Bernalillo County Manager Julie Morgas Baca. “Our efforts to be a very user-friendly county opened the door for someone to take advantage of our accessible and open business nature.”

To stop any future attempts to defraud the county additional safeguards are in place:

  • Internal procedures have been reassessed and expanded
  • All information available through the transparency portal is being needs-assessed
  • Procurement and Business Services staff has received training on identifying fraudulent emails
  • County staff received additional fraud training from Wells Fargo Bank, the county’s fiscal agent
  • The county is in talks with Wells Fargo to implement a third-party verification process

“Becoming a victim of fraudulent activity has an impact on both the county and taxpayers,” says Procurement and Business Services Director Dinah Esquivel. “Protecting our vendors and the funds entrusted to us by the citizens is our top priority. We are a better agency today.”

The Bernalillo County Information Technology Department has been investing heavily in employee education and awareness as well as technical controls to protect the county. The county has put a phishing program in place to simulate fraudulent emails and thereby increase employee awareness and knowledge. Fraud training of key county departments has taken place resulting in improvements to business processes and controls.

“The accounts payable department took the training to heart and has done an outstanding job strengthening its controls and improving business processes and resulted in the prevention of two subsequent fraud attempts,” says Chief Information Officer, Robert Benavidez. “Bernalillo County has also adopted the National Institute of Standards and Technology cybersecurity framework and implemented multiple systems to protect the county and our community from exploitation by criminals.”

In addition to the Sheriff’s Department and FBI, the state auditor and attorney general, both the county’s internal and external auditors and the Bernalillo County Audit Committee are aware of the theft.

Bernalillo County continues to work with all law enforcement and financial agencies to remedy this issue and continues to address policies and procedures to identify and expose all attempts of fraud.

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