IT Services Vendors Targets of State Fund Looting

Major technology vendors with known service contracts with four U.S. states were major targets of a $4 million criminal scheme involving illegally set up company entities and wire transfer accounts, according to the Dept. of Justice.

Three suspects accused of a scheme to illegally transfer government funds out of West Virginia, Massachusetts, Kansas and Ohio to fake accounts of legitimate technology companies were sentenced Aug. 19, according to a U.S. Department of Justice report.

The well-known enterprise technology services vendors included Deloitte Consulting, Unisys, Accenture and Electronic Data Systems, which is now owned by Hewlett-Packard.

The conviction follows a 2008 investigation into an international fraud ring, which used money laundering tactics, wire transfers via money mules and targeted companies that were known for major technology contracts with these state contracts. The criminal scheme collected nearly $4 million dollars by filing documents for dummy entities of these legitimate companies with illegitimate bank accounts in the name of these vendors. Several states did route money to these dummy accounts.

"Today represents a victory for taxpayers," said U.S. Attorney Booth Goodwin in an Aug. 20 statement. "When the state itself is defrauded, we all suffer. Money taken from the public treasury is money not available for schools, roads and police and fire departments. That is why this case was such a priority for my office."

The suspects were Kenyan nationals and included Robert M. Otiso, 36, of Elk River, Mn.; Paramena J. Shikanda, 35, of Minneapolis; and Collins K. Masese, 21, of St. Paul, Mn. Otiso received a sentencing of 72 months in prison; Shikanda received 46 months; and Masese received nine months in charges that ranged from conspiracy to commit mail and wire fraud to conspiracy to commit money laundering.

Two other Kenyan national suspects have plead guilty to being involved in the scheme and are scheduled to face sentencing on Aug. 26.

"I am very proud of the swift response and thorough investigation conducted by the federal and state investigators, and the aggressive prosecution of Susan M. Robinson, chief of the White Collar Crime Section in my office," Goodwin said. "Their work, no doubt, prevented additional significant losses to the victims."