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The original item was published from 12/1/2020 1:12:37 PM to 12/3/2021 12:00:00 AM.

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Legislative District 07

Posted on: December 1, 2020

[ARCHIVED] MAJORITY RELEASES IG REPORT DETAILING 2 MILLION DOLLAR SCAM ON COMPTROLLER’S OFFICE

MAJORITY RELEASES IG REPORT DETAILING 2 MILLION DOLLAR SCAM ON COMPTROLLERS OFFICE


(Mineola, NY) – In September 2019, the Nassau County Comptroller’s Office and Comptroller Jack Schnirman fell victim to a cyber phishing scam that put $2 million of taxpayer money at risk, when the Comptroller’s Office transferred it to a fraudulent entity. The scammers posed as a vendor who often does business with the county, sending an email to the Comptroller’s Office requesting a change in payment arrangements. At the time, Schnirman claimed the amount transferred was only $710,000 and claimed the Comptroller’s Office solely caught the fraud.

 Soon after, a hearing was held by the Finance Committee of the Nassau County Legislature questioning Schnirman, and calls were made for an investigation by the State Comptroller’s Office and the Inspector General of Nassau County. Under questioning by the Finance Committee, Schnirman admitted that the Comptroller’s Office did not in fact catch the fraud, but rather a bank employee recognized the unusual activity and froze the stolen money. Afterward they contacted the Comptroller’s Office.

 This month, The Nassau County Inspector General, Jodi Francese, released the results of her investigation into the Comptroller’s Office and the phishing scam. The Inspector General found that the Comptroller’s Office was the victim of a vendor impostor fraud scheme, in which a fraudster utilized email to impersonate a legitimate county vendor and cause the Comptroller’s Office to change that vendor’s Automated Clearing House banking information, allowing the payments to be moved from the true vendor’s bank account to the fraudsters. 11 payments were authorized, far more than the Comptroller’s Office claimed, totaling $2,095,813.92. These transactions were between September and October 2019. 8 of these payments, totaling $710,955.92, successfully went into the fraudster’s account.

 Further, the Inspector General found that the Comptroller’s Office did not catch the fraud, but rather the bank did. The bank froze the account due to a fraud notification from another bank, and unrelated to Nassau County.  It was the bank’s action that caused the additional $1,384,858 from also going into the fraudster’s account. While the bank then notified the Comptroller’s Office of the freeze on October 22, 2019, it wasn’t until two days later that the Comptroller communicated with the true vendor about the issue. 

 The Inspector General also determined that the internal controls the Comptroller’s Office had in place were not sufficient to protect against fraud schemes and the staff was not trained to detect fraud.

 “After reading the report from the Inspector General, I am deeply concerned by the Comptroller's behavior, and question his ability to protect taxpayer money,” Deputy Presiding Officer and Chair of the Legislature's Finance Committee Howard Kopel said. “The Comptroller lied to the media, this legislature, and the residents of Nassau County in a desperate attempt to cover up his inability to properly manage money. Unfortunately, this is just the most recent example of Comptroller Schnirman showing a complete lack of respect for taxpayer dollars. I am thankful for the Independent Inspector General, and my fellow members of the Finance Committee for providing the oversight residents deserve, and I look forward to continuing to monitor the office to make sure taxpayer's hard-earned money is protected.”

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