A federal grand jury in West Virginia has linked five more people to an international scam that allegedly tricked government agencies in several states into paying at least $3.3 million to bogus companies with names that sounded like legitimate firms.
The charges unsealed Tuesday implicate Minnesota residents Michael M. "Mikie" Ochenge, 33; Robert M. "Robe" Otiso, 36; Paramena J. "Joseph" Shikanda, 35; Albert E. Gunga, 30; and Collins A. Masese, 20.
All were born in Kenya and live in or near Minneapolis, prosecutors said. All but Masese were in custody Tuesday, and scheduled to appear before a U.S. magistrate judge in Minneapolis.
The felony counts allege Ochenge, Otiso and Shikanda helped devise a scheme that exploited increasing reliance on the Internet by both the public and private sectors to conduct business.
Posing as businesses that provide services to state agencies, the conspirators tricked officials between March and July into giving them money owed to the legitimate vendors, the indictment says.
They managed to scam $1.2 million from Massachusetts, $919,000 from West Virginia, $869,000 from Kansas and $301,000 from Ohio, the indictment says. The money had been intended for either Deloitte Consulting or Accenture Corp.
Along with Gunga and Masese, Ochenge, Otiso and Shikanda allegedly conspired to launder the proceeds, with $770,000 wired to Kenya. Most of those funds had come from West Virginia. Officials in the other three states identified in the indictment report that they've since recovered their money.
The indictment also repeatedly mentions Angella Muthoni Chegge-Kraszeski. The Kenyan-born North Carolina resident, married to a U.S. citizen, was indicted in May in connection with the scheme. Prosecutors on Tuesday requested a guilty plea hearing for the 33-year-old, indicating that she has been cooperating with them.
Chegge-Kraszeski allegedly registered corporations with names similar to the legitimate firms _ spelling them as "Deloite" and "Acenture." At times aided by Ochenge, Otiso and Shikanda, she set up bank accounts in Minnesota and North Carolina, the charges allege, using a false South African passport that identified her as "Christina Ann Clay."
Investigators allege computers in Kenya repeatedly accessed state government Web sites to glean information for the scheme. The conspirators also received packages from there containing the bogus passport and two batches of sealed, pre-addressed envelopes later placed in the U.S. mail. Two of the packages were routed through the United Arab Emirates.
But the conspiracy may extend beyond what's alleged in the two indictments. West Virginia was hit by a similar scam that netted around $1 million during the same period. Utah officials reported earlier in the year that the same sort of fraud attack diverted $2.5 million. Chegge-Kraszeski was arrested in May after Florida thwarted a ploy attempted there.
Masese relied on phony California and New Jersey drivers licenses to help Gunga and the others launder the defrauded funds, the indictment alleges. Ochenge, Otiso and Shikanda face all eight counts in the indictment unsealed Tuesday, which includes mail fraud and wire fraud charges in addition to conspiracy and money laundering. Prosecutors also seek to have assets forfeited by any defendants convicted to recoup the scammed funds.
Massachusetts Comptroller Martin Benison said his state discovered the ruse within a few days, and with a bank's help recovered its funds. His office has since audited for any other cases of fraud, and hired an outside consultant.
"We've done extensive work to improve our procedures to put in additional checks and balances," Benison said.
Ohio Budget Director Pari Sabety said her state had added safeguards to its process after she learned about the scam in May from colleagues in other states _ but was still duped.
"It's something that we've dealt with," Sabety said. "We've taken the measures that we think we need to safeguard the system against future incidents."
An array of law enforcement have helped develop the case, from local police in Minneapolis to the FBI, Secret Service and other federal agencies. Investigators in West Virginia, North Carolina and Minnesota have also taken part.
Associated Press Staff Writer John Hanna in Topeka, Stephen Majors in Columbus and Steve LeBlanc in Boston contributed to this report.