Published: July 01, 2009 01:44 am      

Feds: Auditor scam totaled more than $3 million

CHARLESTON — An international scam targeting U.S. state governments managed to rake in more than $3 million, including nearly $1 million from West Virginia, before it was caught, federal prosecutors said Tuesday.

The price tag emerged during the U.S. District Court arraignment of Angella Muthoni Chegge-Kraszeski, the sole suspect so far arrested and identified in the alleged scheme.

Assistant U.S. Attorney Susan Robinson said the 33-year-old Kenyan has admitted to a key role in the scam since her May 9 arrest by the North Carolina State Bureau of Investigation, whose financial crimes unit Robinson credited with developing the case.

Robinson also said the scheme targeted Florida, Kansas and Massachusetts as well as West Virginia, though only funds defrauded from the latter state ended up in Kenya as the conspirators allegedly planned.

Holding a green card and married to a U.S. citizen in Raleigh, Chegge-Kraszeski was ordered jailed without bail pending an Aug. 31 trial. U.S. Magistrate Judge Mary Stanley ruled she was “a very serious flight risk,” citing her foreign roots and her alleged use of a fake passport in the scheme.

Wearing leg shackles and an orange jail uniform, the slight woman offered barely audible answers to Stanley’s questions during the hourlong hearing.

Indicted on a single conspiracy count May 19, Chegge-Kraszeski is accused of setting up corporations in North Carolina, and corresponding bank accounts both there and in Minnesota, with names similar to that of businesses that provide goods and services to state agencies. The ring then tried to dupe state officials into rerouting payments due the actual vendors to the dummy accounts, prosecutors say.

The indictment focuses on $919,916 meant for Deloitte Consulting LLP but instead unwittingly transferred March 19 into one of these accounts by West Virginia’s auditor’s office. Chegge-Kraszeski and at least two other people then withdrew nearly all the money between March 26 and April 1 with most of it wired to Nairobi bank accounts.

Chegge-Kraszeski admitted to the allegations, and to wielding a bogus South African passport giving her the name “Christina Ann Clay” to accomplish much of it, Robinson said. But a bank account she held jointly with her husband and under her real name also helped betray her, the prosecutor told Stanley.

That account’s records show Minnesota plane reservations and cash withdrawn at a casino there at the time the dummy accounts were opened. The account’s ATM card was also used at a North Carolina bank the day a front account was set up there, Robinson said.

Arguing for home confinement pending trial, U.S. Public Defender Mary Lou Newberger cited Chegge-Kraszeski’s statements to investigators. Newberger also said Chegge-Kraszeski knew authorities were on to her two weeks before her arrest, but did not flee.

Perhaps explaining why more scammed money did not reach Kenya, Chegge-Kraszeski had been denied access to some of the dummy accounts she had set up while in Minnesota, Newberger said.

Newberger said Chegge-Kraszeski’s husband stands by her, offering to post their Raleigh house as bail and drive her to her West Virginia court appearances because she lacks a license. The husband, David Frank Kraszeski, attended Tuesday’s hearing but declined comment afterward.

The couple married in August, and Chegge-Kraszeski has been in the U.S. since 2000 and has a son from a prior relationship living in Kenya with her mother, Robinson said. Her green card was set to expire in July but has been extended for one year because she has applied for permanent residency, both Robinson and Newberger said.