Responsibility: Treasurer should seek repayment from scam
More than eight years ago, West Virginia taxpayers lost $1.5 million to a very sophisticated scam. About a year later, state officials went to court in an attempt to recover the money.
At the rate the matter is proceeding through the courts, some of those involved may never see the case resolved.
Just last week, state Auditor John McCuskey’s office suffered a setback. That office, apparently under McCuskey’s predecessor, Glen Gainer III, had filed a lawsuit seeking repayment of $1 million lost in the scam. The suit was filed against Wachovia Bank, now Wells Fargo Bank, which was processing some financial transactions for the state in 2009.
It was then that Gainer’s staff discovered the scam. It involved six Kenyans, who victimized West Virginia, Ohio, Kansas and Massachusetts. They set up phony bank accounts and tricked officials in those states into rerouting payments intended for legitimate businesses. Instead of going to companies that should have received money, payments went to the scammers.
All six of them were convicted on federal charges.
Gainer’s office was right to seek repayment of at least some of the money, though whether Wells Fargo was culpable remains to be seen.
That issue will not be decided through the auditor’s lawsuit, however. Last week, a judge in Kanawha County ruled the auditor lacks legal standing to file such an action — because the bank’s contract was with the treasurer’s office.
However, the auditor’s office can sue the bank for negligence, the judge added.
To call the decision confusing would be an understatement. Gainer, then McCuskey, were just trying to recover money for West Virginia taxpayers. But the law is the law, so now, apparently, Treasurer John Perdue will have to pursue the case.
He should do so forcefully and expeditiously.
And McCuskey’s office should do just what the judge suggested — file a suit for negligence.
If, indeed, the bank was at fault in not detecting and stopping the Kenyan scammers, it ought to be held responsible — without allowing the issue to be tied up in legal maneuvering such as that which already has delayed resolution far too long.