More than a year after scammers stole more than $500,000 from the county, attorneys for the Galveston County commissioners are still attempting to get the money back from the people they say should have prevented it.
Over the past month, Joseph Nixon, a private attorney hired by the county, has sent letters to companies that hold bonds on behalf of Purchasing Agent Rufus Crowder, Auditor Randall Rice and Treasurer Kevin Walsh.
The letters demand the companies disburse money from the bonds, or else face a lawsuit from the county.
“Failure to pay the full amount of the bond to Galveston County will result in suit being filed to collect on the bond,” Nixon wrote.
The letters seek $100,000 from Rice’s and Walsh’s bonding companies and $5,000 from Crowder’s.
It’s not the first time that the county has talked about going after the officials’ bonds because of the lost money. Commissioners first approved taking that tactic in December 2018.
The threatened legal action is fallout from a theft that happened in May 2018.
A scammer posing as a county contractor tricked an employee in the county’s purchasing department into changing how and where a $525,282 payment for road work would be made. Authorities have not announced any arrests in the investigation and the money hasn’t been recovered.
The scammer used a form obtained through the county’s website to request a change on the bank account information for the road contractor — requesting that instead of paying with a paper check, the county send funds to an account through an electronic transfer, according to an independent report commissioned by the county.
The scammer created fake email addresses to pose as both a county employee and the contractor, essentially becoming a middleman for communications between the two sides.
The scammer used email addresses that were similar to, but not identical to, the real email addresses used by the county and the contractor.
When the scammer submitted the form to the county purchasing department, no one checked to verify the new bank account was valid, according to the report.
Although County Judge Mark Henry and county commissioners have said the departments that oversee the payments to contractors should take some responsibility for the theft, the report said no department or individual could be held accountable for not following safeguard procedures that didn’t exist.
Henry on Friday said the offices should have reasonably been expected to have safeguards in place.
“I think this is exactly why they have a bond, for mistakes like this,” Henry said.
The bonds the county is pursuing are required to be held by local officials under state law. If the bonding companies choose to pay the county, they could then turn to the officials and demand to be reimbursed for the payout.
Two of the officials at the center of the controversy said Friday they didn’t know whether their bonding companies intended to pay out the bonds, or fight the county’s claims.
“I did receive a letter that a claim has been placed against my bond,” Crowder, the county’s purchasing agent, said. “They’re going to do discovery and if they find my office was involved, then they’ll release the bond.”
Crowder said he hoped the company would fight the claim, and pointed to the results of the independent audit as evidence that his office did nothing wrong.
County Auditor Randall Rice argues the commissioners don’t have the authority to claim his bond, because he’s supervised by the county’s district court judges, not the commissioners court, he said.
Rice also pointed to the report as evidence that he shouldn’t have to lose his bond
“There was nothing that was done here that could have changed what happened,” Rice said.
County Treasurer Kevin Walsh could not be reached for comment on Friday.