Galveston County Judge Mark Henry wants the county to explore whether it can seek reimbursement for the theft of more than $500,000 by making claims against surety bonds held by three public officials.

County commissioners in an executive session Monday will discuss whether to file surety bond claims against the auditor’s office, the county treasurer’s office and the county purchasing agent, according to an agenda posted by the county on Thursday afternoon.

Commissioners also are posted to vote on taking the action following the executive session, according to the agenda. A posted vote on an agenda is not a guarantee that action will be taken, but does signal the possibility for a vote.

On Friday, Henry said commissioners would discuss with the county’s legal department whether pursuing the claims were even viable.

“They have a bond against errors and omission, and we’re going to file a claim against their bonding company and ask for them to pay,” Henry said.

The goal of pursuing a bond claim would be to reimburse taxpayers for the $525,282 that was mistakenly sent to a scammer posing as county road contractor earlier this year, Henry said. The scammer, who has not been identified or arrested, managed to convince county employees to change information in the county’s purchasing system to redirect the destination of an electronic payment.

The county did end up paying the contractor for the work, but Henry said taxpayers deserved to be compensated for the lost funds through the departments that handled the transaction.

Elected and appointed officials are required by state law to hold surety bonds when they officially take office. Henry compared making a claim against the bonds held by each office to making an insurance claim, where the bonding company would investigate the claim and judge whether the county claim can be paid out.

There is a possibility that the county’s legal department will tell commissioners they don’t have the authority to seek a claim against one or more of the departments.

County Auditor Randall Rice said Friday that only the county’s district court judges, who appoint him, are legally allowed to make a claim against his bond.

Rice didn’t think a move to seek a claim against his bond was necessarily an attack on his office, he said.

“I think they’re doing what they think is in the best interest of the county,” Rice said. “They’re doing what they can to protect the county, just as we’re doing what we can to protect the county.”

Monday’s agenda item is the first time the issue has appeared as an action item since July, when the commissioners voted to hire a private company, the Dawson Forensic Group, to investigate the theft.

That investigation has ended, and a draft report has been reviewed by commissioners, but the county has not released the report. The Daily News has submitted an open records request for a copy of the report.

The Galveston County Sheriff’s Office is investigating the theft, but so far no one has been arrested. No one has been fired over the incident.

Henry has complained publicly of about what he sees as a lack of accountability from the departments that were duped by the scam.

Last week, Henry called for the county to form an internal committee to the review the county’s financial operations and propose changes to its systems to potentially give commissioners court more direct oversight of its finances.

Rice, County Treasurer Kevin Walsh and Purchasing Agent Rufus Crowder don’t report directly to the commissioners court, and commissioners cannot remove the people who hold the those positions.

The treasurer is elected, and the purchasing agent and auditor are appointed to the county’s purchasing board and district judges.

The three men have said that they have made changes to the county’s purchasing and payment systems to ensure that the county doesn’t fall for the same scam again.

Another agenda item posted for Monday asks the commissioners court to sign a non-disclosure agreement with GIACT Systems, a fraud detection company, so that the purchasing department can move forward with contract negotiations with the company.

All three men also said they’ve had little in the way of interaction with Henry or other commissioners since the theft occurred, and had not been invited to brief the court on the changes that have been made to avoid future scams.

Henry’s committee proposal does not appear on Monday’s agenda. Henry said he hoped that proposal would be on the court’s agenda later in December.

John Wayne Ferguson: 409-683-5226; or on Twitter @johnwferguson.


Senior Reporter

(4) comments

Rusty Schroeder

I sure hope that report is published, this whole situation wreaks of incompetence with taxpayer money. Nobody fired or held accountable, unbelievable. What do you think would happen if this happened at your financial institution?

Paul Hyatt

In the real world those people would have been FIRED. Of course when you work for the government you can toss out a 500,000 dollar check, lose the money and not only keep your job, but I bet they get a raise next year... What do the taxpayers get? We get a loss of 500K and no one is held responsible for that loss.....Must be nice to hold a job forever like that....Those 3 are safe and sound and will be allowed to screw this up again....

Ron Shelby

Good idea to pursue, but make sure your new "checks and balances" are in place, otherwise they may "drop" you after the claim, and no one else may pick you up.

Jarvis Buckley

Owe it to try to collect the taxpayer loses.

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