Article Courtesy of The Miami
Herald
By Joey
Flechas
Published January 5, 2017
About $3.6 million is missing from one of Miami
Beach’s bank accounts, leaving administrators and law enforcement
agencies scrambling to figure out how it happened, who did it and why no
one noticed earlier.
In a letter sent Wednesday to the city commission, City Manager Jimmy
Morales said he learned earlier this week that someone had accessed bank
information for one of the city’s accounts and illegally set up an
automatic transfer to other banks. The money moved the way one would set
up automatic payments out of a personal bank account to pay monthly
bills.
Over an unspecified period of time, dozens of transfers from the Beach’s
SunTrust account amounted to $3.6 million — taxpayer money that flowed
out of the city’s coffers and should have been noticed by the finance
department.
“This is shocking,” said Commissioner Kristen Rosen Gonzalez. “I am
waiting for an explanation.”
Morales said the city is the victim of bank fraud and that he doesn’t
believe city employees are to blame, but details won’t be clear until
the investigation concludes. Two managers in the finance department who
Morales said should have noticed the unauthorized transfers resigned
Wednesday as Beach police and FBI agents continue looking into what
happened.
“I don’t think we could have prevented this, but we should have caught
it sooner,” Morales said in an interview Wednesday night. He said he is
examining how internal controls failed to catch the problem
immediately.“This was not just one month of activity. We probably should
have caught it earlier, and I’m trying to figure out if we did something
wrong and where that happened.”
The account that was pilfered, which has since been closed, was a
general account used to house money collected from permit fees and water
bills. This money goes to pay government bills, such as payments to
Miami-Dade County for drinking water. Dollars are also transferred to
other city accounts for other expenses, including payroll.
Morales said the city has sent claims to the banks that received the
transfers to get the funds returned. The compromised SunTrust account is
now closed, and a new one with tighter monitoring has been opened. Most
automatic payments have been stopped. The city’s staff is now reviewing
transactions every day and reconciling all money being paid out in
electronic transfers.
No money was missing from any of the city’s other accounts, but tighter
controls were put on all of them, a city spokeswoman said.
According to sources familiar with the circumstances, the managers
overseeing accounts payable and the city’s treasury division were forced
to resign Wednesday after the money was found to be missing. Morales
declined to name the employees.
The bombshell revelation comes one year after another unexpected shakeup
in the Beach’s finance department. In September 2015, the city’s top two
financial officers — longtime chief financial officer Patricia Walker
and Georgie Echert, assistant finance director — were forced to resign
after the administration learned that they manipulated paid vacation and
sick time to benefit future payouts when they left the city. Both
hastily submitted resignations scribbled on notebook paper.
Late Wednesday, Mayor Philip Levine said that fraud, hacks and identity
theft hit individuals and companies alike.
“It’s unfortunate,” he said. “You say it can’t happen to you, until it
happens to you.”
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