BUFFALO, N.Y. — UPDATE: This story has been updated to include information from New York State.
Erie County could be out $326,000 after a scheme involving a check from the Erie County Clerk's Office, a counterfeit version of that check, and a random company that ended up getting paid instead of New York State.
The missing check for $326,456 was uncovered during an audit of the clerk's office last year conducted by the Erie County Comptroller, the findings of which were released this week.
According to Comptroller Kevin Hardwick, the check made payable to the State of New York Mortgage Agency's Insurance Fund (SONYMA, pronounced SUNNY-MAE) was somehow intercepted and a counterfeit check was made, payable to GET MOBILE LLC.
"They made an exact duplicate, or a pretty close to exact duplicate of it, with one change, who it was paid to, and it went through, and it was processed, and no one was missing it," Hardwick told 2 On Your Side on Thursday.
The counterfeit check (pictured below) was made for the same amount and had the same check number and date the Comptroller added.
Compared to a real Erie County check, the border of the counterfeit one is noticeably different, along with the watermark, county seal, font, and placement of certain text.
After it was discovered by an auditor in the comptroller's office, the check was turned over to the Erie County District Attorney's Office according to Hardwick. The matter was kept confidential until recently.
A spokesperson for the District Attorney's Office confirmed that their office is investigating the theft but said they could not comment further on their investigation.
The spokesperson added that the fraud aspect of the case has been referred to the Secret Service, a division of the U.S. Treasury. The Secret Service Special Agent in Charge of the Buffalo field office also deferred comment.
GET MOBILE LLC. is a Maryland company founded in 2021 according to a search of that state's business database. The entity was forfeited last year "for failure to file property return for 2022."
How was the check found?
According to the Comptroller audit, the check was found when an auditor cross-referenced payments made by the Erie County Clerk's Office to a list of payments received by SONYMA in 2022. Copies of the checks cleared by the Clerk's Office account were also used.
"Each payment matched the amount on SONYMA's list, except the check written for March 2022" the audit states.
On background, SUNYMA told 2 On Your Side that the Mortgage Insurance Fund would not be alerted to payment that was not received because not all counties make payments every month. Recording tax collections as a result vary widely from month to month.
Recoup? What's next?
Comptroller Hardwick told 2 On Your Side it's unclear if the money will ever be able to be recovered.
He added that his office has filed a claim with the county's insurance company in hopes of covering the amount. That would come with a $25,000 deductible.
The audit states that the Clerk's Office is not at fault and that even with enhancements to their checking the Comptroller's Office does not believe it would have prevented this fraud.
More so responsible is SONYMA according to the auditor which never notified the county of receipt of the payment nor did it realize or notify Erie County when it never received the March 2022 payment.
The auditor, Mary Nytz-Hosler recommended that the Clerk's Office implement Positive Pay and/or issue ACH (Automated Clearing House) payments unless prohibited from doing so rather than paper checks. This would mean automatic electronic receipts would be sent to the Clerk's Office.
On background, SONYMA clarified that counties have discretion and can choose to make payments by ACH or manual check. Paper checks once received at the lockbox processing center are processed and deposited to the appropriate lockbox account manually by a bank employee.
Erie County Clerk Michael Kearns told 2 On Your Side Thursday that the check was intercepted at some point after it left his office.
He added that when he took office, SONYMA requested that paper checks be mailed to a P.O. Box in Albany for payment. Kearns said they have since asked SONYMA to change that procedure to try and prevent this from happening. That letter was included in their response to the comptroller's audit.
"We reached out to other counties to see how they're processing their [SONYMA] checks. I spoke with Niagara County yesterday and we want to safeguard the best possible way we can the taxpayer's money but it's something we couldn't control. It left the office. It was intercepted. It was gone," said Erie County Clerk Michael Kearns.
Kearns' Office has since filed an Affidavit of Fraud with the county's bank, another way of potentially recouping all $326,456.