AT PUB, THE LOST 1.3 MILLION AND POTENTIAL SCAPEGOAT

By Juan Montoya

Well, as predicted, the John Bruciak Brownsville Public Utility Board administration has allowed the City of Brownsville commission to get a copy of the internal audit and the upshot of it is that a low-level employee at the Finance Dept. is being set up for a patsy while clearing the top officers there.

In a nutshell, the administration claims that it was an oversight by a payment processor which is to blame for the release of a $1.3 million payroll payment to Texas Noble Builders and an internal audit recommends that safeguards be put in place to prevent future "oversights" from occurring in the future.

Yet, no one knows who received the money, where it went, or who was behind the swindle. And no one can say why the top executives at PUB starting with CEO John Bruciak, CFO Leandro Garcia and Asst. Gen. Manager and COO Fernando Saenz did not already safeguards in place to prevent the theft.

The Brownsville Police Department and the FBI have been investigating the theft and a week ago today, PUB legal counsel Norton Colvin, various staff members of the PUB and some PUB executives were seen in the lobby of the Cameron County District Attorney's Office after they were called in for an interview.

And at the PUB's last meeting, the board approved the hiring of a forensic investigating firm to get to the bottom of the matter. Pointedly, they chose not to go with their usual firm and opted for another on whose independence they could count.

"Hey," said a former criminal investigator, "If I want to hook up a rental unit for electric service I have to provide a statement from my landlord that I am renting the property, they want my ID, my Social Security number, and whether I owe them ay money. And that's for a $80 connection fee. Here we have PUB making a payment of $1.3 million and it was left up to a low-level processor to approve it? They should all be fired immediately."


People who have seen the internal audit report say that the scam started on March 10 when an employee in charge of the Automated Clearing House (ACH) network that coordinates electronic payments and automated money transfers received a request from Texas Noble Builders on February 11 that they were switching banks from Lone Star National Bank to Bank of America,

ACH is a way to move money between banks without using paper checks, wire transfers, credit card networks, or cash.

The email contained a form required from vendors who authorize their payments to be mailed electronically. It is still available at the PUB website. (See graphic at right.)

https://www.brownsville-pub.com/wp-content/uploads/2020/05/Direct-Deposit-Authorization-Form_Vendors1.pdf.


In fact, a completed form bearing the alleged signature of Rene Capistran - Texas Noble Builders CEO  - was received back in February allegedly sent to the ACH employee who then passed it on to the underling for processing. There was no follow up by anyone on its authenticity, calls to Bank of America on the account, or even a call to Capistran on whether he had indeed  changed accounts. The internal audit allegedly states that no such security requirements are in place at Finance to prevent it.

But the alleged notice of change of the Noble account to Bank of America was sent to PUB's bank, Wells Fargo, who on the date of payment, March 11 - a month after the February 11 alleged change of banks and accounts - dutifully used ACH to transfer the funds to Bank of America.

That was the morning of March 11. By 4:45 p.m., when Noble Builders called PUB about the $1.3 million it had not received, they were told that the deposit had been made with their new bank and PUB showed them the form allegedly filled and sent by Capistran. Noble Builders immediately notified PUB that Capistran's signature was a forgery.

Attached to the form were the account numbers for the firm at Lone Star National Bank and the new account number at Bank of America.

When PUB called Wells Fargo to attempt to stop payment on the transfer, they were told that it was too late and the funds had already been sent to the Bank of America account. Then all hell broke loose.

No one knows what happened at Bank of America and how its bank officers allowed the withdrawal of the $1.3 million on short notice. But the money, apparently, is gone.

Did the $1.3 million fly off into a cyber black hole and disappear into the pockets of Chinese or Ukrainian phishers, as some believe? And how is it possible that a hacker knew that PUB had already made two similar payment to Noble in predeings months to pay for its part of the administrative annex construction?

Did the hackers lie in wait for a month before they stuck pay dirt? And, given that the direct deposit authorization form is still available to the world on the PUB website, is PUB still exposed to similar theft attempts?

And more importantly, will a lowly payments processor be made the scapegoat for the ineptness at the top of the feeding chain?