Sheriff: Details on the fraud

By Cathy DeDe, Chronicle Managing Editor

Warren County Sheriff Jim LaFarr updated the County Board of Supervisors Friday on his investigation of the $3.3 million wire transfer fraud perpetrated on the county in December 2025.

“I can say to you that we have solved this crime,” he said, on what he called “Day 116” since the fraud was discovered

He said no one has yet been arrested and much of the money has not been recovered.

Treasurer’s office details

Sheriff LaFarr said, “Between November 10 and December 18, an unknown male with a thick foreign accent called several departments in Warren County.

“Nine of these calls were made to the Warren County Treasurer’s office.

“The duration of those calls ranged between one to eight minutes.

“On November 12, the male spoke with a Treasurer’s office employee, and that conversation lasted about seven minutes.

“During this call, certain information about Peckham Industries was inadvertently shared with this gentleman.

“Later, on the 13th, the male called back and identified himself as a representative of Peckham Industries, using information that was previously disclosed, to gain trust.

“He requested to set up an ACH transfer account with Warren County, and was directed to go to the Warren County web page. There’s a form to make that request and submission.”

The Sheriff added, “At that time the County Treasurer’s Office did not have any policies or procedures in place to conduct these electronic wire related transfers.

“It’s really challenging if we have employees that aren’t provided training, they’re not provided policies and procedures, it’s putting our team at a disadvantage right from the get-go.”

He continued, “Later on November 13, the form was submitted by a gentleman having the name of Raphael Diaz, with a 347- area code phone number and a Discover bank account.

“When that was received, there were no security steps taken to verify the validity of this caller or this information or the request for this account. The ACH account was established for (what purported to be) Peckham Industries

“On December 12, there was an ACH payment made in the amount of $2,132,480.23 processed from our local Arrow Bank to this Discover bank account.

The Sheriff said Arrow has “an established $1 million cap for any transaction.”

“When this transaction reached the bank, their systems detected it as a fraudulent transaction. A representative from Arrow Bank called Warren County Treasurer’s office, advised…that this appeared to be a fraudulent transaction.” He said the Treasurer’s office still approved the transaction.

Sheriff LaFarr said, “There’s been a lot of conversation about an email notification that went out from Peckham Industries warning municipalities about potential for fraud. I’ve shared that this really was irrelevant, essentially it was white noise, and here’s why:

“I don’t think you need an email when your own bank is calling you and telling you — this looks fraudulent.

“We have no reason to believe that the Treasurer’s office did anything following that phone call to verify the transaction.”

He said the same scenario played out with the second fraudulent payment on Dec. 23, this time for $1,225,954.65.

‘Found all but $48,000’

On that same day, Dec. 23, Peckham Industries contacted the County DPW because it had not received $3 million in payments. It was then that the county learned it was likely the victim of fraud.

Also on Dec. 23, Sheriff LaFarr said, he received a phone call from County Board Chairman Kevin Geraghty to launch the investigation.

“That’s where we started,” the Sheriff said. “Every minute counts, and for the first transaction, we were already 11 days behind. So to say that we’ve identified all but about $48,000 of the money — it’s a miracle, because going 11 days in this type of crime, that’s unheard of.

70-year-old woman, ‘mule’

Sheriff LaFarr said, “We have been working diligently ever since to identify Raphael Diaz. We now know, maybe there is a Raphael Diaz, but the person who was calling (Warren County) is not Raphael Diaz.

“What we did identify is a 70-year-old woman in another state…who was the recipient of $3.3 million from Warren County.

“This woman was what we know in law enforcement as a mule, somebody who receives the illegitimate funds, and then funnels those out to other locations.

“Men and women are often recruited as romantic schemes or for get-quick payment of money,” the Sheriff said, with promises like, “We can give you $5,000 if you file this transaction through these accounts and send them elsewhere.”

Sheriff LaFarr said, “This woman has been interviewed by members of a local sheriff’s office, and has admitted to these crimes. We have a recorded interview. We know who she is…where she is…exactly what she did. She’s in another state, and at this point, our hands still remain tied.”

Sharing more detail on this aspect “could potentially be harmful to our criminal investigation,” the Sheriff said.

Distant banks ignore pleas

“A lot of our residents are probably more concerned about the financial part, getting back that $3.3 million for our residents,” said Sheriff LaFarr.

“On January 2, the $1.2 million was returned to Warren County. That was frozen through Discover, Arrow, and made its way back. Wonderful thing.

“It still left us with $2.1 million to attempt to locate, freeze and get back to our Warren County residents.

“We know that it was funneled from at least 10 other banks, and these transactions are really difficult to follow.

“If they’re electronic transactions, it’s easier, but when a check is cut, that’s really challenging the banks.

“It might surprise you a bit — it did me — Secret Service is sending federal subpoenas to these banks that are ignoring them. They’re just not answering them.

“Please know it is not a local bank. This is all occurring outside of our region, outside of New York State.

“I also found it really hard to believe that a local bank in a small town with a 70-year-old woman who traditionally consistently has less than $1,000 in a checking account receives $3.3 million and that doesn’t throw up a red flag for that bank to stop and hold and contact somebody. Again, that did not occur. Just sharing with you something that I was really surprised to learn.”

Case stalled at Secret Service

The Sheriff said, “We have two focuses, a successful criminal prosecution and the return of every penny to Warren County.”

“As far as the prosecution goes, we still continue regularly with the U.S. Secret Service, the agent in that area, as well as the investigators and the sheriff in that local sheriff’s office.

“I will say to you that this Secret Service Office, it’s not like what you picture on TV. It’s a small office. There’s one agent and there’s one local agent’s protection detail.

“As you know, there’s a lot going on in our world and overseas. So his focus right now is not on Warren County.

“We are working with an Assistant U.S. Attorney, a federal prosecutor, to try to see if we can move forward with the prosecution. That would be a best case scenario.

“I will say, that there’s been a limited interest from that office. $3.3 million for Warren County, it’s huge,” but that it is “really not” to the Secret Service or a federal prosecutor, he said.

“This female attorney is working through a process to determine culpability of the 70 year old woman. Do they understand that they did something wrong? Did they do it intentionally? Can they be held accountable in a criminal court

“We’re waiting for that.”

Where lost money is (or was)

“Where’s the money at right now? The $2.1 million, we were 11 days behind.”

Sheriff LaFarr listed:

“$256,000 roughly, was returned from the Discover Bank on December 26.

“That’s in an account.

“The U.S. Secret Service, they have two separate seizures currently held, $439,000-plus, and $176,000-plus, totaling almost $617,000.

“The Secret Service, they have their hands on a little over $1.2 million that has been identified

“We know the institutions where they went.

“There are names labeled with these institutions, but much like Raphael Diaz, I’m confident they’re not legitimate names.

“If we can’t get cooperation from the banks, if the Secret Service can’t get cooperation to try to figure out where this went, and again, we’re in day 116 — the chances of that money still being in any of these banks is not sure.

“But we are still actively working, and we are pushing. We are making calls. Our local Albany Secret Service partners are working very hard to help.

“There’s roughly about $49,000 that is just never going to be found. What happens is, when you have these mules and they start making these transactions, every one gets a little piece of that cut. So that much is outside our control.”

‘No criminal acts’ in county

Sheriff LaFarr said, “I am very pleased to say, through our hard questions, we’re confident…there is no member of our Treasurer’s Office or member of Warren County that we have any concerns has any criminal culpability.

“Potentially, we could learn something down the back side, but I don’t see that coming.” He also ruled out any charge of official misconduct.

“Maybe members were not authorized in certain things, but there’s no one in the Treasurer’s Office, no one in Warren County, that had any intent on gaining personally in this $3.3 million loss.”

In the process of developing a county wire transfer policy last October, “key members of our Treasurer’s office…were informed they were not authorized to engage in these ACH transfers,” the Sheriff said. “Approvals for these types of transactions had to come from the Board of Supervisors. We have learned that this did not occur.

“I’m not looking to lay any blame, to make anybody feel bad, to embarrass anybody. I share this with you and the public to let you know that this was not a sophisticated scheme. There are no concerns we were being attacked.

“It was an error.”

“Clearly, some of the things that were happening were mistakes, and for the people involved, they are embarrassing.”

Asking hard questions

Sheriff LaFarr added, “What our investigators are doing, it’s very challenging. They’re having to ask really hard questions (of county employees). That can be tough from both sides, from the investigator and the person who’s the recipient of those questions. But our team has been treated with utmost respect and dignity.

“So when you see members of the Treasurer’s office, members of other departments, please say thank you, because we are working together as well.”

More to say when this ends

“At some point when we either have a prosecution or we’re told that a prosecution is not going to occur, we will conclude the investigation,” the Sheriff said.

“I’ll make a notification to this board and we’ll make a notification to the public. I will do a press release, and then I will make myself available to continue to answer additional questions.”

Treasurer Norton: ‘We have policies’

Warren County Treasurer Christine Norton in a brief statement at the end of the April 17 Board of Supervisors meeting, said, “I am encouraged that we are getting closer to the truth regarding the circumstances around the fraud from December.

“The Sheriff is an expert in his criminal area, that’s his forte.

“However, processes and business process flows and forensics are not in his fieldhouse.

“Just one point from today: The County Treasurer’s office has, for decades, done about 2,000 wire transfers and ACHs every month. So there are processes and procedures in place.

“They are informal, but they are documented. There is simply not a formalized policy that this board has approved. We’re going to get there, and I’m looking forward to working with everybody to do this.

“I look forward to the results of the ongoing forensic investigations, as well as the (New York State) Comptroller that will be coming in June of this year…I think all of us working together will absolutely make sure that this never happens again.” — Cathy DeDe

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