Georgia man arrested in $566,000 Sedgwick County fraud case

A Georgia man has been arrested on federal charges that he carried out an e-mail phishing scheme that cost Sedgwick County $566,088.90, U.S. Attorney Tom Beall said Tuesday in a news release.

George S. James, 48, of Brookhaven, Ga., has been charged with one count of wire fraud. Brookhaven is about 10 miles northeast of Atlanta.

An FBI agent’s affidavit alleges that investigators followed an electronic trail that led them to James after the county reported the theft of funds that were intended to pay contractor Cornejo & Sons for a road maintenance project between Andale and Maize.

The county received a Sept. 23 e-mail “that appeared to be from (a) vendor asking that billing information … be changed,” according to a property loss notice filed with Lexington Insurance Co. in late October.

James, according to new details released Tuesday, allegedly asked the county to change Cornejo & Sons banking information, then sent an old Automated Clearinghouse form by e-mail to Sedgwick County’s finance department. The form purportedly carried the signature of Ronald Cornejo, a former owner of the family-built Cornejo & Sons company.

But, the FBI affidavit points out, he “has not been a member of the company for several years now.”

The fraudulent e-mail caused the county to change the information it kept on file for the Cornejo company’s financial institution and bank account. The county then issued a payment to the bank account James provided on Oct. 6.

It was received the following day, the county said Tuesday in a news release.

Eighteen days later, on Oct. 25, Cornejo & Sons asked the county about the status of its payment.

That’s when the county realized it had been duped and filed a theft report with the Sedgwick County Sheriff’s Office.

James’ arrest, which happened Monday, was announced to county department heads on Tuesday at the end of the Sedgwick County Commission’s weekly staff meeting.

“The FBI has arrested a person from Georgia who committed the crime against us … and they have arrested him, and he will be brought back here to face the judicial system,” said County Manager Michael Scholes.

Scholes declined to make any further comments after the meeting.

But in the news release sent by the county later Tuesday, he said the county “has taken necessary efforts to protect against cyber crimes in today’s highly complex digital world, including tightening internal controls and processes within the Department of Finance.” He did not elaborate further on those efforts in the release.

So far, $22,471.41 of the stolen money has been recovered. It was not immediately clear how much more may be recovered.

The county, in its release, said it “continues to pursue all avenues of potential recovery.” It was not insured for the loss.

Commission Chairman Dave Unruh said he was pleased an arrest had been made.

“Good job, to the FBI and police and whomever,” Unruh said.

If convicted, James faces a penalty of up to 20 years in federal prison and a fine of up to $250,000, Beall said. A judge could also order him to pay restitution at the time of sentencing.

The FBI, the Sedgwick County Sheriff’s Office and the Wichita Police Department assisted with the investigation.

This story was originally published January 24, 2017 at 10:34 AM with the headline "Georgia man arrested in $566,000 Sedgwick County fraud case."