Ex-state aide charged with theft of $1.2 million

June 10, 1994|By Timothy B. Wheeler | Timothy B. Wheeler,Sun Staff Writer Sun staff writer Marcia Myers contributed to this article.

A former fiscal officer for the Maryland Department of the Environment was charged yesterday with stealing more than $1.2 million earmarked for reducing water pollution and restoring the Chesapeake Bay.

Others may be implicated in one of the biggest thefts from a Maryland government agency, state and federal authorities said.

Rufus O. Ukaegbu, fired last December after a diversion of money was discovered, was charged in Baltimore City Circuit Court with four counts of felony theft for embezzlement over a seven-month period ending in July 1992.

He also was charged in U.S. District Court with money laundering, for his alleged manipulation of stolen funds.

Attorney General J. Joseph Curran Jr., who announced the charges, said the $1.2 million is the largest embezzlement from a state agency in at least eight years. He vowed to seek restitution.

"There will be some of the money recovered, I'm confident of that," he said.

But the diversion of funds, discovered last summer, and the subsequent investigation continues to delay the sale of $90 million in state bonds, half of it slated to help the city, Baltimore County and eight other localities upgrade their sewage treatment plants.

Many of the projects on hold are part of the Chesapeake Bay restoration effort, state officials said.

The investigation began after an environment department employee noticed a discrepancy in accounting for payments by the state's Water Quality Financing Administration. The agency helps pay for improving ewage treatment and drinking water systems throughout the state.

Last fall, not long after he was promoted to chief fiscal officer of the water-quality agency, Mr. Ukaegbu was suspended without pay and later dismissed.

Mr. Ukaegbu, 35, of the 4400 block of St. Georges Ave. in Baltimore is scheduled to be arraigned July 12 on the theft charges.

He remains free on his own recognizance and has been working as a tax preparer and accountant since being dismissed by the state, said his lawyer, Jack Rubin.

If convicted, Mr. Ukaegbu could be imprisoned for up to 60 years and fined up to $4,000 on the state charges. The federal charges carry penalties of up to 20 years in prison and more than $2 million in fines.

Mr. Rubin would not comment on the charges against his client, but he criticized the attorney general's office for publicizing the case.

"I'm astounded that they leaked it to you," Mr. Rubin said. "I really thought more of them than that."

But Carolyn H. Henneman, an assistant attorney general handling the case, said publicizing the charges had nothing to do with Mr. Curran's campaign for re-election to a third four-year term.

"We generally crank out a press release whenever charges are filed, big or small cases," she said.

Mr. Ukaegbu, who began as a fiscal officer with the water-quality agency in 1989, was accused in the federal charges of submitting four phony claims for payment, "bearing names similar or identical to contractors who actually performed services" on state-financed sewage treatment projects.

The payments, ranging from about $140,000 to more than $500,000, were sent by check and wire transfer to bank accounts and addresses controlled by Mr. Ukaegbu "and his associates," the federal charges said. After being moved around in a series of financial transactions, the money was spent for "personal benefit."

Ethan L. Bauman, assistant U.S. attorney, would not comment on the identity of the "associates." Nor would he say how the funds were spent.

The investigation is continuing, said Ms. Henneman, the assistant state attorney general.

The alleged embezzlement is the latest financial problem to hit ,, the environment department, which has been dogged by criticism of its fiscal management since being formed in 1987.

The department has received poor reviews in three legislative audits, including one released this year that pointed to the mishandling of federal grants, sloppy record-keeping and poor financial controls that could mask "unauthorized payments."

Since the diversion of money was discovered last year, internal controls have been tightened another notch, said David A.C. Carroll, state environment secretary.

Forms used to request payment are kept in a safe and must be signed by three different employees before any money can be sent, he said. The bank holding the state's money also must verify the payment before transferring funds or issuing a check.

Mr. Carroll added, however, that "if someone is going to steal from you, they're going to find a way. . . . What you have to do is make it as difficult as possible."

And, in defense of his agency, he emphasized that the diversion of money was first noticed by an employee of the environment department.

Since 1988, the water-quality administration has distributed $207 million in low-interest loans to Maryland counties and municipalities for upgrading wastewater treatment.

Mr. Carroll said the loan program was put on hold while the state reviewed its controls, but he hopes to begin sending money to the localities this summer. The delayed work includes improvements at the Back River and Patapsco sewage treatment plants.

"Projects are not stopping; they're being delayed, [but] they're going to happen," Mr. Carroll said.

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