US County treasurer arrested after stealing money to pay scammers

January 24, 2007 Sophos Press Release

Email scams attempt to trick computer users into making unwise investments
Email scams attempt to trick computer users into making unwise investments

Sophos is warning computer users about the danger of internet scams, following news that a former treasurer of Alcona County, Michigan, has been arrested after allegedly investing more than $1.2 million of county funds in Nigerian fraud scams.

56-year-old Thomas Katona, who was treasurer of the county for thirteen years, has been charged with forgery and multiple counts of embezzlement. Both charges carry a jail sentence of ten years or more.

According to Michigan's Attorney General, Mike Cox, county treasury employees became suspicious of Katona's dealings after local bank officials informed them that he had directed several unauthorised transfers to overseas accounts during late 2006. Beneficiaries allegedly included individuals linked with Nigerian 419 scams. It is claimed that Katona made further payments using his personal savings, and had previously been advised by bank officials that he was investing money in fraudulent schemes.

Sophos notes that a shortage of $1.236 million has now been reported by Alcona County - more than one quarter of its yearly budget.

"Nigerian scam emails promise the world but deliver nothing in return for the cash that people continue to invest," said Graham Cluley, senior technology consultant at Sophos. "If the claims against Thomas Katona are proven in court it may be that thought it was possible to return the funds that were allegedly embezzled. But irrespective of his intentions, the upshot is that his County must now suffer a financial shortfall for the year ahead."

419 scams are named after the relevant section of the Nigerian penal code where many of the scams originated and are unsolicited emails where the author offers a large amount of money. Once a victim has been drawn in, requests are made from the fraudster for private information which may lead to requests for money, stolen identities, and financial theft.

"Many people fall victim to email scams due to naivety, but in this case Katona was warned about the consequences of investing, and decided to proceed regardless," continued Cluley. "There's not much that can be done to stop people who serve up their wallets on a plate to scammers, but clearly handing over your county's money cannot be tolerated, and hopefully this arrest will serve as an example to others."

This week Sophos published its annual Security Threat Report, which detailed many of the different disguises used by email scammers in their attempts to commit identity theft and swindle money out of internet users.

Sophos recommends companies protect themselves with a consolidated solution which can defend businesses from the threats of spam, spyware and malware.