Authorities in Minnesota are warning more than 700 businesses Tuesday of a potential case of check fraud involving a former state employee.
The Minnesota Bureau of Criminal Apprehension and the Minnesota Financial Crimes Task Force are asking businesses who paid Occupational Safety and Health Administration fines from Jan. 1 through Nov. 18, 2009 to examine their records for signs of fraudulent use of their checking accounts.
A woman who used to work for the Department of Labor and Industry is suspected of making copies of those businesses' checking account numbers and using the numbers to create fraudulent checks used at various retail outlets.
The woman, who was terminated from her labor department job, was arrested in November but was later released without being charged. Charges are pending as authorities continue their investigation, said BCA Assistant Superintendent Dave Bjerga.
Bjerga said investigators are asking for businesses' help because much of the evidence that would identify victims has been destroyed. A half-dozen businesses have been identified so far as victims, but investigators believe there could be many more.
"We need the businesses to check those (records) themselves, because we do not have those records and frankly, we would not recognize those irregularities anyway," Bjerga said.
Labor and Industry Commissioner Steve Sviggum said his department terminated the employee suspected of the fraud less than a week after she was arrested. The employee had worked for the labor department for 19 years but not always in processing OSHA fines.
"We had a bad actor. We do not think there are any others," Sviggum said.
Sviggum said the labor department's OSHA unit has received positive federal audits. Still, he said internal controls have been strengthened since the incident, including by no longer keeping copies of paid checks in businesses' files.
Bjerga said all of the fraudulent checks identified so far were written out for less than $1,000, so businesses might have to search their records carefully to find discrepancies.
"They may not know about it," Bjerga said. "The numbers were kept low to fall under the radar."
Commander Patrick Henry of the Minnesota Financial Crimes Task Force said investigators first found out about the fraud from a confidential source. Henry and Bjerga said it's likely the woman worked with others to carry out the fraud, though no one else has been arrested.
The letters were expected to reach the 759 businesses Wednesday or Thursday. Bjerga said there should only be cause for concern for businesses that receive letters and find irregularities in their financial records.
"We want people to take this letter seriously," Bjerga said. "I don't want to make this into something it's not. We're attempting to collect information here."