The government has attached bank accounts of a Kenyan jailed in the United States for hacking and stealing Sh434 million from the US government.
According to documents exclusively obtained by the Saturday Standard, the government wants the High Court to direct Sila Jeffrey Ndungi to forfeit more than Sh17 million held in his accounts, claiming they are proceeds of crime.
According to the Assets Recovery Agency (ARA), Ndungi’s accounts had Sh57 million banked over time but he had reserved the remaining Sh17 million as savings. The money was, however, traced to the illicit syndicate running in the US and Kenya.
“There are reasonable grounds to believe that the Sh17 million traced in the respondent’s bank accounts are illicit funds and proceeds of crime obtained from the crimes committed by the respondent (Ndungi) in the United States of America,” court papers filed before the anti-corruption court read.
In 2016, the Internal Revenue Service (IRS) – the US equivalent of Kenya Revenue Authority – began investigating a scheme involving stolen tax refund cheques. The IRS believed the scheme was being run out of Kenya and suspected one Lydia Breaux of acting as a stateside operative.
Breaux soon confided in an undercover IRS agent that Ndungi had entered the US from Kenya with a large tax refund cheque in need of cash. The trio (the IRS agent, Breaux and Ndungi) met in a Dallas, Texas, restaurant to negotiate the purchase of the cheque by the IRS agent.
At this meeting, Ndungi showed the agent a picture of the cheque, made out to an individual named Cynthia Short and who had died a long time ago. Ndungi also assured the agent that he could get him a fake driver’s licence in Short’s name.
Negotiations continued over the course of a week until the trio met up again to close the deal on August 9, 2016. The IRS agent purchased the cheque at Sh4.8 million.
From the conversation, it appeared that Ndungi was in fact running a separate syndicate in the US, printing fake drivers’ licences for anyone who wanted to drive in the US streets. Ndungi promised to make for the agent a "nice looking number plate".
“I will make you a driver’s licence, you pay me. Email it, give me your email address and I will send it to you, perfect colour,” Ndungi is quoted to have said in the conversation with the agent.
A few days later, Ndungi made good his promise and e-mailed the agent a fake driver’s licence in Short’s name.
Further investigation revealed that other fraudulent tax refunds had been issued to a bank account linked to Breaux. One such refund, under the name Dietrich Eipper, was filed with an IP address associated with Ndungi.
During his trial, the court was told that Ndungi illegally obtained the cash by presenting to the United States Department of Treasury a cheque payable to Short that had been issued on a federal income tax return filed electronically from Kenya.
Ndungi is said to have stolen Sh430 million from dead pensioners in the US.
However, documents filed before the Kenyan court now reveal that he may have been a pawn in a bigger syndicate.
The undercover agent had negotiated with Ndungi for a discount, but the man informed him that a single cent out of the whole deal would lead to his death.
At the time of his arrest, Ndungi had with him cheques worth Sh7.6 million.
“There are a lot of people involved with these cheques, if I tell them something happened, they can kill me,” Ndungi confined to the agent, adding that the cut for each of the players had been agreed.
The agent pressed him on whether he was in the syndicate alone and his answer was that was not his specialty, and in fact, the deal was too huge for him.
“I gotta tell you this is not my area, I tell you there are a lot other guys. I cannot talk on their behalf,” he replied to the agent who wanted a ‘small cut’ as a first time customer.
Ndungi was arrested and charged with two counts of theft of public funds based on two fraudulent tax refunds, one in Short’s name and another in Eipper’s name.
The jury jailed him for 10 years but he successfully appealed and is awaiting fresh sentencing.
Justices Patrick Higginbotham, Jennifer Elrod and Catharina Haynes in December last year unanimously agreed that a Northern Texas Jury wrongly convicted him for aiding and participating in filing fraudulent tax returns.
The three judges ruled that there was no enough evidence to pin the hacker and ordered that he should be re-sentenced.
“Drawing all reasonable inferences in support of the verdict, we hold that the evidence was insufficient to support Sila’s Count III conviction,” the fifth circuit court ruled.
According to the three judges, the argument fronted by the US authorities that Ndungi was the only user of a PayPal account that was used to siphon taxpayers’ returns was watered down by the fact that the same account was used 1,000 times after he was taken into custody.
“We, therefore, vacate Sila’s Count III conviction,” the judges ruled.
They however declined to determine whether the US government had correctly pegged $3.9 million (Sh434 million) loss to him.