Fake Invoices And Gambling Debts: How US Bureaucrat Stole $6.7 Million

Peter Bang was shaking.

The 20-year Montgomery County, Maryland, employee sat before the county attorney and his deputy in a conference room, staring at the piece of paper in front of him. He was being placed on leave without pay for stealing more than $6.7 million in public funds over six years, by far the largest embezzlement scheme in the affluent suburb's history.

Bang "was trembling, he was shaking the whole time," Deputy County Attorney John Markovs said. "He lowered his head and seemed resigned to the fact he had been caught."

Byung Il "Peter" Bang, a numbers and budget guy, was also an embezzler and a gambler, according to court filings - bringing hundreds of thousands of dollars to casinos across the country even as he wagered he would get away with stealing millions from county coffers.

In November, Bang pleaded guilty to federal and state charges relating to the theft. He is scheduled to be sentenced in U.S. District Court in Greenbelt, Maryland, on Friday on federal charges of wire fraud, fraud and false statements, and faces sentencing next month on state charges of a theft scheme and misconduct in office.

The county is seeking the "longest sentence possible" - for the two federal charges, which carry a maximum total of 23 years in prison; Bang's attorney, Gerald W. Kelly Jr. requested 36 months.

Neither Kelly nor Bang responded to requests for comment.

Bang's theft stands out both for the magnitude of the losses and the length of time it went on, said Bruce Dorris, president and chief executive of the Association of Certified Fraud Examiners.

Interviews and documents paint an expanded picture of the years-long caper - and how the county government reacted as officials belatedly realized the extent of the scheme.

Scant oversight of the economic development department's operations, coupled with the trust and institutional knowledge Bang had built up over his years there, appear to have made it relatively easy for him to maneuver his way through the system, the county's inspector general found in a report after the theft was discovered.

"Someone who is committing fraud will look for that opportunity," Dorris said. "And looking at his position, he had that opportunity and he took full advantage of it for years."

Peter Bang leaves US District Court in Greenbelt, Md., on November 16, after pleading guilty to charges related to embezzling county funds.

Bang was steadily promoted within the department, rising to chief operating officer in 2010. He was the go-to guy in a place that didn't always feel well-run, people familiar with the department said. Based on Bang's knowledge of how things worked, they said, people gravitated to him to get things done.

"Neither the people below him or above him seemed to be able to answer questions about the department's finances," said Jacob Sesker, then the county council's economic development analyst.

Bang's appearance added to the effect.

"He was always the best-dressed man in the room," said Sesker, now a senior legislative analyst with the county. "It's not that often you're in a room full of people both in the public and private sector, and the best-dressed person is a bureaucrat."

But Bang's efficiency came with a dismissiveness that some who interacted with him in the county viewed as arrogance. His arguments and explanations seemed circular and hard to follow.

" 'Convoluted' is one way to put it - he would sort of go above people's heads," said Tim Firestine, who as chief administrative officer was the highest appointed official in the county at the time of the theft. "Like he's the smartest guy in the room, and he's going to explain it in a way you are just not going to understand."

For the scheme, Bang seized on a partnership between the county and the South Korean province of Chungcheongbuk-Do, which in 2010 agreed to invest $2 million toward building a business incubator in eastern Montgomery County.

Part of a page in a spreadsheet that Peter Bang kept to document details of his gambling life

Bang then directed money from the county toward a false company that seemed to be created for the scam, with a name evoking the province: the Chungbuk Incubator Fund LLC. He approved the LLC's fake invoices, directing the county to hold the checks for him to pick up. The money went to bank accounts associated with Bang's home address.

The scheme ended after the county privatized its economic development functions in 2016, doing away with Bang's department - and his ability to direct funds with apparent impunity. Bang was transferred to the county's finance department.

And there he might have stayed if the Internal Revenue Service hadn't knocked on the county attorney's door with a summons in April 2017.

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Court records say Bang used the money he stole for his own benefit. He brought five- and six-digit cashier's checks to casinos from Bank of America and the Montgomery County Employees Federal Credit Union but failed to tell the casinos how he got the money, state prosecutors found.

In the end, state prosecutors said, it was those checks - and his reluctance to discuss the source of the funds - that caused his downfall.

Kelly Jackson, special agent in charge of the Washington, D.C., field office of IRS criminal investigations, said her agency began investigating Bang after reviewing data from the U.S. Treasury's Financial Crimes Enforcement Network, or FinCEN, which collects information about transactions from banks, casinos and other financial institutions.

The IRS, working from its Baltimore office, would have compared the information reported to FinCEN about Bang's activities - which could include bank deposits as well as his casino activity - to his tax returns and the W-2 forms showing his county salary (which in 2016 was $175,127).

"There was a lot of information through FinCEN that totally did not match his reported income," Jackson said.

Since ill-gotten income, such as from embezzlement, is still taxable, the IRS' case was based on the $2.3 million in taxes they estimated Bang owed

A court filing from Bang's attorney this week indicates that Bang attended "a few months" of Gamblers Anonymous meetings and a "week-long gambling addiction program" in 2006 and in 2007 - the year he filed for bankruptcy, declaring $80,000 in online gambling debts. While that part of the document was supposed to be redacted, it was viewable in the online filing.

But if Bang was a prolific gambler, none of his colleagues seemed to know. Firestine said Bang told county employees he went to Las Vegas each year to play golf, never mentioning lady luck. In Bang's 2007 bankruptcy filing, he listed among his possessions a set of golf clubs worth $300.

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A summons usually doesn't bring good news.

Firestine remembers hearing from Markovs, the deputy county attorney, shortly after the IRS issued its demand for documents from Montgomery County on the afternoon of April 6, 2017.

"He calls me and says, 'We got this really weird subpoena from the IRS, and it relates to business, and it mentions Bang's involved,' " Firestine said.

The IRS was seeking all records involving the county's relationship with Chungcheongbuk-Do Province, as well as Bang, companies related to his family, and the Chungbuk Incubator Fund LLC - an entity that neither Firestine nor Markovs had ever heard of.

Markovs checked Maryland's business database, where records showed the LLC had been created and dissolved twice, both times by a Rockville CPA. Both filings designated Bang, at his home address in Germantown, Maryland, as the person to wrap up the affairs of the company.

"Why does this guy have an outside LLC company that was set up?" Firestine recalled wondering. "That's when we started to get a little nervous and think, 'Wow - what the hell's going on here?' "

For an excruciating month and a half, Firestine, Markovs and a tiny group of other top county officials aware of the investigation watched silently as Bang continued to report to work every day in the finance department.

They couldn't take action against Bang, lest it interfere with the criminal case prosecutors were silently building against him. But Markovs got the county's IT department to remotely monitor and back up Bang's computer, in case he caught wind of the investigation and began destroying files.

In fact, Bang had been deleting files from his work computer - but he hadn't erased everything.

Using forensic software, Markovs found statements on Bang's hard drive from a Bank of America account for Chungbuk Incubator Fund LLC, which he had loaded onto his county computer and then deleted. They showed a $150,000 deposit on Nov. 12, 2010 - what turned out to be the first of the fake Chungbuk acquisitions of county money - and copies of personal checks from the account made out to and signed by Bang: $110,000 on Nov. 14, $60,000 on Dec. 8, $37,000 on Feb. 17.

County officials also found a color-coded spreadsheet detailing six years of apparent gambling wins and losses at casinos, including weekend jaunts to Atlantic City, day trips to Charles Town, West Virginia, and trips to Las Vegas every December.

In several years, Bang chronicled his gaming activity down to the slot machine name and number, how much he wagered on each spin, and what the payout was.

He recorded winning $113,000 in under two hours at the ARIA in Las Vegas, and $25,300 in an early-evening round of blackjack at another Vegas spot, the Bellagio's high-limit lounge Club Privé, known for the stock of rare spirits its "speakeasy-style bar" serves to high-rollers. Earlier that year, Bang noted that he lost $110,000 in table games at the Borgata in an afternoon.

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For Firestine and others, it was salt in the wound that the county didn't uncover the scheme itself, through auditing or by other means. The county's risk assessment process, for example, never flagged the economic development transactions as high risk. And the transactions were exempt from county procurement rules, leaving them subject to less scrutiny.

"All the mechanisms we have in place to catch these kinds of things, he still managed to slip through," said Firestine, who has since retired from the county.

After learning of the theft, the county paid $1.6 million to an outside forensic auditor, Baker Tilly Virchow Krause LLP of Chicago, which pored through records to examine the county's economic development programs and determine the extent of the losses.

The county's inspector general's investigation concluded that a hands-off approach by the department's leadership, coupled with a lack of questioning about Bang's budget stewardship or his growing funding requests, allowed him to operate undetected.

Steve Silverman, who headed the department from 2009 to 2015, gave Bang his computer password to use and didn't appear to have reviewed the financial records that could have revealed Bang's shell company, the report said. (Montgomery County says it has since tightened controls and procedures.)

Silverman said his role was to recruit and retain businesses, not oversee everything Bang did - and that the county's finance department should have requested more details when cutting checks at Bang's request.

"I had a light hand in terms of oversight," Silverman said. "My job was to interact with businesses and elected officials and to let the division heads run their divisions."

Court records show Bang now works for a cleaning company in Virginia. He's had to relinquish his passport, agree not to open any new bank accounts or lines of credit without permission, and seek treatment for gambling. No one else has been charged in the scheme.

In a victim impact statement submitted to the court, Markovs pointed out what the $6.7 million could have paid for: an addition to an elementary or middle school; replacing 13 transit buses; putting 55 more police officers on the street.

"There are over one million victims of Mr. Bang's crimes," Markovs wrote.

Bang has agreed to pay restitution to the county and IRS. The county expects to get $137,925 that Bang's attorney is holding in escrow, as well as the contents of Bang's Fidelity retirement account, which Markovs estimated at just under $1 million. The county's insurance policy should pay another million.

Markovs said the county is considering its options on how to recover other assets.

But Dorris said victims of such schemes are "seldom" made whole. "It all depends on what that fraudster does with that money," he said.

While prosecutors have said the stolen funds appear to be gone, Firestine isn't so sure.

"I think it's out there somewhere," he said.