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ROCKVILLE — In the aftermath of a scandal that led one former Montgomery County government employee to plead guilty for embezzling $6.7 million, officials are trying to figure out what went wrong.
Byung Ill Bang, the former chief operating officer for the Montgomery County Department of Economic Development (DED), serving from 2010 to 2016, pled guilty to embezzling $6.7 million by diverting funds into a fake incubator business that Bang ran.
Montgomery County Inspector General Ed Blansitt III concluded that the now-defunct Department of Economic Development was poorly run with little oversight.
According to Montgomery County prosecutors, Bang transferred the money he embezzled into a personal account to pay for gambling debts. Casinos across the U.S. alerted the Internal Revenue Service that Bang had paid them millions of dollars. After agents from the IRS investigated, they noticed that the millions Bang paid to casinos did not match with the income on his tax returns.
“I think the findings demonstrated to us significant mismanagement of the Department of Economic Development, and a number of inappropriate payments, given the circumstances,” Blansitt said.
Blansitt outlined a culture of pressure inside the DED to get certain invites done, with leadership in the department allowing for shortcuts to be taken if necessary. Blansitt said that given weak management within the DED, Bang had the opportunity to embezzle millions of dollars.
“We noted that in everything we looked at, we saw that people were under pressure to make things happen quickly,” Blansitt said. “In particular, they were trying to respond to an initiative, and DED, the Department of Economic Development, seemed very willing to take shortcuts to respond to these pressure points.”
In addition, Blansitt said that the former directors of the DED evaded oversight from the county government by creating a standing reserve fund for the DED director. In addition, Blansitt said, a “lack of segregation of essential duties” allowed Bang to divert funds from the DED’s incubators program without being detected.
Andrew Kleine, the new chief administrative officer for Montgomery County, promised to bring more oversight with the use of data to county agencies so no employee can easily take funds without detection again.
“We will meet regularly to monitor performance, seeking to understand not just how well we’re doing but whether we are money’s worth,” Kleine said.
In his report, Blansitt recommend that county agencies divide its key duties among different people to provide a safeguard against abuse of power and to have a periodic rotation of the people who manage the departments’ finances.
Councilmember Evan Glass (D-At-Large) questioned why no one in the county government recognized the obvious signs that Bang was embezzling millions of funds from the county government.
“It’s screaming for oversight and it is lacking, and that is the focus of today’s conversation,” Glass said. “And the IG says is that the writing was on the wall and that nobody read it.”
While the DED is now defunct, replaced with the public-private Montgomery County Economic Development Corporation, members of the council said the goal of the meeting was to learn how to provide better oversight to other county agencies to prevent fraud and embezzlement.
New Director of the Office of Management in Budget Rich Madaleno said he believes that many of Bang’s coworkers naively trusted him and that agencies need to institute more control, which would have prevented abuse.
“Let’s start asking these hard questions, that maybe we grew conformable with the people that we were working with so therefore we didn’t even doubt what was happening,” Madaleno. “We need to have the right procedures in place and to hold everyone to those procedures.”