Transnational Fraud Ring Targets U.S. Government Procurement Offices and Vendors

The Office of the Inspector General (OIG) at the Department of Homeland Security (DHS) issued a fraud alert on July 16 relating to a transnational fraud ring impersonating DHS procurement officials.

The members of the fraud ring, based in Atlanta, Georgia, have previously obtained computer equipment from private vendors and have also stolen electronic equipment intended for other federal agencies, including the Departments of Commerce, Defense, Housing and Urban Development, Justice, Labor, and Transportation; the Federal Deposit Insurance Corporation; the Securities and Exchange Commission; and the Railway Retirement Board. Some of the purchase orders identified were for hundreds of thousands of dollars each.

The fraud ring identifies federal government solicitations for computer equipment – such as laptops, hard drives, and smart phones – and then fax or email fraudulent requests for quotations (RFQ) to government vendors in the United States.

The RFQs use the name of a legitimate government procurement official but include a phone or fax number associated with the fraudsters. The email addresses used spoof U.S. government agencies, with domain names such as “rrb-gov.us.” Alternatively, the email’s From header may display a legitimate government email address, but the Reply-To header is a slightly different, non-government email address.  The OIG alert warns that in some cases, the fraudsters avoid email and insist on communicating by fax.

The fraud ring responds the quotations it receives with fraudulent purchase orders that include delivery addresses chosen by the fraudsters, which are frequently abandoned commercial properties.

Once the shipment has been delivered, the fraud ring either sells the equipment in the United States or ships it to Nigeria for resale. Ultimately, the equipment enters the black market, and the government vendor never receives payment.

The OIG fraud alert advises vendors receiving an RFQ for electronic equipment that appears to come from the U.S. Government, to take the following precautions:

Independently obtain the phone number for the listed procurement official and call them to confirm the RFQ is legitimate before responding to any RFQs received by fax;

Respond to RFQs received by email only when the sender’s domain and the Reply To header end in “.gov”;

Beware of any purported procurement officials who refuse to communicate by email;

Beware of typographical errors, unusual language, and distorted U.S. government seals and other graphics; and

Clearly indicate on the outside of all boxes that the contents are the property of the United States Government (in at least one case, a buyer refused to purchase the stolen goods from the fraudster when he saw “U.S. Department of Homeland Security” on the boxes).

Anyone who believes they may have been a victim of this fraud scheme should call the DHS OIG Hotline (1-800-323-8603).

The Government Technology & Services Coalition's Homeland Security Today (HSToday) is the premier news and information resource for the homeland security community, dedicated to elevating the discussions and insights that can support a safe and secure nation. A non-profit magazine and media platform, HSToday provides readers with the whole story, placing facts and comments in context to inform debate and drive realistic solutions to some of the nation’s most vexing security challenges.

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