A management agreement between the Maryland Economic Development Corp. and what was formerly the Montgomery County Office of Economic Development was a major factor that allowed the department’s former chief operating officer to embezzle $7.2 million, according to an audit report by Montgomery County’s inspector general.
Chief Operating Officer, Byung Il “Peter” Bang, a county employee from 1997 to 2017, pleaded guilty Nov. 16 to the embezzlement charge in U.S District Court, and is scheduled for a sentencing hearing Feb. 22. He could face a maximum of 20 years in prison.
The report from the Office of the Inspector General, released Monday, explains that a 2006 agreement between MEDCO and the county allowed the county economic development director to make decisions without input from anyone else in the county.
The agreement also allowed the county to distribute funds not used for the procurement of economic development projects into a “special reserve account,” according to the Nov. 19 report.
“This arrangement circumvented management controls established by the County government, avoided transparency and oversight by elected County officials, and created a standing reserve fund for use by the DED Director,” the 150-plus page report stated.
Bang was able to embezzle the money by diverting it into four South Korean bank accounts that contained his home address following an agreement signed between Montgomery County and South Korea that created the shadow business Chungbuk Incubator Fund LLC, authorities said.
The report states that this helped create a climate within the DED that led to a lack of “segregation of duties” for employees, allowing an employee, such as Bang, to misuse county funds.
One former DED director not identified by name in the report, who served between 2009 and 2015, admitted sharing his password for the county’s information technology system with Bang, which allowed him to send emails and conduct transactions under the former director’s name.
The report includes a series of recommendations, including that the county implement more regulations for agencies involved in the procurement process. It also recommends that there be a more clear distinction between the responsibilities of managers in each department, and that the managers periodically rotate responsibilities.
“This includes separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling any related assets so that no one individual controls all key aspects of a transaction or event,” it states.
Dan Schere can be reached at Daniel.schere@moco360.media
