Byung Il “Peter” Bang, a Montgomery County government employee for 20 years, pleaded guilty Friday morning in U.S. District Court in Greenbelt to embezzling nearly $7 million in county funds dedicated to helping small businesses, according to a press release from the U.S. Department of Justice.
According to court filings obtained by The Washington Post, Bang was the chief operating officer for the Montgomery County Office of Economic Development between 2010 and 2016. He had been a Montgomery County employee from 1997 until June of 2017.
According to The Post, Bang was in charge of disbursing county funds to small businesses, helping them negotiate affordable rent and teaching business skills to the staff of the companies. Federal authorities say Bang diverted money into four South Korean bank accounts that contained his home address, which he had set up after Montgomery County entered into an agreement with South Korea to set up a small business incubator fund called Chungbuk Incubator Fund LLC.
In 2016, the Department of Economic Development was privatized and Bang was transferred to the county’s finance department.
Bang pleaded guilty Friday afternoon in Montgomery County Circuit Court to one count of wire fraud and one count of making a false statement on a U.S. income tax return. His sentence hearing was tentatively set for March 7.
In a press conference inside the courthouse following Bang’s second hearing of the day, Montgomery County State’s Attorney John McCarthy, First Assistant U.S. Attorney Jonathan Lenzner and IRS Criminal Investigation Special Agent in Charge Kelly Jackson all shared details on the case.
“He was smart,” McCarthy said of Bang. “He learned how to do this because he was in many ways in charge of it. He was the final say-so on the authorization.”
McCarthy said there is no evidence to suggest Bang is still in possession of any of the money he stole, nor is there any evidence that other government employees were involved in the scheme.
Jackson said it was clear Bang has a “gambling issue,” and both she and McCarthy laid out how the IRS was able to catch him. The agency was initially alerted through routine currency transaction reports, as Bang was bringing large sums of money into casinos in Las Vegas, Delaware and West Virginia and declining to share the source of the cash. Investigators obtained cashier’s checks ranging from $35,000 to $200,000, which they were able to trace back to accounts associated with the Chungbuk fund, allowing them to piece together the suspicious activity associated with the fake entity.
“It is criminal when a public official uses their position of trust to steal from citizens they are employed to serve,” Jackson said. “As the chief operating officer, the public expected Mr. Bang to appropriately use county funds to assist small business development around the county. But that’s not what happened.”
Bang fraudulently allocated a total of $6.7 million during the six-year-period. Of this amount, $5.5 million came from the county’s finance department, $1.2 million came from the department of economic development and more than $45,000 came from the Maryland Conference and Visitors Bureau.
Bryan Roslund, chief of the Montgomery County State’s Attorney’s Office Special Prosecutions Division, broke down each of the three forms of deception employed by Bang during his circuit court hearing. Under the guise of fraudulently authorized payments and invoices, the county issued eight checks and made four transfers to the Chungbuk fund from November 2010 to March 2016, the account title functioning as a “veneer of legitimacy,” Roslund said. Bang maintained the operation even during a freeze on procurement, earning exemptions with fraudulent information. From August 2010 to July 2014, Bang made requests to Medco and Scheer Partners to disburse funds to his fake company, netting nine checks over that span. Finally, from February 2011 to April 2013, Bang used his position to defer money from the bureau and into the Chungbuk corporation account through 21 rent payments, as the county subsidizes those costs for incubation companies.
“He was able to deceive the county into wiring millions in hard-earned taxpayer funds into his bank accounts,” Lenzner said. The defendant not only abused his position of trust within the county, but he also abused the sophisticated knowledge and expertise in economic development he had gained from his job.”
Over the years, Bang accumulated more than $2.5 million in taxes owed to the IRS due to his failure to report the fraudulent funds as income on his annual tax returns. He also admitted that he lied on county financial disclosure statements between 2012 and 2016.
In a press release Friday, Montgomery County Executive Ike Leggett said the IRS alerted the county that Bang may have been embezzling county funds. The matter was later referred to the state’s attorney’s office and eventually federal authorities. Because there were ongoing federal and state investigations, county officials were required to remain silent. Bang’s employment officially lasted from February 1997 until he was terminated on June 12, 2017, Leggett wrote.
Leggett also said the county has retained two independent auditing firms to review the economic development department’s transactions for the preceding 10 years. The investigations indicate that Bang acted alone, he said.
“Bang took advantage of the fact that Economic Development funds are exempt – under County policy – from the County’s usual procurement oversight procedures, an exemption designed to give the former Department of Economic Development more flexibility in creating and attracting new jobs and investment. That put more responsibility on the Department of Economic Development itself for oversight. Mr. Bang was able to exploit his past reputation as a highly effective employee and his knowledge of established County procedures,” Leggett wrote.
Leggett added that since learning of Bang’s embezzlement, his administration has taken several steps to eliminate fraud and abuse in county government, which includes establishing a new “compliance unit” within the Department of Finance, which reviews all of the department’s transactions and analyzes tests run by forensic software designed to detected irregular payment transactions.
County Council member and County Executive-elect Marc Elrich said in an interview that he and the rest of the council were briefed about the matter Thursday by the county’s inspector general.
“There was nobody he [Bang] was accountable to. Peter had no one that signed off on him signing checks. He made all these decisions by himself,” he said.
Elrich said that during Thursday’s briefing with the inspector general, council members were given a list of recommendations that revolve around making sure there are more channels of accountability for those in charge of allocating government funds.
Asked who besides Bang bears responsibility for the embezzlement, Elrich said it was important to look at who the department heads were during the six-year period.
“Were they absolutely unaware that there was no oversight? I don’t know the answer to that question,” he said.
Elrich said he plans to implement the inspector general’s recommendations when he takes office next month as county executive. Andrew Kleine will be taking over as chief administrative officer to replace the retiring Tim Firestine, but Elrich declined to reveal if he planned to replace any other department heads.
County Council President Hans Riemer, in an interview with Bethesda Beat, called Bang’s actions a “reprehensible crime.”
“He stole a huge amount of money. He did the worst thing a public employee can possibly do. He’ll hopefully serve a lot of time in jail,” Riemer said. “Our inspector general is working with the executive branch to ensure this can’t happen again.”
Riemer said he and other members of the council had been briefed on the matter earlier in the week, but were asked by authorities to keep any information confidential.
Former County Executive Doug Duncan, who served in that role from 1994 to 2006, said those in powerful positions in the county’s executive branch all bear some responsibility.
“It goes to the top of the county government. It’s the county executive and the chief administrative officer,” he said.
Bang began working for the county during Duncan’s administration. The former county executive said although he didn’t know Bang well, he “represented the county well.”
“He would be at some site visits we did and other things. He was always well prepared, confident [and] made a good presentation,” Duncan said. “He got things done, but clearly something happened where he felt like he could get away with something.”
Duncan said the revelations about Bang’s embezzlement are a “real blow to the county’s reputation.”
“I think it shows that if you decide something’s not a priority, bad things can happen. And I think that’s where the [chief administrative officer] needs to shoulder some responsibility,” he said.
A sentencing hearing for Bang is scheduled for Feb. 22 in U.S. District Court, during which Bang could face a maximum of 20 years in prison. Bang, as part of his plea agreement, must also pay restitution to the victims who lost money.
This story was updated to include the correct photo of Byung Il Bang. A previous photo provided by the Montgomery County State’s Attorney’s Office was incorrectly identified as the defendant in this story.
Dan Schere can be reached at Daniel.firstname.lastname@example.org