What you need to know:
- After their uncle fled to Kenya to escape arrest, Loretta Wavinya and Lillian Nzongi took charge of the family syndicate.
- The sisters filed fraudulent tax returns.
- They were arrested in June 2007, by which time they had stolen a staggering Sh1.5 billion in the US.
Nobody noticed as Paul Kilungya Nyumu flew back to Kenya in order to avoid prosecution in the United States over the theft of Sh200 million.
In Nairobi, he quietly left Jomo Kenyatta International Airport and vanished into thin air.
Back in the US, he had left his two nieces – Loretta Wavinya, 32, and Lillian Nzongi, 28 – to run the syndicate. They were, after all, young and wearing a mask of innocence.
The Americans, whom Nyumu had defrauded in a well-organised family-run tax filing syndicate, only noticed his absence when he failed to appear in court. At no time did the passport officers notice that Nyumu had a fake document that he used successfully to flee justice.
By this time, Nyumu’s gang had filed fake tax refund claims worth $13.1 million (Sh1.3 billion). They were waiting for their big pay day before their leader was arrested.
Eva Mwangi, who was Nyumu’s deputy in the syndicate and based in Kansas, Missouri, disappeared from the radar. The Nation Investigations desk has been unable to trace her whereabouts to date.
On the face of it, the scam looked simple: steal elderly people’s identities and use that information to claim tax refunds from the American government.
It was one of the biggest cybercrime syndicates run by Kenyans.s
By arresting Nyumu, the Federal Bureau of Investigations (FBI) thought they had stopped Kenya’s first transnational cybercrime syndicate in its tracks just two years after it took off, and in the process saved Americans from losing Sh1.3 billion. What they didn’t know is that the victory was pyrrhic.
One of Nyumu’s nieces, Wavinya, who had gone to the US to study radiology, had got a job as a tax preparer for homes that take care of the elderly in Kansas. Her siblings, Nzongi and Edwin Sila Nyumu, decided to lie low. It was a strategy.
Things remained quiet for a year until Nzongi, in her new job as a tax preparer, saw another opportunity to make money. Having learnt as mules under the apprenticeship of their uncle, the three siblings in 2006 decided to form an even bigger syndicate.
They would go on to steal a staggering $15 million (Sh1.5 billion) by the time Nzongi and Wavinya were arrested in 2007.
When you factor in inflation and today’s exchange rates, the three siblings stole an equivalent of Sh2.4 billion in just two years.
Wavinya led the syndicate in filing 540 fake tax refund claims while maintaining a low and inconsistent profile to avoid detection by authorities.
In order to do this, court papers show, they recruited 13 people, mostly Kenyans in Kansas, Missouri, just like them. The first ones to be recruited were Ervin Somba, 24, and Kenneth Njagi, 28, who were friends with Sila. They then recruited Moses Ndubai, 31, and Bernard Nyemba, 37, both of Kansas City.
Also recruited were Vincent Ogega, 23 (Independence City, Missouri), Aaron Mutavi, 26 (Overland Park), Mary Gitiha, 23, (San Francisco, California) and Earnest Kangara, 38, (Santa Rosa, California).
Some Americans were also recruited to the syndicate, giving it a truly multinational face. These were Jeanette Alexander, 38, Michael Anderson,46, Rashira Lewis, 20, and Parker S. Willingham, 23, all of Kansas City, Missouri.
The plot became complex. Wavinya was to use her insider knowledge as a tax preparer for elderly homes to steal the identities of those being taken care of. The identities were then used to file fake W-2 forms (A W-2 form is a tax form that shows the amount of taxes withheld from your pay check for the year and is used to file your federal and state taxes) and ask for tax refunds from the American government.
The payments would then be routed to post office boxes opened by those recruited. The recruits would then act as mules and reroute the money paid to their accounts by the American government at a commission back to Nzongi’s bank accounts.
The job of opening bank accounts was given to Alexander, Kamau, Anderson and Ndubai. And in order to make the accounts look legitimate to the banks, they registered fictitious businesses within the State of Missouri.
The businesses would receive fake invoices for providing fictitious services to Nzongi and Wavinya and then transfer money to the accounts of the two sisters.
The money would then be wired to bank accounts in Nairobi where a second set of mules would withdraw it and send it to fugitive and family patriarch Paul Kilungya Nyumu’s family.
Nyumu, who was hiding from the FBI in Kenya, was instrumental in laundering the stolen funds. The syndicate he had started two years earlier had grown into a monster. His niece, Wavinya, was firmly in the driver’s seat.
In order to avoid detection from the FBI, all recruits were ordered to frequently change jobs and get vehicle registrations that don’t match their cars. They were then asked to get physical addresses that don’t match those on their IDs. The recruits from Kenya made sure they got into marriages with American citizens. Investigations by the FBI would later establish that “many of these marriages were sham marriages to achieve permanent residency status.”
Wavinya’s criminal records, which the Nation has now retrieved from the US, indicate that from 2006, she resumed filing fraudulent tax returns.
Another FBI report says: “Edwin Sila, along with his friend Ervin Somba began recruiting third parties to open accounts and fraudulent cards to receive the refunds. They also listed post office mailboxes as the addresses to receive the funds.”
Thus, Wavinya, Sila and Somba, along with Njagi, managed the scheme until the summer of 2006 when the Internal Revenue Service (IRS) began sending letters of inquiry about the destination of the tax refunds.
The FBI, too, got wind of the fraudulent tax refund scheme and started asking questions. Their first suspect was Somba. In the course of their investigations, they started sending letters to Somba’s friends and associates, which turned out to be a big mistake.
“The letters were described as subpoenas to testify in order to ‘develop a case’ against Somba,” says the criminal file about the syndicate.
Upon finding out that the FBI was asking questions about him, Somba escaped from his house in the summer of 2006.
By the time the FBI knocked on his door at 10334 Tullis Avenue, Kansas city, he had returned to Nairobi leaving behind his American wife, Lynne Scales, with whom they even had a child.
“Prior to that time, Somba’s residence had been a central meeting point for conspirators going out on ‘bank runs’ and meeting up afterwards to distribute the proceeds,” said the FBI in their filing in court.
But unlike Nyumu, Somba would be arrested a year later on September 25, 2007 at a restaurant in Karen by the FBI, who had been deployed to Nairobi to look for him and five others, including Gitiha, Karingithi Kamau, Kangara, Njagi and Sila, who had escaped to Nairobi.
The last to be arrested was Sila, the man who, as reported yesterday, avoided extradition to the US by keeping Kenyan police on his payroll. He was briefly arrested in November last year, then set free.
But the scattering of the group and the fact that the authorities were on the trail of Somba, did not deter Wavinya and Nzongi from recruiting new people to file fake returns.
Having realised that they were being trailed and were likely to be arrested, the two sisters escalated the theft and the amount of money they were wiring to Nairobi.
“These transfers may have constituted payment to overseas conspirators, ‘stockpiling’ of money in anticipation of a move back to Kenya, or money wired to relatives. All suspicious transfers were under $10,000, presumably an attempt to avoid federal reporting,” the FBI said.
In June 2006, for example, two wire transfers of $18,550 (Sh1.8 million) were sent to a Preston Nyumu – suspected to be Nzongi’s uncle Paul Nyumu – in Nairobi, who was using an alias to avoid detection.
In the same month, transfers totalling $83,000 (Sh8.3 million) were sent to Nyami Somba and Corrine Kamau in Nairobi. Corrine is the wife of Karingithi Kamau, while Nyami is the Kenyan wife of Somba, who had escaped to Kenya.
A balance of over $1,000,000
“A search of the residence shared by Wavinya and Nzongi on July 19, 2007, uncovered a bank statement that indicated a balance of over $1,000,000 (Sh100 million) in an account in Kenya,” the FBI said.
To hide their true identities, the sisters filed the fraudulent tax returns electronically through public Internet hot spots such as restaurants and through unsecured private wireless networks maintained by unwitting individuals.
Wavinya and Nzongi also used their neighbour’s unsecured wireless network to connect to the Internet. The false tax information was used to generate federal refund claims in the range of $4,000 to $47,000 each at each turn.
They also submitted false returns to tax authorities to generate claims in the range of $1,500 to $20,000 per return.
“Once the money hit their accounts, Wavinya and Nzongi wrote cheques to mules and drove them from bank to bank to cash them until the accounts got depleted or the IRS detected the fraud and froze the account,” the FBI said.
The scheme started falling apart sometime in June 2007 when staff at a bank used by Nzongi noticed she was frequently making large cash deposits made up of only $20 notes, which is consistent with large cash withdrawals from ATM machines.
For instance, on June 1 and June 4, 2007, Nzongi deposited $11,080 (Sh1.1 million) all in $20 bills. On the night before June 4, she was photographed at an ATM withdrawing $990 (Sh99,000). The next day she wired $9,580 (Sh950,000) to a Lilian Nzongi believed to be an alias of her sister Wavinya.
“The Division of Employment Security shows no employment records for Lillian Nzongi in 2007. Lillian Nzongi had no other known source of income,” says a criminal file about the syndicate. Yet she was making huge cash withdrawals, deposits and wire transfers.
The two sisters were finally arrested on June 17, 2007 together with five others.
By that time most of their co-conspirators had escaped to Kenya, never to be seen again. Ogega was sentenced to 12 years in jail, the court free Mutavi, while Alexander and Kamau got 21 months each. Ndubai and Anderson got three-and-a-half years each.
The court also ordered Ndubai to pay $264,799 (Sh26 million) in restitution. As for Wavinya and Nzongi, they were jailed for five and 14 years, respectively.
Wavinya was also ordered to pay $2,451,829 (Sh250 million) in restitution. She unsuccessfully tried to appeal for a shorter sentence in 2014.
With the two sisters jailed, the FBI thought they had finally put the lid on the Nyumu family criminal gang.
Things cooled for seven years until 2016, when one of the cousins of Nzongi and Wavinya, who was based in Nairobi, and who had been to the US a number of times, struck.