Pago Pago, AMERICAN SAMOA — The whereabouts of LBJ Hospital’s $4.5 million, which was the subject of a fraudulent bank transfer last year, is the main focus of a Senate Resolution unanimously passed on Monday before the Fono went on its four-week recess.

The resolution authorizes the Senate Select Investigation Committee (SSIC) to investigate the matter and implement safeguards against future scams.

Senate President Tuaolo Manaia Fruean raised the issue during a hearing in September 2023, questioning Treasurer Malemo Tausaga about his department’s involvement in the scam that resulted in the transfer of $4.5 million of LBJ funds to a bank account in Florida.

Treasurer Malemo responded that his department received a notification from LBJ instructing them to transfer the funds to an account at Wells Fargo Bank, which they promptly executed. He confirmed that the notice was on LBJ letterhead and bore the LBJ Board members' signatures.

However, Treasury later discovered that the letter was fraudulent, neither originating from LBJ nor bearing the authentic signatures of the LBJ Board members. Malemo informed the Senate that the funds remain under the jurisdiction of the United States, with the FBI currently investigating the scam. He also noted that nearly $300,000 has been recovered so far.

According to the resolution, "it has been over one year since Treasurer Malemo's revelations to the Senate, and no update has been provided to the Fono. The senators are concerned that these federal funds will be lost permanently if not followed up on.

"It is only proper that the Treasurer provide the senators with the date of the last update and what was said or written as received from the FBI regarding the investigation," the resolution stated.

The resolution also notes that in previous hearings, LBJ officials informed senators that the scammed money has been reimbursed to LBJ in its entirety. The Senate needs confirmation of such from LBJ and the Treasurer.

In a Senate hearing held in January this year, Treasurer Malemo and the Acting CEO of the Territorial Bank of American Samoa (TBAS) at the time, Owen Peery, testified. Malemo explained that $957,192 was returned on August 25 last year, and $3.4 million was received by ASG on December 12, 2023.

He presented a copy of a $3.4 million check from Wells Fargo Bank as proof.

Senate Budget & Appropriations Committee Chairman Senator Utu Sila Poasa asked Treasurer Malemo why the bank was holding $100,210. Malemo explained that, according to the FBI, this amount was missing from the total $4.5 million.

He stated that if the entire $4.5 million had been available when the FBI investigated the matter, the full amount would have been returned by now.

To avoid such discrepancies in the future, the resolution stated that “the Senate desires to know if Treasury has a verification process when transfers or payments to financial institutions outside of American Samoa are requested, and which division in the Treasury handles these transfers. Additionally, the Senate seeks to understand who at LBJ the Treasury deals with regarding LBJ subsidies.”

The resolution also posed the following questions;

If Treasury has financial arrangements with outside financial institutions regarding ASG funds under their control, which financial institutions and who in the Treasury is responsible for overseeing these arrangements?

What is Treasury doing to assist the FBI in its investigation?

Has the FBI questioned Treasury's employees, and has Treasury turned over records and/ or documents to the FBI to assist in their investigation?

Who in the FBI is investigating this matter and what is their contact information?

Has Treasury dealt with any similar fraudulent scams before or since the LBJ subsidy one?

Has the Treasury IT division put in safeguards to assist the Treasury in spotting potential scams? If not, why?

The SSIC Chairman, Senator Togiola T.A. Tulafono has scheduled a hearing on the matter for October 11th.

BACKGROUND

The last known scam, where money was transferred fraudulently from an ASG account, occurred in August 2011, when ASG discovered the illegal wire transfer of funds, $1.2 million, to an unknown account at the Vietnam International Bank (VIB). This was during Gov. Togiola Tulafono’s administration, who is now a sitting senator, and chairman of the SSIC.

In July 2012, Samoa News reported that then Gov. Togiola said that it was a “cyber-crime” attack and that “through the timely effort of officials at Bank of Hawaii and VIB, the account was frozen and funds remained safely intact, pending the outcome of the joint investigation [with Interpol Vietnam and the FBI].”

Samoa News also reported in 2012 that in October 2011, ASG sought the help of Congressman Faleomavaega Eni in its efforts to reach a resolution in the matter and have the money returned to ASG.

In 2014, Radio NZ reported that the federal grant money fraudulently taken from an American Samoa Government account to VIB remained unresolved. By then, Lolo M. Moliga had become governor and Faleomavaega wrote to the governor saying that the US Justice Department was now working directly with the Vietnamese government to resolve the matter and the money should be transferred back soon.

However, there has been no update since 2014 on the issue, so it is unknown if the money was ever returned by VIB to ASG.