“We did identify a 70-year-old woman in another state who was the recipient of $3.3 million from Warren County,” Sheriff LaFarr told the Warren County Board of Supervisors on April 17. “This woman was what we know in law enforcement as a 'mule,' somebody who receives money — illegitimate funds — and then funnels those out to other locations."
"Men and women are often recruited as romantic schemes or for quick payments. 'We give you $5,000 if you follow this transaction to these accounts and send them elsewhere,'" Sheriff LaFarr explained of the scheme. "This woman's been interviewed by members of a local sheriff's office and admitted to these crimes. We have a recorded interview. We know who she is, we know where she is, we know exactly what she did. She's in another state, and at this point, our hands still remain tied as far as the prosecution goes."
Due to the ongoing investigation, the name and whereabouts of this 70-year-old woman have yet to be disclosed. Investigators and federal prosecutors are currently working to determine the level of criminal culpability of this 70-year-old woman. "Does [she] understand that [she] did something wrong? Did [she] do it intentionally? Can [she] be held accountable in a criminal court? We're waiting for that, and that's one we're going to take some time," Sheriff LaFarr said.
"I also found it really hard to believe that a local bank in a small town with a 70-year-old woman who traditionally has less than $1,000 in a checking account receives $3.3 million and that doesn't throw up a red flag," Sheriff LaFarr continued.
No member of the Warren County Treasurer's Office has any criminal culpability in the fraud scheme, according to the sheriff's investigation.
The money trail for the stolen funds has been a complex one to follow, involving as many as 10 different banks — all of which have been uncooperative with the investigation thus far. "What I can tell you about the money, it went from Arrow Bank, then it went to a Discover Bank, and then, in working with our Secret Service partners, we know that it was funneled to at least 10 other banks," LaFarr said.
"These transactions are really difficult to follow. If they're electronic transactions, it's easier, but when a check is cut, that's really challenging. The banks, it might surprise you, have been very uncooperative," Sheriff LaFarr explained. " Secret Service, AUSA, they're sending subpoenas up to these banks, and they're ignoring them. They're just not answering them. They have a timeline to get back by such and such a date, and they're just not responding, which I find extremely hard to believe."
Sheriff LaFarr added that the banks in question are outside the region and not in New York State. Arrow Bank has been cooperative and is not involved in the fraud.
The Post-Star previously reported how, back in early December 2025, a person of interest known as "Rafael Diaz" impersonated an employee from Peckham Industries, a vendor that supplies materials and works on road paving projects with the Warren County DPW. "Diaz" engaged in conversations with several members of the Treasurer’s staff, solicited information, and requested the opportunity to establish an ACH payment account. The account was established and payments were made. Computer systems were not compromised, according to Sheriff LaFarr .
Sheriff LaFarr notes that "Rafael Diaz" is not the real name of the fraudster.
"Arrow Bank, our local bank, has security mechanisms in place, as you would expect a financial institution would, to detect fraud. When this transaction reached the bank, their systems detected that it's a fraudulent transaction. A representative from Arrow Bank called the Warren County Treasurer's office, advised the Treasurer's office that this appears to be a fraudulent transaction, and the request was made to process the transaction," Sheriff LaFarr said.
"We found nothing to indicate that the Treasurer's office did anything following that phone call to verify the transaction," Sheriff LaFarr continued.
It wasn't until Peckham Industries contacted DPW later in December because their expected payments in the amount of $3 million had not yet been received. "This prompted a flurry of phone calls between DPW, the Treasurer's office, Peckham Industries, and it was early on December 23 that it was learned that the county was likely the victim of fraud," Sheriff LaFarr said.
Sheriff LaFarr called the fraud case "an error" and not the work of a sophisticated crime.
Of the remaining $2.1 million, nearly $617,000 has been seized by the Secret Service, with an additional $1.2 million that's been identified. "We know the institutions where [the money] went. There are names labeled with these institutions, but they're not legitimate names. If we can't get cooperation from the banks, if the Secret Service can't get cooperation to try to figure out where this went, and again, we're in day 116, the chances of that money still being in any of these banks is slim. But we are still actively working. We are pushing. We are making calls," Sheriff LaFarr explained.
Sheriff LaFarr also estimated that about $49,000 will never be recovered due to transactions between "mules."
"We all want to see someone held accountable. We want to see our money come back. At some point, when we either have a prosecution or we're told that a prosecution is not going to occur, we will make notifications to the board. We'll make notifications to the public," Sheriff LaFarr said.
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