SASKATOON – A First Nation in Saskatchewan is suing a bank and an auditing company, alleging they failed to catch fraudulent transactions totalling $5.8 million. The Whitecap Dakota First Nation says its former senior accountant wrote cheques totalling that amount to himself and another account between January 2009 and July 2013.
The band’s statement of claim alleges the Royal Bank should have been suspicious about the high dollar amount of the cheques, and KPMG should have uncovered the transactions during its annual audits of the First Nation’s finances.
The accountant, Hugo Gallegos, was fired in 2013 and has been charged with fraud, theft and other offences.
The statement of claim contains allegations that have not been proven in court, and RBC and KPMG have not commented on the lawsuit or filed statements of defence.
The lawsuit lays out detailed allegations as to how Gallegos may have transferred a large amount of money to accounts held by himself and his mother, via more than 1,700 cheques.
“Gallegos cultivated a relationship with the RBC branch tellers and other employees. Gallegos then exploited this relationship to gain the RBC employees’ trust and confidence, all of which restrained the employees from making reasonable and necessary inquiries into Gallegos’s huge volume of unusual transactions,” the statement reads.
“RBC was, or ought to have been aware, that Whitecap did not write cheques to its other employees in anywhere near the number and totals of the cheques written to Gallegos, if at all.”
RBC spokesman Robb Ritchie said Friday the bank would not comment on the case, citing “client confidentiality and the litigation surrounding this matter”.
KPMG did not immediately respond to requests for comment.