By Christine Giordano / Art by Sebastiaan Stam
In a case of misapplied intelligence, a LACERA cyber employee was allegedly smart enough to establish an alias, a straw company, get promoted, and funnel bids his way, but it’s likely going to cost him $360k. The $82b Los Angeles County Employees Retirement Association (LACERA) filed a lawsuit against its former employee who allegedly built a fake company to enrich himself off of a bid-rigging scheme while working as an interim Information Security Officer for the the association. The scheme netted the scammer $120,000 in funneled funds, and LACERA is seeking damages three times the cost of the fraud, at $360,000, under Government Code § 87100, according to court documents.
The employee, Carmelo Marquez, allegedly violated government code section 1090 and the Political Reform act, and breached fiduciary duty, according to the retirement association complaint. He used the alias “Carlos Rodriguez” and created the straw company, SafeSec (a Wyoming based LLC where he was the sole member and owner), to hide his real identity.
Initially hired by LACERA in 2021 as an independent contractor, he claimed he had a close friend who recently started a cyber company. Then, in October 2022, got SafeSec on the approved vendor list for cybersecurity products that Marquez encouraged LACERA to buy. He then allegedly created sham quotes so that his company appeared as the lowest bidder. He was promoted to ISO in February 2023, in charge of new vulnerability management and remote access management tools, products, new technology and business processes, and services to be purchased.
After leaving LACERA in May 2023, Marquez continued to use that alias and unsuccessfully attempted to secure contract extensions with LACERA under false pretenses, alleges the lawsuit.
In seeking damages three times the cost of the fraud, LACERA is seeking to void any personal gain Marquez may have benefitted from. “LACERA’s contracts with, and purchase orders and payments to, SAFESEC are void and an order that Defendants Marquez and SafeSec repay to LACERA all payments previously made by it to SafeSec,” according to the complaint. “The actions of MARQUEZ were done with malice, fraud, oppression, and reckless disregard for the rights of LACERA within the meaning of California Civil Code section 3294.”
The retirement association posted the news on its website.
“LACERA will not tolerate this egregious, unlawful violation of duty against LACERA and its members by those who are entrusted to work for the retirement system and its members,” said Luis Lugo, Deputy Chief Executive Officer of LACERA in a written release. “LACERA is determined to safeguard the interests of its members and vigorously pursue all necessary actions to remedy breaches of trust. This legal action, which was authorized by LACERA’s Board of Retirement, reflects our unwavering commitment to accountability, transparency, and the protection of our members’ retirement assets.”
