A federal grand jury has indicted a pair of Washington men, charging them with taking $1.4 million from Baltimore's public housing authority and electronically transferring the funds to a nonexistent business, according to authorities.

The men, William Alvin Darden and Keith Eugene Daughtry, were indicted last month on charges of bank fraud, according to federal court documents. The pair transferred money from the Housing Authority of Baltimore City's fund for Section 8 residents to a fictitious contracting company 30 times over a two-month period last year, according to the documents.

Housing Authority Executive Director Paul T. Graziano said the agency's accountant spotted the transactions last September and immediately contacted Bank of America, which handles the city's account. The transferred funds, which totaled nearly $1.4 million, were reimbursed, he said.

"The bottom line is we have a system, and this proves that it worked," said Graziano.

The FBI began investigating the men at the request of PNC Bank, where they had opened an account for a business called Keith Daughtry Contracting. The men registered the company with state authorities — and misspelled its name on official documents — days before requesting the first payment, according to the federal indictment.

The men enrolled the business in an electronic payment program and transferred sums ranging from $50 to $6,500 from last July to September, according to court documents.

"We process checks every month, so it's not that difficult to get our routing number and account number," said Rainbow Lin, the authority's chief financial officer.

The authority, a federal agency independent of city government, issues more than $130 million in payments to Section 8 landlords each year and makes at least 6,000 payments a month, said Graziano.

Neither suspect has ever worked for the authority or is connected to it in any way, Graziano said.

The indictment was unsealed about three weeks ago, but the Housing Authority did not publicize it until Thursday evening. Graziano said he only recently learned that the charges had been made public.

Housing officials were under the impression Thursday evening that Darden had not yet been indicted, contrary to court records.

"After we realized the [FBI] had realized [the charges], we wanted to make it clear to the public that we had systems in place to prevent this kind of thing," Graziano said.

julie.scharper@baltsun.com

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