More than $600,000 was returned to the Ketchikan Gateway Borough on July 25 after the borough’s bank, Wells Fargo, successfully retrieved an electronic fund transfer that the borough made to a fraudulent account a couple of months ago.
Charlanne Thomas, the borough’s finance director said the borough was notified by Wells Fargo in May that it unknowingly sent money to a fraudulent checking account at Citibank after attempting to pay for the Dudley Field turf project. The contractor’s email account had been hacked by scammers who requested payment be sent to a different checking account.
Thomas said the fake email address used by those committing the fraud had only a one letter difference than the vendor’s.
“They were able to grab an email string we had been having with the vendor about payment and they sent a request to us within four hours of us receiving the initial payment request,” Thomas said. “They sent a new one and said, ‘We’re sorry we gave you an invalid account number, please change it to this.’ The email address had one letter in it that wasn’t in the real email, and it just got missed.”
Wells Fargo tried stopping the borough’s electronic funds transfer and requested a reversal the following business day, but the fraudulent account at Citibank had been frozen for investigation.
The borough also filed a claim with its cyber and crime prevention insurance provider and reported the fraud to the FBI.
Thomas has been receiving weekly updates from Wells Fargo about its work with Citibank to retrieve the borough’s money. Usually, the update is that there is no update — until July 25.
“My update today was that we received a $625,000 deposit back into our accounts payable account,” the finance director said.
A press release sent out by the borough said $625,132 had been returned. It was $23.84 short of the total original amount paid to the fraudulent bank account. Thomas said she didn’t know why the $23.84 couldn’t be accounted for.
Thomas said that in response to the incident, the borough is limiting the amount of money it will send electronically to new vendors, and that only supervisors can complete online transactions once three supervisors have reviewed it.
She’s also looking at contracting with a third-party provider that specializes in preventing fraud by vetting bank accounts and account numbers, covering any damages incurred as a result of missed cases.
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