City of Griffin out more than $800,000 in alleged fraud; FBI investigating

SHEILA A. MATHEWS :::

The city of Griffin has lost $802,499.29 in two separate online transactions that officials say were fraudulent.

Griffin Police Department Master Patrol Officer Chip Johns on Friday, June 28, responded to city offices located at 100 S. Hill St., where he met Chuck Olmstead, an official of the Finance Department.

“He (Olmstead) stated that a company they use for the water treatment facilities (PF Moon) sent an email requesting an account change and needed to update information. Everything looked accurate on the email so the information was exchanged,” Johns reported. “The first transaction went through on June 21 for $581,180.51 (reference case #19-005312). The second transaction went through on June 26, 2019 for $221,318.78. It was found later that the email address used was not the correct email. He stated that SunTrust believes they can recover the money in the next few days.”

According to Olmstead, the CoG Information Technology Department is also involved, attempting to trace “the source of the fake email,” Johns said.

Griffin City Manager Kenny Smith now reports the money has not been recovered and that the investigation of this alleged fraud is being conducted by the Federal Bureau of Investigation (FBI).

“We have not (recovered the money). We’re still working with banking groups that are involved in it, and we’re working with the FBI, who is investigating the fraud, and we’re just waiting on additional information,” Smith said.

Asked if this alleged fraud is believed to have been perpetrated domestically or internationally, Smith said, “Well, we don’t know where it originated, so the FBI was the group we felt was better able to assist, and they’ve agreed to investigate.”

Smith said city employees, though unable to determine the source of the emails, continue to assist investigators in any way possible.

The alleged fraud was discovered Friday, June 26, when the Finance Department was contacted by the vendor – PF Moon.

“The actual true vendor called wanting to know where their payment was, and we told them we’d already paid them. They said they hadn’t received it, so we went back and looked,” Smith explained. “Once we discovered there was a slight differentiation in the emails, that’s when we learned what had happened.”

Smith said he and other local officials believe someone may have hacked an external system to obtain the information used in these incidents.

“We thought someone had hacked the vendor’s system, and we still suspect that. We received an electronic invoice that appeared to be from a vendor we do business with. Whoever fraudulently sent that invoice knew that we did business with that company, knew the project done by this company and the cost of that project,” he elaborated. “They knew the invoice amounts in relation to the project worked on. We feel like for them to know all that information, someone had to have gotten into the vendor’s system, so I guess that’s what needs to be investigated by authorities – how they got ahold of that information in order to send the fraudulent invoices.”

When asked if anything had seemed suspicious about these invoices or the request for updated banking information, Smith said, “It’s not that unusual. I mean, no. People change banks and change methods of payment, so it wasn’t anything that jumped out at anyone. People change banks.”

In addition to the FBI criminal investigation, city officials are reviewing the incident to determine if all internal policies and procedures were followed.

“It’s a vendor we do business with every day and have for years. It appeared to be a legitimate invoice. We’re looking into that,” he said.

Smith said he remains hopeful, but is uncertain if the money will be recovered.

“There’s more than one bank involved, so there’s got to be coordination between all the banks. Our bank wants to recover our money, but other banks are involved, too – where the money has been and where the money is at this point.”

Smith confirmed the city of Griffin does have insurance, but it has not been determined if it may be claimable should the funds be unrecoverable.

“We have insurance and the insurance company has not given us a definitive answer as to whether this is a covered event or not. Hopefully – we have our fingers crossed – that we’ll be able to get our money back.”

Comments

  1. thanks

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