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City discloses cyber-fraud targeting authority funds; council directs immediate purchasing policy changes
Summary
City staff reported a fraudulent ACH payment tied to an email compromise affecting an authority’s payment to a vendor; police and federal agencies are investigating and the council voted to require authorities to follow city purchasing procedures immediately.
City staff told the Lawton City Council that a fraudulent wire/ACH payment was made in February after a vendor’s email was compromised, and that the incident is under investigation by Lawton police, the FBI and the U.S. Secret Service.
Council members were briefed that the fraudulent request arrived inside a long-running email stream with multiple legitimate messages, which made it hard to distinguish the fraudulent instruction at the time. Staff said the fraud resulted in funds being diverted and the intended vendor not receiving payment; staff and police learned of the issue more than a month after the fraud when a contact reported the payment had not been received.
As a result of the incident, the city said it has begun changing administrative purchasing procedures and will add language to support agreements with city authorities to require wire-transfer safeguards and adherence to city purchasing policies. Council voted 7–0 in favor of a motion requesting the city manager to notify the affected authorities that they must follow the city's purchasing policies effective immediately while formal support agreements are updated.
City staff said authorities are separate legal entities that typically administer their own funds after allocations, but that the stolen funds were still public dollars and required city action. Staff also said they are working with outside counsel experienced in cyber-fraud matters to determine liability and next steps while the criminal investigation continues.
The city did not disclose the vendor name or the amount taken while the investigation is ongoing; staff said legal and investigatory constraints limit what can be shared publicly at this time.
