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CSWD board says federal investigators are involved after suspected email fraud; independent probe to be hired
Summary
The Chittenden Solid Waste District told commissioners on March 25 that the FBI is involved in an active investigation of a suspected business-email compromise affecting MRF finances; the board voted to pursue an independent outside investigation and to limit internal distribution of related materials pending counsel direction.
The Chittenden Solid Waste District board said March 25 that the suspected business-email compromise affecting the materials recovery facility project has escalated to a federal investigation and that the district is cooperating with the FBI.
Why it matters: Board leaders and staff said the matter could affect financial controls and project oversight for the new MRF and that an independent investigation will be needed to establish scope, root cause and recommended remediation steps.
Sarah Reeves, the district's executive director, told commissioners the issue has moved to federal authorities and that CSWD is supporting their work. She said the district has asked counsel to help identify a firm to conduct “a focused, independent, and defensible investigation” into the suspected business-email compromise and that information developed so far will not be shared beyond counsel and the retained investigators to protect the integrity of the probe. “The goal will be the determination of the scope, the root cause, the impact, and the appropriate remediation,” Reeves said.
Reeves also reported that Simple Root performed a review of the network and affected accounts and "there was no indication of malware or other breach," and that Simple Root recommended several system changes to improve security. Reeves told the board the district is reviewing financial policies and procedures and will bring any suggested revisions first to the finance committee.
Commissioners repeatedly said an independent, outside review is important both to verify facts and to maintain public confidence. Board discussion referenced substantial missing funds in general terms and stressed the need to “trust but verify” rather than rely solely on internal accounts of what occurred.
The board did not release detailed findings or a cost estimate for the outside investigation on March 25, but commissioners were told it is too early to know total expense; staff and counsel said they will identify a firm and begin the process shortly. Reeves said the board's counsel, including an attorney from Paul Frank & Collins working on the matter, is assisting with the search for investigators.
Next steps: CSWD staff said they will bring recommended policy revisions and the independent-investigator procurement to the finance committee and the full board as those items are ready. The board emphasized that communication about the investigation will be managed by counsel and the retained investigators until their report is complete.
