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City reports March business-email-compromise; staff say about 97% of funds expected to be recovered
Summary
City staff reported a March business‑email‑compromise that diverted a vendor payment; staff said they identified related accounts, froze assets with bank and law enforcement assistance, and expect approximately 97% of the funds to be recovered while finance implemented new controls.
A city staff member told the Pittsburg City Commission on April 14 that the city was the victim of a business‑email‑compromise (BEC) in March that produced a diverted payment to a fraudulent account.
According to the staff presentation, on March 5 unknown actors contacted city employees posing as a current vendor and provided updated banking information. On March 6 the city sent a payment to the account that the employee believed belonged to the vendor. On March 11 the actual vendor informed the city it had not received the funds, prompting investigation.
Staff said they immediately contacted the city's bank, the city's insurance carrier, local police and the FBI’s Kansas City field office. Investigators identified accounts connected to the incident and froze assets; staff reported that approximately 97% of the funds are expected to be recovered. The staff member told the commission that interviews of city employees found no intentional wrongdoing and that the finance director has already implemented procedural changes to reduce risk going forward.
Commissioners thanked staff for the rapid coordination and recovery efforts. Later in the reports section, commissioners also acknowledged a delegation from Aberdeen, South Dakota, who visited Pittsburg to review downtown projects and C‑TEC programs; staff noted ties between Pittsburg State University and technical-education partnerships discussed during the visit.
