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City reports $57,500 ACH impersonation fraud; staff to tighten controls
Summary
Finance staff disclosed a $57,500 ACH impersonation fraud tied to a vendor payment; bank, law enforcement and insurance notified, and council directed staff to require paper authorizations and draft comprehensive internal-control policies over the next three months.
Council was told the city was targeted by a sophisticated ACH impersonation fraud on a vendor payment associated with pay application #4. The finance presenter said the scheme supplied an EFT form and a legitimate-looking account; staff performed due diligence but the transfer nevertheless occurred. The bank and law enforcement have been notified and insurance coverage was invoked; recovery efforts were underway.
"This involves pay application number 4, which is about the wire involved, $57,500," the finance presenter said, adding that the bank's fraud department and law enforcement are involved and that the city’s insurance has impersonation-fraud coverage. As an immediate control, staff will temporarily require paper (wet-signature) forms for EFT changes and will undertake a three-month effort to draft a comprehensive internal-control policy. The presenter said the incident will prompt stronger vendor verification and an increase in checks/payments where appropriate.
Council members said they had notified the sheriff and the banks and urged staff to finalize written procedures and return with proposed controls and policy language for approval.
