City and Borough of Juneau loses almost $80,000 to wire fraud scam

A group walks in front of Juneau City Hall on Tuesday, May 10, 2016, in Juneau. (Photo by Rashah McChesney/KTOO)

A scammer stole $329,630.21 from the City and Borough of Juneau through wire fraud earlier this year.

City staff presented a memo detailing the incident to the Juneau Assembly during a committee meeting Wednesday. The city’s insurance was able to cover $250,000 — the policy limit for fraud. The city was left on the hook for the remaining $79,630.21.

The fraud was committed by someone posing as staff for SECON Construction. SECON contracts with the city on a number of projects.

CBJ Finance Director Jeff Rogers said the city has seen phishing and other types of fraud attempts about once a week in recent months.

“That’s a fairly dramatic increase for that kind of effort, and we’ve stopped all of them except for the case that’s been noted to the Assembly,” Rogers said.

In December, the impersonator asked city staff to update the company’s direct deposit information. After being provided with the necessary documents, staff updated the account. When SECON later invoiced the city for work performed at the Juneau International Airport this spring, the payment was sent to the fraudulent bank account.

The fraud was discovered in May when SECON contacted the city to say they had not received the payment. When staff realized the money had gone to a fake account, they contacted the Juneau Police Department and the FBI.

Rogers said the FBI investigation is ongoing, but they haven’t received much followup from the investigator.

“They may, frankly, have all the information that they need from us,” Rogers said. “The other possibility is that the FBI is investigating a very large number of these kinds of crimes and that they’re simply overwhelmed with the volume.”

First National Bank Alaska tried to recall the payment when the fraud was discovered, but was unsuccessful.

Rogers said the city has a risk fund it uses when situations like this occur. He said the current balance is enough to cover the loss.

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