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City of El Paso: ‘Phishing Scam’ Investigation Reveals Theft of $3 Million in Funds

An investigation by law enforcement and the City of El Paso uncovered a “phishing scam” that resulted in the loss – and subsequent recovery of – just over $3millon dollars, and a change in the way the city pays vendors.

The City of El Paso has temporarily changed its vendor payment process and is issuing paper checks to those who do business with the City.

The immediate action was instituted upon the Comptroller’s Office discovering irregularities with the electronic vendor payment process. Issuing paper checks was an immediate and necessary step to deter additional incidents and safeguard City resources.

To date, the sum of $292,000 of the approximately $300,000 in misdirected funds have been recovered and nearly $1.6 million of the approximate $2.9 million has been recovered.

City officials say that in early October of this year, the Comptroller notified the Internal Auditor that the City was potentially the victim of a phishing scam resulting in the loss of approximately $300,000.

As a result, the following steps were taken:

o   Immediately additional internal controls were put in place to prevent future incidents.

o   Incident reported to law enforcement.

o   Internal investigation commenced.

City officials also stated that they did not immediately inform the public about the phishing scam at the request of law enforcement to “allow for an appropriate investigation and to increase the possibility of recovering the funds.”

By Mid-October officials say that, as a result of the internal investigation the City and the Camino Real Regional Mobility Authority (CRRMA) discover an additional misdirection of funds in the amount of approximately $2.9 million.

The City, the CRRMA, local law enforcement and the Federal Bureau of Investigations (FBI) have taken steps to attempt to recover the misdirected funds and for the apprehension of the responsible parties.

 

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