The City of Lexington, Kentucky, Police Financial Crimes Unit is working with the local Federal Bureau of Investigation (FBI) and Secret Service offices to investigate the electronic theft of approximately $4 million in Federal rent assistance and transitional housing funds.
The missing funds – originally intended for the Community Action Council – were discovered last week. Once the missing funds were discovered, they were tracked to three wire transfers into a private bank account. That account was frozen by the financial institution on Sunday, August 28.
Currently, officials believe that individual(s) outside government directed an electronic funds transfer into the private account. The criminal posed as the Community Action Council, conducting an operation that involved multiple emails. Initial investigations show no criminal involvement of City or Community Action Council employees.
“The government’s financial system was not compromised. The city is working through the fund recovery process and to help Community Action Council ensure continuity of housing assistance,” Commissioner of Finance Erin Hensley said in an August 29 press statement.
In an updated August 30 press statement, Mayor Linda Gorton said she has ordered an in-depth examination of the city’s internal wire transfer processes through the Division of Internal Audit.
“The government is a victim of a crime at a time when it is partnering with agencies across the community to provide critical financial assistance,” Gorton said. “Cybercrime is a growing problem around the world. We must be sure government employees are well trained to detect it.”
The city is currently working through the fund recovery process to help the Community Action Council ensure continuity of housing assistance, Hensley said.
“This kind of theft is all too common everywhere. It happens all the time to businesses, universities, non-profits, governments … no one is immune,” said Sgt. Brad Williams, who leads the Police Department’s Financial Crimes Unit. “It is officially called a business email compromise scam.”