Town of Erie Reports BEC Scam That Resulted in Loss of Over $1 Million

Town of Erie Reports BEC Scam That Resulted in Loss of Over $1 Million

Town of Erie Reports BEC Scam That Resulted in Loss of Over $1 Million
Courtesy/News Source: cyware.com

The phishing email appeared to come from a person working for SEMA construction which associated with the building contract of Erie Parkway Bridge since October 2018.

Although the staff had checked some of the information on the form for accuracy, they failed to verify the authenticity of the form with SEMA Construction.

The Erie officials have announced that the town has recently fallen victim to a business email compromise (BEC) scam. The scam has cost the town a sum of over $1.01 million.

What happened?

In a notification, Erie Town Administrator Malcolm has stated that the town has sent money to a person who requested a change in the form of payment for the construction work on Erie Parkway Bridge. The fraudulent wire transfer had occurred on October 25, 2019.

The email appeared to come from a person working for SEMA construction which associated with the building contract of Erie Parkway Bridge since October 2018.

Although the staff had checked some of the information on the form for accuracy, they failed to verify the authenticity of the form with SEMA Construction.

"Although town staff checked some of the information on the form for accuracy, they did not verify the authenticity of the submission with SEMA Construction; they accepted the form and updated the payment method," said Malcolm Fleming in an email memo, The Denver Post reported.

The fraud was confirmed on November 5, when Erie staff was alerted by the bank of a possible fraud attempt.

SEMA was later paid on November 15 for the Erie Parkway Bridge project completing using physical checks.

What preventive measures are being taken?

Following the incident, the Town of Erie had removed the contact form from the website and temporarily discontinued electronic payments. The town is also working on hiring accounting and finance managers.

In addition, the town’s police department and the Federal Bureau of Investigation are investigating the incident. The town is also working on recovering the funds lost to the BEC scammers.