Chetek City Recovers Stolen Funds After Wire Fraud Scare

The scheme came to light in November 2023 when city officials stumbled upon a significant financial irregularity.

Chetek City Recovers Stolen Funds After Wire Fraud Scare

CHETEK, WI -- The City of Chetek has been on high alert since discovering a wire fraud scheme that targeted its ongoing infrastructure project, the Chetek Wastewater Treatment Plant (WWTP), according to a press release from the City of Chetek.

Press Release

The City of Chetek has been constructing the Chetek Wastewater Treatment Plant ("WWTP) since May 2023. This public infrastructure plant is important to the long-term health and safety of the residents of the City and provides opportunities for further economic growth of the community.

In November 2023, City officials became aware that the City had been the victim of a wire fraud scheme, which resulted in the City wiring $2.6 Million to a fraudulent actor. The misdirected wire was believed to be a legitimate payment toward the ongoing construction costs associated with the WWTP. However, we are glad to report that City officials, working closely with banking partners, were recently able to recover the total amount of the misdirected wire.

Upon discovery of the fraud, the City took swift action. It first alerted local and state law enforcement, and the FBI. It alerted every financial institution involved with the City's accounts and the WWTP project. It engaged expert third-party forensic analysts to review the integrity of the City's email and user accounts. Importantly, that review, which concluded in February 2024, determined both that the fraudulent actors had not infiltrated any City accounts or computer systems, and that no data breach had occurred in connection with the wire fraud. The City has also informed its government partners in the WWTP at the state and federal level, and has worked diligently with investigators to further their efforts.

The City secured a loan to cover the effects of the fraud. It has not experienced, nor does it anticipate, any interruption to the construction of the WWTP project or disruption of any other City services. The City's financial partners finalized their internal processes and assessments in recent weeks, leading them to confirm, on March 1, 2024, that the entire amount of the misdirected wire had been recovered.

Although the City's investigation is ongoing, the City believes that the perpetrators of the fraud created fraudulent email addresses resembling those of the City's general contractor, Market & Johnson, with which they contacted a separate private company working with the City on the WWTP, representing that the City needed to use new (fraudulent) wire instructions. Those fraudulent communications were then forwarded to the City for payment on the ongoing WWTP project.

After discovering the fraud, the City also quickly implemented additional security measures. It enhanced its fraud and virus detection capabilities, including by requiring additional phishing training for employees.

City officials - both elected and appointed - are collectively working closely with legal counsel to assess the City's options. As this is an ongoing investigation and legal matter, the City will be limited in its ability to share additional information beyond what is contained in this press release at this time.

Last Update: Mar 13, 2024 6:14 pm CDT

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