Email scheme led City of Lexington employees to send $4 million to scammers

Posted at 8:16 PM, Aug 29, 2022
and last updated 2022-08-29 23:15:33-04

LEXINGTON, Ky. (LEX 18) — A complicated scheme led the City of Lexington to lose millions of dollars to a group city employees thought was one of their partners, officials announced in an update Monday.

Earlier, they announced Lexington police were investigating the theft of $4 million in federal funds, intended for federal rent assistance and transitional housing funds. Since then, both the FBI and Secret Service have joined the investigation.

They say the criminal operation "involved multiple emails and a complicated scheme" and that "criminal actors put themselves into communication between the City and Community Action Council."

The City says that employees received an email from a sender claiming to be the Community Action Council that gave new bank information. The City then, "not realizing the bank information was bogus, sent three wire transfers totaling about $4 million to the fake bank address."

Sgt. Brad Williams leads the Police Department's Financial Crimes Unit. “It is officially called a business email compromise scam," he says.

The City currently believes that City or Community Action Council employees are not responsible.

Mayor Linda Gorton has ordered an examination of the city's internal wire transfer processes.

“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 to recover funds to ensure that housing assistance can continue. They say that "wire transfers of cash to CAC have been suspended until the investigation is complete."

This is a developing story. Stay with LEX 18 as we learn more information.