City of Lexington recovers nearly $4 million stolen federal funds

Posted at 12:23 PM, Sep 02, 2022
and last updated 2022-09-02 18:16:31-04

LEXINGTON, Ky. (LEX 18) — The City of Lexington says they have recovered all of the funds that were stolen in an electronic theft.

The missing money – $3,905,837.05 – was seized from a private account and refunded to the City on Friday.

"I give all the credit to the police financial crimes unit," said Lexington Mayor Linda Gorton. "They were first on the job and then the FBI and the Secret Service began their investigations. I mean, it's been a wonderful team effort which started with our police."

The transfer was originally intended for the Community Action Council but one week ago, it was diverted into a private account by criminals, the City says, who inserted themselves into electronic communication between the City and Community Action and provided false transfer information.

"It's really a gift in a way. It's a gift to us because what we're doing because of this, is we're doing our internal audit to look at all of our processes inside government that have to do with wire transfers and that sort of thing. And it also gives us an opportunity to reeducate all of our employees who work with email, who have email, and to help them understand the ins and outs of what might be real and what might not be. It's just in many ways it's really upping our game so we're very pleased."

The investigation into the theft continues by local FBI and Secret Service offices. The FBI is conducting a criminal investigation, and the Secret Service is investigating the electronic transfers. The City of Lexington claims in a news release that investigators have no evidence of criminal involvement by city or Community Action employees.

"I'm hopeful that they will eventually get to the point where they have the person who did this," Mayor Gorton said.

"We are fortunate to find this money," Sgt. Brad Williams, who leads the Police Department’s Financial Crimes Unit, said. "Often, the funding cannot be recovered."

"I understand from police that when the FBI and Secret Service are involved it can take a while to get to whoever was involved, but that's okay. We're going to get there," said Mayor Gorton.