A California city got conned out of nearly $1 million after scammers posed as a construction company, then impersonated a city employee to make sure the bogus payment went through.
Pittsburg wired $913,000 on Feb. 12 to an account it believed belonged to Discovery Builders Inc., the company behind the city’s planned Dream Courts sports and recreation complex.
Officials didn’t realize the money was gone until five days later, when the real builder asked where the payment was.
The scam hinged on a tiny email alteration: A fake Discovery Builders address contained an extra lowercase “L,” according to court records.
The fraudsters then allegedly hacked the email of Sara Bellafronte, an assistant to the city manager, and impersonated her in messages to a city finance employee.
The fake Bellafronte claimed she had verbally confirmed the new banking information and instructed the employee to update it.
The money quickly vanished through a dizzying chain of accounts, prompting an FBI investigation.
Authorities issued 18 search warrants covering 116 accounts and traced the cash to two US-based suspects and another in Nigeria.
No suspects have been arrested or publicly identified.
Investigators froze the account that received the city’s money, allowing Pittsburg to recover about $696,000.
Officials said they were seeking insurance coverage for the roughly $218,000 still missing.
One Illinois man who received some of the money appeared to investigators to be an unwitting pawn in the scheme, court records say.
Believing he worked for a legitimate company called “Tyco Alloy Industries,” he moved the funds and bought about $217,000 in bitcoin, sending it to a cryptocurrency wallet.
Discovery Builders President Louis Parsons said the company didn’t blame the city.
“Somebody was pretty sophisticated to accomplish this,” Parsons told the San Francisco Chronicle. “I just feel bad for the city of Pittsburg that they had to deal with this.”
The company has since had a representative physically collect checks from the city.
Discovery Builders, a Seeno family company, ultimately received the full $913,000 within 60 days of learning about the scam.
The Dream Courts project is a planned 42,000-plus-square-foot facility aimed at boosting sports tourism. Pittsburg approved the project in 2020 for no more than $3 million, but rising costs and labor-union negotiations delayed construction.
Parsons said the facility could be finished within the next 60 days.
The city said it has since beefed up payment verification, changed financial workflows and adjusted IT staffing.
“This crime is both upsetting and a hard lesson for how we can improve our security. I share the community’s disappointment that criminals were able to exploit our systems,” Mayor Dionne Adams said.
The city faces an estimated loss of roughly $100,000, According to The Mercury News.
Pittsburg released details of the scheme Wednesday, saying doing so would no longer compromise the investigation.
Read the full article here
