ERIE, Colo. (CBS4) – Investigators are learning more about a suspect who scammed the town of Erie out of more than $1 million. In October, town officials sent the money to the suspect claiming to be SEMA Construction, the company hired to build the Erie Parkway Bridge.
Investigators have revealed SEMA Construction was targeted by a hacker twice in Sept. before the town was involved. The company’s email was hacked and an “internal email” was used to request a payment be wired out of state and then out of the country. SEMA contacted their bank and the funds were recovered, minus a wiring fee.
On Oct. 21, officials said a suspect submitted an electronic form on Erie’s website, requesting a change in payment for SEMA Construction. The form requested an electronic fund transfer using a fake voided check. Staff checked the form’s address, phone number and contacts for accuracy, according to officials, but did not verify the change with SEMA Construction.
Erie issued two payments to SEMA on Oct. 25 totaling $1,016,233.80. The bank account information for SEMA was was actually for an escrow account at a Citibank in Florida. An attorney who owns the account told the FBI he was contacted by an unknown suspect who claimed to be building soccer stadiums.
“The cybercrime landscape is ever-changing. Cyber intrusions are becoming more commonplace and more sophisticated,” said FBI Supervisory Senior Resident Agent Todd Sandstedt. “Billions of dollars are lost every year repairing systems hit by such attacks.”
The funds were quickly transferred from the escrow account to Santandar Bank, Mexico. Several days later, Citibank in Florida notified Erie’s bank of the possible fraud. Once the town learned of the fraud, officials cut two physical checks for SEMA Construction totaling $1,016,233.80.
“I felt violated,” said Town Administrator Malcolm Fleming. “The criminal element is out there, and we always need to be on our guard.”
Erie Police discovered the email account used by the suspect was created on March 13, 2017 and listed to an address in Australia. Officers investigating the account found hundreds of additional domains, many of which have construction ties.
The suspect also used a Canadian Internet Service Provider (ISP). Officials said the Internet Provider in Canada will not cooperate with the investigation.
Officials have since removed the form from the town’s website and discontinued vendor payments via electronic funds transfer unless they are verified.
The town is waiting to learn if its insurance will cover the loss. Erie’s primary insurance carrier, CIRSA will cover $150,000. The Town also has a secondary policy with AIG, to cover larger losses from criminal acts. AIG has not determined whether it will cover the rest of the town’s loss.
Before the town fell victim to fraud, the Erie Board of Trustees approved the creation of two new positions in 2020: Accounting Manager and Finance Manager. The Trustees also voted to make the part-time Risk Manager position full-time.
“These additional positions will provide additional support, oversight, segregation of duties, and management of the Town’s financial operations, which have expanded significantly in magnitude and complexity as the Town has grown in population,” Fleming said.