The town hall of Erie, Colorado (Bahooka/CC BY-SA 3.0)

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Town pays fraudster $1m for new bridge after simple online scam

7 January 2020 | By GCR Staff | 0 Comments

Erie, Colorado lost more than $1m after electronically transferring funds owed for a new bridge to a fraudster posing as the contractor that built it.

The town of 18,000 people in Boulder County sent progress payments to the wrong bank account after someone claiming to be from SEMA Construction, the main contractor for the $5.1m Erie Parkway Bridge, completed a form on the Town’s website requesting electronic payment instead of cheques.

The change wasn’t properly verified and the money disappeared.

Town administrator Malcolm Fleming revealed the theft on 30 December in an announcement to the town (PDF). 

“Although town staff checked some of the information on the form for accuracy, they did not verify the authenticity of the submission with SEMA Construction,” he wrote.

Fleming said the fraudster changed the payment method on 21 October.

Four days later, on 25 October, the town processed two legitimate payment requests from SEMA for the bridge totalling $1.016m, but sent the money to the new bank account electronically.

Unbeknownst to the town, the money was then swiftly wired out of the country.

The town held a ribbon-cutting ceremony for the $5.1m bridge on 4 November, with Erie Mayor Jennifer Carrol hailing it as an “iconic landmark for the Town of Erie”. 

But the celebratory mood soured the next day when the town’s bank notified Erie of the suspicious movement.

When staff contacted SEMA to ask if it had received its money, the company said it had not, nor had it requested a change in the way money was paid.

The town still had to pay SEMA $1.016m, which it did the old-fashioned way – by cheques – on 15 November.

Erie police and the FBI are investigating to find the fraudster. Administrator Fleming said police had found no evidence that a town employee engaged in criminal activity.

Fleming told The Denver Post that the staff member who accepted the electronic form and updated the payment information had not followed guidelines for dealing with such requests. The person involved resigned voluntarily after the fraud came to light.

Erie staff are now working with the town’s insurers, CIRSA and American International Group, to try and secure reimbursement.

Image: The town hall of Erie, Colorado (Bahooka/CC BY-SA 3.0)

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