Authorities said a group of scammers based in China stole a $2 million online payment sent to a Torrington company for improvements to a Farmington, Connecticut, sewage treatment plant.
The town sent the payment to C.H. Nickerson & Co. Inc. in September. In October town officials realized the payment was never received by the company and notified the FBI and Webster Bank, the town’s banking service.
"Webster was made aware of an alleged fraud perpetrated by someone purportedly posing as a supplierto the Town of Farmington. Webster Bank has worked with the Town of Farmington, other banksand the authorities to assist the Town in the recovery of its funds," a statement from Webster Bank says.
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Farmington police Chief Paul Melanson said scammers targeted the company's municipal customers and fraudulently manipulated the Automated Clearing House system to send the funds to a different account.
Local and federal law enforcement officials are investigating. Police suspect other towns and cities were also victimized.
Town officials said more than $860,000 has been recovered, and they are working with their insurer to get most of the money back.
Officials stressed that standard procedure was followed in the case and they do not expect any disciplinary actions.
“This incident demonstrates how important it is for all of us, in government, or in our own personal lives, to take extraordinary efforts to protect against cyber-crime. There are criminal enterprises at work constantly seeking ways to penetrate even the most secure systems,” Town Manager Kathleen Eagen said in a statement.
Authorities say there are no indications that anyone in the town participated in the scheme.
The town has changed payment procedures to protect against future scams, including putting limits on ACH payments, verifying payment with the vendor using alternate communication, having two people in the town’s finance office approve all vendor ACH forms, and verifying vendor banking information on a regular basis.