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    Monday, April 29, 2024

    FBI says email scam likely behind $2M theft from Farmington

    A business email scam was likely the cause of Farmington's $2 million loss to a China-based network last fall, federal law enforcement officials announced Thursday.

    In an emailed statement, the FBI said there is "absolutely no suspicion or indication that this fraud involved the manipulation or compromising" of the Automated Clearing House banking transfer system.

    The FBI's initial review found the $2 million loss may have been the result of a "business email compromise," the statement said.

    "The ACH payment network was never compromised or manipulated,"

    Similar thefts of municipal money have been reported in other towns and cities across the country, including in Sedgwick County, Kansas and El Paso, Texas and at The Community College System of New Hampshire.

    In each case, the funds disappeared last fall when a payment was made via the ACH Network to an existing contractor for an ongoing project. Authorities are investigating whether the cases are linked.

    In a business email compromise scam, schemers heavily research companies already working with municipalities in order to spoof a company email and assume the identity of a trusted individual within a company, according to the FBI website. The schemers then request a wire fraud transfer "using dollar amounts that lend legitimacy," the FBI says.

    In October, Farmington lost $2.04 million after a town employee used the ACH network to make a payment on a major town project, but the money was paid to a third party account.

    Federal and local police are investigating the theft.

    Town Manager Kathleen Eagen described the ACH network as an "industry standard" for making payments at all levels of government. It is an electronic payment method that uses batch processing that collects transactions throughout the day for later distribution.

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