Sugar City was caught in a scam after a con artist tricked the city clerk into sending nearly $80,000 under the guise of paying for road work.
The incident began on July 16 with the money being sent on July 20. The city didn’t realize what had happened until the following day.
The city council reported the incident during its July 23 meeting.
The city had budgeted $77,940.57 to the American Pavement Preservation Company to cover the cost of recent road work. No one but the city and the company knew the exact amount of the work done, reported the council.
“The original amount ended up changing. We added some additional streets. They had to have had access to that amount through someone. Only very few people knew that amount,” said Sugar City Attorney Chase Hendricks.
Mayor Steve Adams said whoever stole the money knew the city’s relationship with the construction company.
“The good news is that it’s a person who has very direct knowledge. The hope is that someone can get caught,” he said.
The council questioned if there was any insurance available to cover the monetary loss. Adams didn’t believe Idaho Counties Risk Management Program or ICRMP that also insures cities, would reimburse the city, but Hendricks said he would investigate that.
“That’s one thing I’d like to pursue further. ICRMP’s first inclination is to say ‘No, it’s not covered.’ (The) solutions to this need to be explored,” he said.
Should the city not recover the money, it will have to realign its budget, said the council.
The Madison County Sheriff’s Office did a report on the crime, and the FBI was notified.
On July 16 longtime clerk Wendy McLaughlin received an email from what she thought was the American Pavement Preservation Company.
The email was instead from a scammer using the fake email@example.com email rather than the correct email of firstname.lastname@example.org. Notice the “s” between the words “American” and “pave” in the first email.
In the fake email, the scammer, posing as Priscilla Gomez, asks McLaughlin when the company could expect payment for its work. The email included the correct invoice for the amount of $77,940.57. McLaughlin responded on July 19 that the city would mail a check by the end of the week. She also asked if the company could cover the cost of the fire hydrant water usage during the project.
The scammer wrote back about an hour later asking if McLaughlin could instead wire the money. The scammer agreed to cover the wire fees but said nothing about the fire hydrant water usage costs.
The week prior, McLaughlin had wired money to the Department of Environmental Quality that routinely requests money be sent that way. Thinking nothing of it, on July 20, McLaughlin wired the money to what she thought was American Pavement Preservation.
The following morning, the real officer manager Priscilla Gomez called McLaughlin.
“She said, ‘I want to pay for the water hydrant feed we used during the slurry project,’” McLaughlin said. “I asked her ‘If she wanted to take care of the wire transfer fees.’ She asked ‘What wire transfer fees?’”
Gomez said they hadn’t requested the money via a bank wire. McLaughlin sent Gomez the emails, and Gomez told her that there is no “s” in their email address.
“She called Wednesday morning, otherwise, I wouldn’t have known any different,” McLaughlin said.
McLaughlin called the bank to see if it could stop the funds, but was told there was very little the bank could do once the money had been sent.
“The money went to a legitimate bank, but it was under fraudulent circumstances. Hopefully, they can put a freeze on that account. It was going to San Francisco that’s an hour later than us. The bank would just be opening, so I was hopeful,” she said.
This was the first time that the city had been scammed, said McLaughlin.
“I’m scared, I’m embarrassed, I’m anxious. I’m all of the above,” she said.
Yet, Councilwoman Catherine Nielsen had nothing but praise for McLaughlin.
“I feel so bad for Wendy,” she said. “It was even a fluke that she caught it. It’s one of those things very few people would have noticed. Wendy does a really great job over at the city. I know she feels really bad.”
While the city investigates what happened, it will change its payment policy, Neilsen said.
“We won’t be sending any more bank wires. We’ll be going through the accountant to make sure we have safeguards.”
McLaughlin said this incident may serve as a warning to other municipalities.
“Hopefully, this will help, so someone else can’t be tricked this way,” she said.