Scammer steals $172K from Chandler, contractor The Chandler Arizonan

Scammer steals $172K from Chandler, contractor

Scammer steals $172K from Chandler, contractor
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By Kevin Reagan, Arizonan Staff Writer

The City of Chandler fell victim to a scammer who stole $172,000 that was supposed to be paid to a construction company for repairing the city’s roads.

Vincon Engineering Construction, based out of Mesa, submitted multiple invoices to the city last summer for roadwork costing $171,888. When the company didn’t receive payment on time, Vincon notified Chandler of its unpaid debt. 

While the city is paying the company $100,000, Vincon will be out $72,000. The company’s lawyer did not reply to an Arizonan request for comment.

The city initially responded to Vincon’s claim by stating it already paid its invoices. But the company assured Chandler no payments was wired to Vincon’s bank account.

A subsequent investigation revealed someone claiming to be with Vincon emailed the city, asking all future payments to Vincon be deposited into a new account through an automatic clearinghouse network.      

The email appeared legitimate to city staff and they obliged by rerouting Vincon’s payments to the scammer’s account. 

“The city and Vincon essentially were defrauded,” said Matt Burdick, a spokesman for the city, adding the suspected scammer has not been apprehended and its unlikely Chandler will get its money back. 

Vincon filed a notice of claim against the city in October in order to recoup the money it should have been paid. The company argued it was not at fault for the scam and felt Chandler should pay all of its outstanding invoices.

On Thursday, the Chandler City Council unanimously agreed to settle Vincon’s claim by paying the company $100,000.

 About 75 percent of the settlement will be paid by the city’s insurance provider, making the city liable for paying a $25,000 deductible.  

“Our losses could have been much greater,” said Councilman Terry Roe, “I’m happy this wasn’t worse than what it was.”

Dawn Lang, the city’s management services director, said this is the first time Chandler has fallen victim to this type of scam. 

When the city first got the scammer’s email, Lang said a city employee emailed someone from Vincon to verify it wanted to change where payments were being deposited. But the city did not get an immediate response, Lang said.

As a result, the city has added a protocol requiring staff to now call contractors over the phone to verify any requests like this.  

“The whole experience absolutely caused us to reevaluate all of the electronic methods and make sure we add this additional step,” Lang said, “and got changed immediately when we realized what had actually happened.”

The city will now only send physical checks to Vincon through the mail instead of using an automated clearinghouse. 

Most of the city’s contractors receive payments electronically, Lang added, because it’s thought to be safe, quick, and convenient.  

The city’s information technology department regularly trains employees on how to protect sensitive information and spot suspicious emails. 

Lang said she often gets emails from scammers impersonating other city employees and is able to detect them pretty quickly.

 The scammer, in this case, presented themselves very legitimately, she said, raising the city’s alarm to be a little more vigilant.  

“This is the first time this has ever happened in the city of Chandler and we take it very seriously,” Lang added. 

Steve Pass, a Chandler resident, thinks the city is more at fault for the scam and urged the council to reimburse Vincon all $172,000. 

“It’s a monumental screw-up,” Pass told the council last week.

Chandler is not the only city in the country to be recently tricked into sending money to online scammers. 

Two cities in Florida mistakenly gave away more than $700,000 last year to someone pretending to work for a construction contractor. 

Last month, a Colorado town lost more than $1 million in funding intended to pay for a new bridge. Town employees wired the money to an account they thought belonged to the contractor. 

The City of Chicago almost lost $1.5 million last year in a phishing scam, but authorities managed to recover the money. 

Like in Chandler, these other municipalities had been duped by an email convincingly looking like it was from a contractor.

Data collected by the FBI shows the amount of money lost to email scams has increased by 136 percent. More than $12 billion was lost worldwide between 2013 and 2018.

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