New information in investigation of $4 million stolen from the City of Lexington

Investigators say city employees received emails from a sender they thought was Community Action Council

LEXINGTON, Ky. (WTVQ) – The City of Lexington has released new details in the investigation of $4 million in federal funds stolen from a city account. The money included federal rent assistance and transitional housing funds for Community Action Council. Investigators say someone or a group of people, wire transferred the money into a private bank account.

According to the City, it happened after city employees received emails from a sender they thought was Community Action Council with new bank information. Investigators say the employees not realizing the bank information was bogus, sent three wire transfers totaling about $4 million to the fake bank address. According to the City, the Lexington Police Financial Crimes Unit, local FBI and Secret Service continue to investigate the theft.

“This kind of theft is all too common everywhere. It happens all the time to businesses, universities, non-profits, governments … no one is immune,” said Sgt. Brad Williams, who leads the Police Department’s Financial Crimes Unit. “It is officially called a business email compromise scam.”

Erin Hensley, Commissioner of Finance, said the financial institutions that are involved acted swiftly to freeze the private account, working late into the evening on Aug. 25. “We greatly appreciate their cooperation,” she said.

Mayor Linda Gorton has also ordered an in-depth examination of the city’s internal wire transfer processes through the Division of Internal Audit. Additional steps are under consideration.

“The government is a victim of a crime at a time when it is partnering with agencies across the community to provide critical financial assistance,” Gorton said. “Cybercrime is a growing problem around the world. We must be sure government employees are well trained to detect it.”

Currently, the city believes there was no criminal involvement of City or Community Action Council employees. “However, this an active investigation and facts continue to emerge,” Gorton said.

The City is working through the fund recovery process and to help Community Action Council ensure continuity of housing assistance, she said. Wire transfers of cash to CAC have been suspended until the investigation is complete.