City turns to investigation on how $1.04M was transferred to fraudster posing as construction CFO

The City of Saskatoon is continuing to make progress on recovering $1.04 million that was defrauded from them in an email scheme.

After reporting that the “vast majority” of the funds had been frozen in 10-15 bank accounts via a court order on Monday, city manager Jeff Jorgenson told Gormley on Tuesday that approximately $95,000 had already been returned voluntarily to city coffers.

“The progress has been shockingly positive,” Jorgenson said, noting the banks have acted quickly to help hold the funds in place and track the accounts involved.

With most of the money in their sights for recovery, he said the city would focus on recovery efforts rather than an insurance claim that was filed directly after the fraud was discovered.

The money initially went missing after a fraudster impersonated the chief financial officer (CFO) of Allan Construction, requesting a change in banking information to city staff at the end of July.
Staff complied, and the next payment intended for the company — $1.04 million as a continuance payment for the Senator Sid Buckwold Bridge rehabilitation project — was sent to the fraudulent account on either Aug. 7 or 8.

Jorgenson said with legal teams, police and banks working on fund recovery, the city itself can now turn attention to investigating exactly how the fraudulent email was successful.

“What was the control? Who had signed off on the control? Who utilized the control to make this change?” he cited as questions that were being asked as part of the internal probe, during a news conference on Monday.

Mayor Charlie Clark told 650 CKOM’s Brent Loucks, that city council is expecting a complete report on the situation by next week.

“Was this a case where someone didn’t follow a control? Or was there a control that was not in place that should have been in place?” he asked.

The mayor noted the embarrassment of the situation, but said Saskatoon can now act as a warning to other municipalities in the future.

He added, email schemes are becoming more common across the board, and business leaders he’s spoken with since the fraud became public have been understanding.

“I ran into executives from some of the larger corporations in the city, who all sort of looked at me with a knowing nod and said, ‘yeah, we know exactly what you’re going through right now,’” Clark recounted.

However, the mayor said he’s pleased to see progress in the fund recovery process. He suggested the city’s commitment to being transparent with the public has benefitted the attempt to claw back the money from the fraudster.

“Some other cities have not gone public when money has gone missing, and it’s taken a lot longer to trace it,” he said.