The Ketchikan Borough was scammed out of $625,125 earlier this month. According to Borough Manager Ruben Duran, the funds were intended for the contractor that recently completed turfing for Dudley Field, but was wired to a fake vendor account instead.
“At this time, it’s a criminal investigation, so I’m being careful about what is released out while they do that investigation,” Duran told the Borough Assembly at a meeting on May 6. “We do not know if the money can be reversed but we’re not the only victim in this scheme. Apparently other communities, other organizations were hit.”
Duran said a “bad actor” hacked the turf contractor’s email account. They then located an existing email chain between the contractor and the Borough, and sent new payment instructions to the Borough.
“Wells Fargo reported that the contractor, not the Borough, had been the victim of a cyber attack. There is no evidence of a breach of the Borough’s system,” Duran said.
According to the borough manager, the account that received the fraudulent payment was a bank in the United States. It was then flagged by Wells Fargo because it had received a number of transfer payments like the one from the Borough, but from different sources under a series of different vendor names.
Municipal governments across Alaska have been targeted with similar scams in recent years. A couple years ago, a scammer made off with over $250,000 from the Juneau School District. And an infamous 2018 cyberattack on the Mat-Su Borough took them offline for more than two months.
Ketchikan’s city government got hit with a very similar scam in 2019. The Ketchikan Daily News reported at the time that a spoofed email chain with a contractor seeking payment cost the city about $20,000. The city has since implemented guardrails, like giving staff specialized training to spot scam attempts.
Duran told the Assembly that the FBI is investigating the case, and a claim has been filed with the Borough’s cyber liability insurance. He also said to expect periodic updates on the case. In a phone call, the Borough’s Finance Director said it is not yet clear how much of the $625,125 will be covered by insurance.
