The City of Hamilton continues to be fooled by invoice scams involving thieves posing as legitimate vendors and requesting that the City pay invoices to a new bank account.
According to a report by the City’s audit staff, the City has been the victim of this type of fraud three times in the past year alone.
CityHousing Paid $552,000 to a Fraudster in a Calamity of Errors
In March 2024, CityHousing Hamilton paid $552,000 to a fraudster impersonating a vendor.
“In March 2024, shortly after the City of Hamilton’s cyber security incident, CityHousing Hamilton realized two vendors had their electronic funds payment amounts transposed in the data that was submitted to the bank, resulting in one vendor being paid about $137,000 instead of about $552,000 (an underpayment of about $415,000) and the other vendor being paid about $552,000 instead of about $137,000 (an overpayment of about $415,000),” reads an audit report being presented this week.
When CHH staff realized their error, they contacted the vendors, only to discover that the $552,000 had been sent to a fraudulent bank account.
To make matters even worse, two weeks before the scam, the vendor emailed CityHousing, “advising that they had experienced a security breach and asking CHH to call them if any requests to change their banking were made.”
Money Traced $417,000 Recovered
The City quickly secured Norwich Orders requiring banks to turn over information about the flow of the stolen funds. This enabled the City to “follow the monies transferred to other banks until substantial funds were located in one particular bank account, which were frozen through the use of a Mareva Injunction.”
CityHousing to Implement Basic Financial Control Procedures
The City’s auditor recommended that a senior-level supervisor position be created to oversee the finance staff’s work, that controls be implemented regarding changes to vendor information, and that more than one staff member be involved in payments of “material dollar amounts.”
These recommendations are being implemented.
The CityHousing Hamilton Board of Directors will review the audit report during their upcoming meeting on April 22. Council will review the findings at the May 1st Audit, Finance, and Administration meeting.
The CHH Board meeting begins at 10:00 a.m. on Tuesday and will be livestreamed on YouTube.
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Published: April 21, 2025
Last updated: April 21, 2025
Author: Joey Coleman
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v. 1.0.0 original version