Newport loses $330K in fraudulent web scheme
Newport officials said the city lost $330,000 after an investigation found it was the victim of a fraudulent web-based scheme that resulted in the wrongful transfer of city funds.
Photo courtesy CITY OF NEWPORT
NEWPORT — Newport officials said the city lost $330,000 after an investigation found it was the victim of a fraudulent web-based scheme that resulted in the wrongful transfer of city funds.
The city has notified appropriate law enforcement authorities. The matter, which happened around Feb. 11, remains under active investigation, Newport officials said in a Thursday press release.
“This is a deeply concerning situation,” said Mayor Keith Campbell. “We recognize this could represent a significant loss of taxpayer dollars. We take our responsibility to safeguard public funds extremely seriously.”
Preliminary findings indicate that the funds were obtained through a sophisticated online scam, Newport officials said.
At this time, there is no evidence that residents’ personal information was compromised. The incident appears to be limited to municipal financial transactions.
The theft has been reported to local and state law enforcement as well as other appropriate authorities. It is likely the Federal Bureau of Investigation will be brought into the investigation, Campbell said.
In addition, Newport officials said they have initiated a comprehensive review of internal financial controls, policies and procedures. City officials have also begun identifying and implementing additional safeguards for electronic payments and vendor verification processes.
Campbell said city officials will provide updates as appropriate while maintaining the integrity of the investigation.
Newport is the latest city to be hit by online scammers, with Clark Fork losing more than $480,000 in November 2023 after the city mistakenly transferred funds to a scammer impersonating a construction contractor’s manager.
The fraud occurred when Clark Fork officials paid a bill for excavation work associated with improvements to the city’s drinking water infrastructure. The city soon discovered it had mistakenly transferred funds to a scammer impersonating the excavation firm’s manager. Ultimately, Clark Fork was able to recover about $192,937.22 of the total $483,519.12 that had been misdirected to a threat actor.
The Clark Fork incident remains under investigation by the Federal Bureau of Investigation.
As a result, the city’s officials said a possibility remains that additional funds may be recovered. However, a timeline for that investigation is uncertain.