Thestatement from the office of Arab Mayor R.D. “Bob” Joslin said it was a “sophisticated, socially engineered phishing scheme involving a fraudulent payment connected to the construction of the new Recreation Center.”
One or more perpetrators posing as a “legitimate officer of FITE Construction (the contractor building the City’s Recreation Center) successfully misrepresented themselves and caused a fraudulent payment in the amount of $432,739.21 to be issued to the unauthorized entity.”
The fraud was detected internally and has led to a broader investigation.
“Upon discovery, the City immediately began an internal review and confirmed that this was a one-time occurrence involving a fraudulent invoice and payment redirection scheme,” the city said. “No private personal data, employee information, or citizen data was accessed, compromised, or obtained.”
The incident involved only one financial transaction, the city said. Officials say they have implemented additional safeguards and enhanced verification procedures to prevent similar incidents in the future. The matter is under active investigation by the Arab Police Department, the Alabama Law Enforcement Agency (ALEA), the Federal Bureau of Investigation, the Department of Homeland Security and the United States Secret Service.
The city says it’s also working closely with its bank and the recipient’s bank in an effort to attempt to recover the funds. The City’s IT professionals have conducted a review of municipal technology systems and have confirmed that city systems remain secure and operational, while further safeguards have been implemented.
“As part of the investigation, we have been made aware that similar fraudulent schemes have recently impacted other municipalities and school systems, and there appears to be a broader pattern of such incidents occurring across the nation, with indications that the origin of these schemes may be overseas,” the city said.
“The City of Arab is deeply concerned about the theft of taxpayer funds and is committed to pursuing every available avenue to recover the money and hold those responsible accountable. Because this remains an active and ongoing investigation, certain additional details cannot be disclosed at this time,” the statement from Mayor Joslin said. “The City will provide additional information as it becomes available through the criminal investigation and as permitted by law enforcement authorities. We want to reassure our citizens, employees, vendors, and community partners that this was an isolated financial scheme involving invoice fraud and did not involve a breach of personal or confidential information.”
The city said Mayor Joslin and the City of Arab “remain committed to transparency, fiscal responsibility, and the protection of public resources. While this is an ongoing investigation, all questions should be directed to APD Chief Shane Washburn.”
Arab is a city of more than 8,000 people located mostly in Marshall County and partially in Cullman County, about 30 miles south of Huntsville.
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