After Scam Causes County $313K Loss, Policies Put Into Place
May 26, 2022 at 9:16 p.m.
After Scam Causes County $313K Loss, Policies Put Into Place
By Dan Spalding-
County officials confirmed Wednesday that the county lost the money after falling victim to a fraudulent billing request.
The theft came in the form of a fraudulent Automated Clearing House (ACH) request in which the perpetrator imitated a vendor for Kosciusko County government seeking payment of invoices. An ACH transfer is the electronic movement of money between banks through the ACH network.
The scam began April 7 when the county administrator's office received a request for payment using ACH, but with a different routing number.
The auditor's office then included the request among other ACHs being issued at the same time.
The bills were sent on April 26, and officials realized there was a problem three days later.
A representative of the county's insurance carrier had requested no publicity on the issue during the investigation.
Police were notified. An internal investigation turned up no leads, and the county's insurance has indicated it will not cover the loss.
According to County Commissioner Cary Groninger, new rules include double and triple-checking information, contacting the recipient ahead of issuing payment and even using a small test transfer to ensure it's going to the intended recipient.
Money lost in the scam came from the county's American Rescue Plan Act (ARPA) fund, some of which is being used to pay for much of the county's emergency communications upgrade. The vendor whose information was used in the fraudulent scheme was J&K Communications of Columbia City, which is a key player in the overall project.
Since the loss of the money would not be a qualifying ARPA expense, the county will likely have to come up with money from another source to pay the actual bill, Groninger said.
“We feel sick about this,” Groninger said. “We realize that these are taxpayer dollars that people have worked hard to earn and they’re entrusted to us at the county level to be good stewards of those tax dollars.”
He said staff has taken the issue to heart and that the county will continue to refine the processes to ensure it won’t happen again.
“Through this, the processes we’re putting in place we’re going to be better because of it,” he said.
County officials confirmed Wednesday that the county lost the money after falling victim to a fraudulent billing request.
The theft came in the form of a fraudulent Automated Clearing House (ACH) request in which the perpetrator imitated a vendor for Kosciusko County government seeking payment of invoices. An ACH transfer is the electronic movement of money between banks through the ACH network.
The scam began April 7 when the county administrator's office received a request for payment using ACH, but with a different routing number.
The auditor's office then included the request among other ACHs being issued at the same time.
The bills were sent on April 26, and officials realized there was a problem three days later.
A representative of the county's insurance carrier had requested no publicity on the issue during the investigation.
Police were notified. An internal investigation turned up no leads, and the county's insurance has indicated it will not cover the loss.
According to County Commissioner Cary Groninger, new rules include double and triple-checking information, contacting the recipient ahead of issuing payment and even using a small test transfer to ensure it's going to the intended recipient.
Money lost in the scam came from the county's American Rescue Plan Act (ARPA) fund, some of which is being used to pay for much of the county's emergency communications upgrade. The vendor whose information was used in the fraudulent scheme was J&K Communications of Columbia City, which is a key player in the overall project.
Since the loss of the money would not be a qualifying ARPA expense, the county will likely have to come up with money from another source to pay the actual bill, Groninger said.
“We feel sick about this,” Groninger said. “We realize that these are taxpayer dollars that people have worked hard to earn and they’re entrusted to us at the county level to be good stewards of those tax dollars.”
He said staff has taken the issue to heart and that the county will continue to refine the processes to ensure it won’t happen again.
“Through this, the processes we’re putting in place we’re going to be better because of it,” he said.
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