FBI Investigates Financial Scam Targeting City of Unalaska

Jul 16, 2019

Unalaska City Hall.
Credit Berett Wilber/KUCB

Updated 7/29/19

Federal agents are investigating how the City of Unalaska was tricked into sending an undisclosed sum of money to a financial scammer. 

City Manager Erin Reinders said the fraudulent activity was detected July 10. The Finance Department realized it had received a fake payment request from an entity pretending to have provided services to the city.

"We thought we were paying a vendor when, in fact, we were not paying that vendor. We were paying someone else," said Reinders. "I've identified that these requests are actually quite common. And this one worked [on] us, sadly."

Reinders declined to specify who made the fake request or how much money they received. But she said officials acted quickly to recover some of the money and notify the Federal Bureau of Investigation (FBI), as well as the city's attorney and insurance company. 

Now, Reinders said the FBI is investigating the crime, which isn't believed to be an inside job. The city is also evaluating its financial policies. 

"We're taking that due diligence and looking through what are some best practices that we can better incorporate into how we do the work, so we can protect ourselves against this sort of thing in the future," she said.

In a statement, FBI officials said fraudulent schemes are increasing in frequency and sophistication. They encouraged anyone who thinks they may be a victim of financial fraud to contact the FBI. 

"In the case of Unalaska, we were able to recover funds and prevent any future loss thanks to the timely and thorough response from the city administration," said the FBI statement. "We are continuing to investigate this case in an effort to identify the perpetrators."

Unalaska is now involved in at least three federal investigations. In addition to the fraud inquiry, investigators are looking into the death of a U.S. Coast Guard seaman in January and the Mount Ballyhoo car crash that killed two teenagers in May.