Unalaska Recovers $2.3 Million After Phishing Email Scam

Sep 4, 2019

The City of Unalaska recovered much of nearly $3 million taken in a phishing email scam.
Credit Berett Wilber/KUCB

More than $2.3 million has been returned to the City of Unalaska, after a federal investigation into financial fraud targeting the local government.

Between May 15 and July 9, the city paid $2,985,406.10 to a fraudulent bank account as a result of a phishing email scam. City Manager Erin Reinders said the email sender represented themselves as a known vendor and requested a change in payment method.

When city officials realized the mistake in July, she said they notified the Federal Bureau of Investigation (FBI), as well as the city's attorney and insurance company. 

"We recognized that we had been transferring funds that were in response to legitimate invoices from a known vendor into an account that was not the vendor's account," said Reinders.

While Reinders would not specify the legitimate vendor, she said they have since been paid in full.

Federal officials were able to recover $2,347,544.43 of the nearly $3 million transferred to the scammer. The remaining $637,861.67 was not recovered, but Reinders said she expects the city's insurance to cover the loss.

In a statement, FBI Special Agent Steve Forrest said fraudulent schemes are increasing in frequency and sophistication. The agency encourages 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 Forrest. "We are continuing to investigate this case in an effort to identify the perpetrators."

Unalaska has been involved in at least three federal investigations this year. In addition to the fraud inquiry, investigators are still looking into the Mount Ballyhoo car crash that killed two teenagers in May, as well as the death of a U.S. Coast Guard seaman in January. Last week, another 19-year-old coastguardsman was charged with his murder.