Recently Announced Wire Fraud Situation

12/15/2020     

To: Mount Air Water District Residents

Re: Recently announced Wire Fraud situation

Dear Residents,

We recently discovered and revealed a suspected wire transfer fraud against the Mount Air Water District. On or around 10/28/2020 it was discovered that a payment we were attempting to make to our legal counsel was intercepted and funds were transferred into an unknown account.

This incident has been the subject of investigation by several entities, including our bank’s wire fraud division, the recipient bank’s wire fraud division, Sharon Township police, and the Franklin County Sheriff’s Office’s cyber crimes division. As this is an active investigation I will share what I can as it becomes known to me.

We know that not all of the funds made it to the incorrect account, so it is likely some, though likely not all, is recoverable. It can take up to 90 days to get the detail as to how much is being held. The invoice amount was around $26,200.

The invoice being paid was a genuine one and we had had numerous communications via email and other concurrent phone calls/meetings with counsel’s office over a period of weeks, where in part, timing and payment of the invoice was discussed. Some of these emails were genuine and sent from counsel, and some were apparently “spoofed” from those same email addresses by some unknown outside party. Our counsel was not aware that their Windows 365 account had been hacked and that emails were being sent out on their behalf.

Due to COVID-19 safety precautions, our bank allowed a wire transfer to be set up remotely (without entering the bank) and did not adhere to our 2-signer policy. Our District bylaws requires 2 board members to sign all checks and process payments. The wire transfer should be handled no differently. Had two of us reviewed and approved the bank information for the wire I have no doubt that this incident would not have occurred. The bank is aware of that. The day the transfer was initiated I was not aware it was proceeding nor did the bank contact me for remote approval. The District member initiating the transfer was responding to the urgency of the emails and working under the assumption that the bank was following our regulations.

We have an errors/omissions insurance policy for the District that is reviewing our possible claim but it is unclear at this time if this would be a covered claim. We will continue to follow up with our bank about their error in the processing and hold them accountable as we are able.

This is an unfortunate but increasing type of crime that has been perpetuated upon us and I deeply regret that we have to deal with this on top of all of our necessary expenses to get our water system built. I have no doubt that we will find a way to resolve it that minimizes our exposure.

The board will be meeting in January (time and date TBD and announced) to discuss and decide upon any actions that require consensus. We hope by that time we know more about the police investigation findings, bank investigators’ findings, the “recoverable” dollar amount, as well as our insurance’s stance on coverage. After more detail is known we will know what decisions need voted on. We can consider retaining an attorney to pursue a few avenues but also need to weigh that in balance with minimizing any further financial loss. We will look for input from residents on that as soon as we have a better idea what the losses could be.

In the meantime, our banking relationship manager is aware of and will absolutely adhere to our District Bylaws in relation to any payment processing. I will personally confirm any change in payment method and location requested by any vendor in person or by phone. At this point checks will be our only method of payment.

This incident was initially discussed in the Sharon Township Trustee meeting on November 4 as part of a standing agenda item (Water District Updates). It was also discussed in the monthly DelCo/District Update Meetings on November 12 and December 10, 2020. We will continue to utilize these multiple venues to communicate updates in addition to our District website and the quarterly District Board meetings.

Please reach out if you have specific questions that have not been addressed in our communication and I will do my best to get answers, if they are yet known.

My cell is 614-395-7009 and email is lkunze5@gmail.com.

Sincerely,

Laura Kunze
President, Mount Air Water District