City of Saskatoon loses $1M to fraudster posing as executive

The City of Saskatoon is reviewing its procedures after falling prey to a fraudster who stole $1.04 million by posing as a construction company executive.

The city called an “urgent” news conference on Thursday to announce the unprecedented loss and to warn others in the community.

City manager Jeff Jorgenson said to his knowledge this type of theft has never happened at city hall before.

He said the city is focused on recovering the money.

The fraudster impersonated the chief financial officer of a prominent construction company to advise the city of a change in banking information. The payment of $1.04 million was sent to the fraudulent account.

“Right now the focus is on the recovery of funds,” Jorgenson told reporters packed into city hall’s media room.

“The banks are working on it. The police are working on it. We have our internal auditor working on it as well. So that’s where our priority is.”

City hall found out about the fraud on Monday. Jorgenson said he could not reveal further details because there is an ongoing police investigation. He would not name the construction company.

Jorgenson said a lot of the information on city contracts is made public, so city hall needs to ensure it has proper processes in place to protect against fraud.

City hall staff have spoken to experts since the fraud was discovered to try to determine the probability of recovering the lost money.

“What I would say is that we’re chasing down every lead, cautiously optimistic that we will be able to recover a significant portion of the funds,” Jorgenson said.

Jorgenson said the contract with the company is not affected by the fraud and city hall still owes the money to the contractor.

“Clearly, the control that was used wasn’t strong enough to prevent (the fraud),” he added. “What I would say is internal and external staff who are experts in this area are reviewing all financial processes and controls in this area.”

The fraud began a “handful” of weeks ago and involved a single payment, Jorgenson said. No city employee has been disciplined because of the incident, but a human resources investigation will happen after the police investigation, he said.

Mayor Charlie Clark, who also appeared at the news conference, said he is optimistic the money can be recovered because the fraud was identified early.

“It’s a million dollars of taxpayer money,” Clark said. “The world’s changing quickly. The way that identity theft and the way some of these issues are happening can affect anybody. We are going to make sure it never happens again at the city.”

Police sent out a news release on Tuesday warning residents about schemes.

This type of fraud, like the one at Saskatoon city hall, is a type of phishing scam known as whaling because high-level targets are being duped.