Burlington recovers most funds following half-a-million dollar fraud incident

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Published December 13, 2023 at 1:06 pm

burlington recovers most funds lost in fraud incident

The City of Burlington recently announced that it’s recovered 84 per cent of funds that it lost following a significant fraud incident in 2019. 

The city made the announcement following a Dec. 12 council meeting. 

A report presented to council says that in May 2019, the city discovered that it was defrauded out of $503,026.66 after making a payment to a falsified bank account that it believed belonged to an established city vendor. 

The report says the money was sent after the city received a “complex phishing email” requesting a change to the banking information of a client the municipality was familiar with. The money was sent in the form of an e-transfer on May 16 of that year. 

The city says the unauthorized payment was reported to its financial institution and the Halton Regional Police, adding it put additional internal controls in place to prevent this type of fraud from occurring in the future.

After the fraud was discovered, staff also worked to recover the funds and the city’s legal services department kept council updated regarding the incident and ongoing response.

The report says the city recovered an additional–and most likely final–$100,000 in November 2023, bringing the total amount of recovered funds to $422,641.67.  

In a news release, the city said efforts to recover the funds included making a claim to its insurer pursuant to its cyber crime policy, the commencement of a Superior Court of Justice action and the negotiated restitution in the criminal proceedings. 

Prior to last month, $322,641.67 was recovered in 2020.

According to the report, three individuals were charged in connection to the fraud, but only one person has faced criminal proceedings. The charges laid against the other two suspects were withdrawn.

The city asked the Crown for a restitution order in its favour as part of the criminal proceeding resolution, which led to the recovery of the most recent $100,000.  

The city said the 84 per cent recovery rate is “relatively high” and the most that can be expected at this point. 

“Being able to recover a significant portion of the remaining outstanding funds is good news for our community in this case. On behalf of Council, I hope this will bring an additional sense of relief to the Burlington community,” Mayor Marianne Meed Ward said in a statement.

“I want to thank the quick action of city staff and Halton police in their efforts in recovering as much of these funds as possible. City staff have also secured our internal controls and processes to substantially strengthen our prevention efforts for the future, particularly as cyber-attacks become more common.”

The report says the total financial impact to Burlington is $110,406.85, which includes the unrecoverable amount plus legal and investigative expenses related to the recovery of the funds to date. 

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