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Report: Baltimore City was duped into paying a scammer more than $376k last year

Scammer poses as Carroll County Sheriff's Office
Posted at 12:27 PM, Feb 15, 2022

BALTIMORE — Baltimore City's Accounting and Payroll bureau was duped into paying a scammer more than $375,000 last year.

The revelations were made in a new Inspector General's Report that was released Tuesday.

According to the report, the City thought it was paying a vendor on behalf of services it provided to the Mayor’s Office of Children and Family Success.

But what really happened was the vendor's email address was unknowingly the victim of a phishing attack.

So the scammer used the vendor's email without their knowledge to contact the city and change bank information, so the city would pay the hacker's bank and not the vendor's.

All the while, the City thought it was a true representative of the vendor making a legitimate request to switch banks.

This apparently happened twice.

The first bank the scammer wanted the City's deposit to go to rejected the transaction, flagging it as fraudulent.

Then two weeks later, the scammers used the vendor's email again to contact the city and request that payments be switched to yet another bank.

Despite the first transaction being flagged, the City still went ahead and deposited $376,213.10 into that second unverified account as requested.

The Inspector General determined that the letters and voided checks submitted to the city for both bank accounts were fraudulent, and not associated with the vendor.

Turns out the City's Accounting and Payroll employees relied on information they had from the Mayor’s Office of Children and Family Success, and never had access to a list of the vendor's authorized signatories, which in this case led them to take a phone call from someone falsely claiming to be the vendor’s Chief Financial Officer.

In response to the report, the City's Finance Director vowed in future business dealings to remove different agencies as the proverbial middle man.

At the same time the City says it will require Department of Finance employees to independently verify any future bank change requests made by vendors.

The City so far, still has not paid the real vendor in full. Nearly $39,000 of the $376,213.10 in funds the city deposited into the second bank have been frozen.

The full report can be read below.