Mansfield finance director says city has recovered nearly all $748K from email fraud

MANSFIELD — City of Mansfield Finance Director Kelly Converse told City Council members Tuesday she is confident the city will recover all $748,145 stolen in an fraudulent email phishing scheme in May.

In an email, Converse provided an update “regarding the Business Email Compromise (BEC) fraud incident previously reported.”

In the scheme, the Mansfield finance department was scammed into sending a payment intended for a vendor to a fraudulent bank account.

Converse said someone impersonating the vendor contacted the finance department and requested they update the information used for electronic deposits. Believing the request to be authentic, an employee in the department processed the change.

Blankenship said the payment was sent on May 22. The financial institution receiving the payment flagged it as suspicious, froze the receiving account and reported the incident to the city’s bank. However, Blankenship said Mansfield officials weren’t notified until May 29.

(Mansfield Finance Director Kelly Converse discussed an email phishing scheme when she was a guest in June on the News Man Weekly podcast. The conversation with Converse begins around the 33:04 mark of the show.)

“Through close collaboration with law enforcement, our banking partners, and our insurance carriers, we are pleased to report that the City of Mansfield has recovered most of the funds impacted by this fraud,” Converse said in the email to council members.

Specifically, she said:

—  $536,320 was traced and successfully recovered by the bank where the fraudulent account had been opened. “This is a rare occurrence, we were told,” Converse said.

— $200,000 was reimbursed through the city’s primary insurance coverage.

— The remaining $11,825 has been submitted under a separate insurance policy. “We are confident in reimbursement,” she said.

Converse said she is “grateful for the swift and diligent work of our financial institutions, insurers, and investigative partners in helping us secure this recovery.”

She said her department “remains fully committed to strong internal controls and funding safeguards, having finalized and implemented a Payment Security and Fraud Prevention Policy.

“We continue to work with our IT, city administration and law enforcement partners to enhance our defenses against increasingly sophisticated cybercrime threats,” Converse said.