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CO Town Loses $1M to Bridge Scammers

Friday, February 21, 2020

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After experiencing a $1 million scam, the town of Erie, Colorado, has been informed that its two insurance carriers—Colorado Intergovernmental Risk Sharing Agency and American International Group, Inc.—will not cover the expensive mistake.

“We have a $2 million policy and [AIG is] covering $100,000," Erie Mayor Jennifer Carroll said. "That’s just ridiculous in our minds."

The Scam

On Oct. 21, 2019, a scammer acting as SEMA Construction—the company responsible for the construction of the new Erie Parkway Bridge—supposedly submitted an online request form on the town’s website requesting that payment for the work be sent electronically instead of by check.

Without checking the information with SEMA, an Erie finance division employee approved the request, sending two payments totaling a little over $1 million to the online account specified on Oct. 25.

While a ribbon-cutting ceremony was held for the opening of the bridge in November, on Nov. 5 the town was informed about the possible fraud. SEMA later confirmed that they never received payment for the project, nor did they submit a request to change the form of payment.

In lieu of this news, town administrator Malcolm Fleming notified both the Erie Police Department and CIRSA, in addition to the town’s insurer to file a claim.

Since the incident, the Erie finance division employee has resigned.

Through investigations held by the police, insurance agencies and the FBI, it was discovered that the money had been transferred to a Citibank escrow account, where it was then transferred out of the country, using a Canadian Internet Service Provider.

Further investigation led authorities to an attorney in Florida who owns the Citibank account and facilitates business transactions. According to the attorney—who is also seen as a victim—they were contacted by the suspect who claimed to be building soccer stadiums and needed to escrow funds to assist contract costs.

Since the incident, the town has paid SEMA the $1 million it was owed.

What Now

At the end of January, 9NEWS reported that while CIRSA issued a $150,000 check to cover the deductible for AIG’s policy, the town of Erie will remain at a loss of $850,000.

“That’s going to affect all future transportation projects that we had planned for this year and probably even the next coming year," Carroll said, "so that’s why it’s really important for us as a growing town."

Previously, the mayor added that although the town hadn’t intended to involve taxpayers in covering the loss, the lack of aid from the insurance agencies has inevitably caused them to recant that decision, creating an impact on local taxpayers.

   

Tagged categories: Bridges; Bridges; Business management; Business matters; Business operations; Completed projects; Finance; Insurance; NA; North America; Program/Project Management; Project Management

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