Wisconsin City Mistakenly Wires $2.6 Million to Scammers, Officials Admit

The City of Chetek, Wisconsin, has been the victim of a $2.6 million scam, city officials announced in a press release. The city mistakenly wired the money to scammers, thinking it was paying for a Chetek Wastewater Treatment Plan project, the release says.

“The City of Chetek has been constructing the Chetek Wastewater Treatment Plant since May 2023,” the March 13 news release said. Chetek is a small community located in northwestern Wisconsin.

“This public infrastructure plant is important to the long-term health and safety of the residents of the city and provides opportunities for further economic growth of the community,” it says.

Here’s what you need to know:

The City of Chetek Wired $2.6 Million to a ‘Fraudulent Actor,’ City Officials Say

ChetekThe City of Chetek press release.

In November 2023, city officials “became aware that the city had been the victim of a wire fraud scheme, which resulted in the city wiring $2.6 million to a fraudulent actor,” the release says. “The misdirected wire was believed to be a legitimate payment toward the ongoing construction costs associated with the WWTP. However, we are glad to report that city officials, working closely with banking partners were recently able to recover the total amount of the misdirected wire.”

Upon “discovery of the fraud, the city took swift action. It first alerted local and state law enforcement and the FBI. It alerted every financial institution involved with the city’s accounts and the WWTP project,” the release says.

“It engaged expert third-party forensic analysts to review the integrity of the city’s email and user accounts. Importantly, that review, which concluded in February 2024, determined both that the fraudulent actors had not infiltrated any city accounts or computer systems and that no data breach had occurred in connection with the wire fraud,” the release continues.

“The city has also informed its government partners in the WWTP at the state and federal level and has worked diligently with investigators to further their efforts.”

The City Had to Take Out a Loan to ‘Cover the Effects of the Fraud,’ According to Officials

City of ChetekChetek, Wisconsin.

The city secured a loan “to cover the effects of the fraud. It has not experience, nor does it anticipate, any interruption to the construction of the WWTP project or disruption of any other city services,” the release says. “The city’s financial partners finalized their internal processes and assessments in recent weeks, leading them to confirm on March 1, 20234, that the entire amount of the misdirected wire had been recovered.”

According to the release, the city “believes that the perpetrators of the fraud created fraudulent email addresses resembling those of the city’s general contractor, Market & Johnson, with which they contacted a separate provide company working with the city on the WWTP, representing that the city needed to use new (fraudulent) wire instructions. Those fraudulent communications were then forwarded to the city for payment on the ongoing WWTP project.”

The city has “quickly implemented additional security measures. It enhanced its fraud and virus detection capabilities, including by requiring additional phishing training for employees.”

There is an ongoing investigation, and the city is “collectively working closely with legal counsel to assess the city’s options,” the release says.

The press release was signed by Laura Stelzner, city of Chetek Treasurer and Administrator and Attorney Michael Gentry, Reinhart Boerner Van Deuren, s.c.

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