$1.29 million missing from Galveston County Consolidated Drainage District after cyber theft • Friendswood PD, FBI investigating how thief used district email and forged documents to gain access to bank account The Friendswood Police Department and the FBI are investigating how someone or some group was able to gain access to the bank account of the Galveston County Consolidated Drainage District and managed through a series of wire transfers to steal nearly $1.29 million of tax dollars. The Galveston Consolidated Drainage District is responsible for flood mitigation projects along Clear Creek and other tributaries in Friendswood and a portion of League City. The district encompasses more than 20 square miles of northern Galveston County and maintains more than 80 miles of creeks, ditches, bayous, and subdivision detention ponds. Rusty Burkett, the president of the district’s board of directors, said that someone was able to clone the district administrator's email and then, without going to the bank or talking to someone in person, add a fictitious chief financial officer to manage access to the district’s bank account. “No one knew about, nobody knew who he was,” Burkett said. “They did all of this by email. The bank never required them to come in to meet this guy. Never came and signed anything with original ink. “(They) forged all the board of directors’ names, forged a resolution, and submitted it by email only.” The fraudulent wire transfer orders were done between November 7 and November 27,” said the district’s CEO and General Counsel, Paige Bailey. There were wires sent on November 7, November 14, November 20, and November 27. Bailey said that it was only when a fifth wire was requested on December 10 that the bank called the district to verify whether the transfer request was legit. Hometown Bank President and CEO Allan Rasmussen, Jr. cited pending litigation for declining to respond to the district’s allegations of bank negligence. Burkett said the theft could have been thwarted if HomeTown Bank had required the fake CFO to come in person or verify the email requests by calling the district. None of which happened, he said. Moreover, Burkett said the drainage district had never transferred money via wire before, which should have been a red flag. The roughly $1.29 million stolen amounts to about 18% of the district’s annual operating funds. Bailey said the district collects between $6 million and $7 million in annual property tax dollars and fees. Burkett said that despite the large amount of funds missing, operations of the district and its ongoing projects are not affected by the the theft. He also pledged that the district would somehow recoup the stolen money. Meanwhile, Friendswood police haven’t been able to locate a suspect or confirm where the money went. Friendswood Police Department Public Information Officer Taylor McCombs said the investigation is ongoing. As is policy, the FBI does not comment publicly on ongoing investigations. Bailey said changes are coming in the wake of the theft. First, the district removed its accounts from HomeTown Bank, and more layers of internal financial checks and balances are under review. Spoof emails that allow tax dollars to be wired to a thief or criminal organization are an ever-present threat. The FBI’s Internet Crime Complaint Center estimates that such scams accounted for $55.5 billion in global theft from government organizations in the past decade. In recent years, the City of Galveston and the Galveston County government finances have each been the victims of similar thefts. There has been an arrest in the City of Galveston case. Fawn S. Sloan, 52, of Kentucky, was arrested for her part in a phishing scam that misdirected nearly $600,000, which was to be used to purchase garbage trucks for the city. In 2018, a similar scam allowed someone to pose as a Galveston County vendor to steal $525,000 after the now dismantled County Treasurer’s Office staff didn’t follow security procedures to verify the validity of the transaction. No arrests or identification of suspects have been made in that case.

Posted by i45NOW TJ Aulds at 2025-01-14 20:44:16 UTC