City officials admit they were scammed out of $773,000
Topline: The City of Memphis, Tennessee was defrauded of $773,000 in a phishing scam in 2022. Taxpayers are just finding out now because former Mayor Jim Strickland’s administration kept the information from the public.
Key facts: An online scammer pretending to be city vendor Zellner Construction asked a Memphis accounts payable employee to wire $773,695.45 to a private bank account in February 2022. A spokesperson told WREG that the city was operating under COVID-19 protocols that “relaxed” the procedures for wiring money.
Once the city realized the mistake, it was too late to retrieve the cash, the spokesperson said.
The scam was revealed when a city councilman mentioned it during a public meeting this June, and officials confirmed the details to several news outlets on July 17 — over two years after the incident.
Memphis spent $40.1 million on its contracts with Zellner Construction between 2020 and 2022, according to records at OpenTheBooks.com.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
Critical quote: City Councilwoman Jerri Green, who was elected after the incident took place, told WREG, “We have to make sure we are taking care of the taxpayers’ dollars. That’s our number one job, is to be good stewards of their funds. To learn we’ve been taken advantage of in some way is very disturbing.”
Supporting quote: “These scams are very sophisticated and ever evolving,” said financial officer Walter Person. “After discovery of this incident in early 2022, we returned to our pre-COVID protocols, including verifying the proper notary indicia, telephonic verification of multiple data points for all wire transfers, and periodic phishing scam training sessions with our I-T security team.”
Background: Memphis spent over $947 million paying almost 11,200 outside vendors in 2022.
Only 216 of those payments were for more than $773,000, the amount lost to the phishing scam. Any of the other transactions could have been paid for with the stolen money.
Summary: Most taxpayers can spot an online scam when they see one. City financial officers should be a bit more perceptive — and at least be transparent with the public when they are not.
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