Lexington recovers $4 million in stolen funds, vows to beef up security
A week after cyber criminals diverted nearly $4 million in rental assistance funds from Lexington city accounts, the city announced Friday they have recovered the funds.
The missing money — $3,905,837.05 — was seized from a private account, and refunded to Lexington on Friday.
The city originally intended to transfer the federal rent assistance and transitional housing funds to the Community Action Council. The money was diverted into a private account by criminals, who inserted themselves into electronic communication between city officials and Community Action staff and provided false transfer information.
“This kind of theft is all too common everywhere,” said Lexington Police Sgt. Brad Williams, who heads the department’s financial crimes division. “We are fortunate to find this money. Often, the funding cannot be recovered.”
After the cyber heist was discovered, Lexington Police Department, the FBI and Secret Service launched an investigation and froze the account where the money was transferred.
The federal agencies and the police are still investigating and have not made any arrests as of Friday, city officials said.
Investigators have no evidence of criminal involvement of city or Community Action employees, city officials said. Community Action oversees many city programs, including eviction prevention programs.
Meanwhile, the city is reviewing and beefing up its procedures and security to make sure future attempts to steal electronic transfers are stopped.
“We are closely examining our procedures, and are taking additional steps to prevent fraud, from inside or outside the government,” said Finance Commissioner Erin Hensley. “We have started additional training within the department to keep cybersecurity a central focus. In addition, our outside auditors are conducting independent tests of our procedures and will make recommendations for improvements.”
The Secret Service is also reviewing the city’s procedures.
Lexington Mayor Linda Gorton said multiple state and federal agencies and groups inside government have worked to recover the funds and make sure it doesn’t happen again.
“The Lexington Police Financial Crimes Unit, several financial institutions, our Departments of Finance and Information Technology, and local FBI and Secret Service offices have played pivotal roles in the recovery of these funds,” Gorton said. “We appreciate their expertise and swift response.”
