Chetek, Wis., falls victim to $2.6M wire fraud scheme; all funds recovered

Chetek, Wisconsin, city officials say they’ve gotten their money back after a fraudster tricked the city into wiring $2.6 million under the guise of making a payment for ongoing wastewater treatment plant construction.

The city first became aware of the fraud in November and quickly alerted local, state and federal authorities, a news release states. At this time, investigators believe the fraud only extended to a single wire transfer, and no municipal computer systems or financial accounts were infiltrated.

Officials said the fraud suspect created an email account that resembled that of the city’s general contractor, Market & Johnson, and contacted a company that was partnering with the city on the wastewater treatment plant. The fraudster told the company that Chetek needed to use new, fraudulent wire instructions that were then forwarded to the city.

“The misdirected wire was believed to be a legitimate payment toward the ongoing construction costs associated with the [wastewater treatment plant],” the news release states. “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.”

The city said it secured a loan to avoid any disruptions to the wastewater treatment plant project, and financial institutions informed the city on March 1 that all $2.6 million had been recovered.

New cybersecurity measures are being taken to prevent future incidents, including bolstering fraud and virus detection capabilities and training employees to identify phishing schemes.

The city says it is weighing its legal options while the investigation continues.