Baltimore City Tightens Security After $1.5M Fraud Scheme

Baltimore City officials are ramping up security measures following a fraud incident uncovered in March, according to the Comptroller’s Office.

The fraudulent scheme involved two payments, totaling $1.5 million, that were mistakenly approved for a city vendor but ultimately redirected to an unauthorized bank account, as reported by The Baltimore Banner.

A bank flagged the issue after detecting the payments—one for $803,000 and another for $721,000—entering the fraudulent account. While the second payment was successfully reversed, the city has yet to recover the initial $803,000.

Authorities, including the Federal Bureau of Investigation (FBI) and the city’s inspector general, are currently investigating the case.

City officials have not yet identified the perpetrator, The Baltimore Banner reports.

The scheme unfolded over several months, beginning in the fall when an individual posing as a legitimate vendor initiated email communication with the city’s finance department. The fraudster later submitted updated banking details, complete with proper documentation and a valid tax identification number.

“The fraudulent actor started doing things such as changing account information, which is what vendors sometimes do. That part is normal,” said Baltimore City’s Deputy Comptroller Erika McClammy.

The city has not disclosed the vendor’s name but confirmed it is a regular contractor with the Department of Public Works (DPW).

Investigators discovered that the fraudster managed to evade the city’s virtual geographic boundary system, which tracks mobile devices and IP addresses. The individual used an IP address associated with Starlink, a satellite internet provider, to conceal their location.

In response to the breach, city officials have begun enhancing security protocols to prevent future fraudulent activity.

The Comptroller’s Office stated that the Accounts Payable and Finance departments are reviewing internal controls and collaborating with IT officials and the City Administrator to implement immediate security upgrades.

“The Department of Accounts Payable followed all existing verification protocols and, upon learning of this incident, took immediate action,” said Comptroller Bill Henry.

City officials are also urging vendors to strengthen their own security measures and will be providing additional guidance on safeguarding account information.

$1.5M Stolen in Baltimore City Fraud Scheme; Officials Scramble to Tighten Security was originally published on wolbbaltimore.com