Here’s why Fresno leaders say they couldn’t publicly disclose $400k phishing scam loss
The city of Fresno fell victim to an electronic phishing scam in 2020, resulting in a loss of $400,000.
So why are public officials just now talking about it?
The electronic fraud was disguised as an invoice from a subcontractor working on the construction of the new southeast Fresno police station, Councilmember Miguel Arias told The Bee. The invoice included the subcontractor’s letterhead, and only the account numbers were different. A city staffer completed an electronic money transfer, not knowing the invoice was a fake, he said.
Fresno Mayor Jerry Dyer, who didn’t take office until January 2021, said he learned of the loss shortly before he took over as mayor. Dyer’s administration told the Fresno City Council about the loss in the first closed session meeting of 2021.
It’s unclear why former Mayor Lee Brand and former City Manager Wilma Quan didn’t disclose the loss, but Dyer said he believes it was reported in the city’s 2020 comprehensive annual financial report.
The Bee was tipped off about the loss in late 2021 and sent a public records request to the city seeking email communications about the incident. However, the request was denied, with this explanation: “The City of Fresno has reviewed its files and did not locate records responsive to your request.”
Yet, earlier this week, The Bee obtained email communications between Arias, former City Manager Thomas Esqueda, City Attorney Doug Sloan, and City Controller Michale Lima, regarding the incident, proving the records did exist.
Dyer said he wasn’t exactly sure why the city attorney’s office rejected the request, but the FBI did ask city officials not to publicize the incident so their investigation wasn’t compromised. Plus, confirming the records existed may have confirmed the existence of an investigation, he said. The FBI has a longstanding policy to neither confirm nor deny an investigation.
Furthermore, since the city attorney was included in the emails, they were subject to attorney-client privilege, he said.
Sloan explained that the city attorney’s office searched for the words “wire fraud.” Since those words didn’t appear in the emails obtained by The Bee, the city attorney’s office told The Bee there were no responsive records.
Dyer and Sloan insisted city staff did their due diligence.
Fresno Bee Editor Joe Kieta called the PRA denial “troubling.”
“When government officials deny the existence of records that clearly exist, it undermines public faith in the city in general and raises legitimate questions about transparency and whether those charged with handling public money are operating in good faith,” Kieta said Wednesday. “If they kept a nearly half-million-dollar loss secret for almost two years, what else haven’t they disclosed to the public?”
Dyer agreed taxpayers should know about the loss, but he said the key was timing and balance in how it was reported.
“There is definitely a need for the public to be made aware of those things. It’s always about timing,” he said. “It’s like any type of criminal act that occurs. The primary focus or the priority is the investigation, trying to arrest somebody and then notification of the public or media.”
This story was originally published March 9, 2022 at 12:23 PM.