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B&G REPORT.

Construction payment scams: Governments watch out

Last week, Southern Oregon University put out word that it was duped out of $1.9 million by an email payment scam involving a campus construction contract.

FBI graphic

This unfortunate story has become eerily familiar. An email comes to a public entity with an address that appears to be the same as a contractor on a construction project. It tells the entity about a new bank account in which to deposit the amount due. In this case, the university wired the money to the account, then discovered several days later that the actual contractor received nothing. The FBI is investigating.


We’ve read about similar scams in The City of Albuquerque, New Mexico,  which lost about $400,000 in early spring and a Socorro, New Mexico, school, which lost $200,000. Tim Keller, the New Mexico auditor put out a warning to government agencies in early April.  Auditors in Ohio and Utah have issued similar alerts. The FBI started publishing warnings about the scam several years ago and has said that it is spreading. Its Portland office put out a press release in late May providing guidance on how to avoid being fooled.


Scammers also target businesses, but public entities may be particularly vulnerable because of the easy availability of contracting information and the frequency of construction projects. News articles within the last year have chronicled  construction payment scams affecting Appalachian State University, El Paso, Texas, the community college system in New Hampshire, an Ohio school district and a couple of counties in Utah. Daniel Salazar, a reporter for The Wichita Eagle, nicely summed up the similarities in some of these cases in early January, following up on the loss of about $500,000 to Sedgwick County, Kansas in late 2016.

 
 
 

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