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East Point reveals it was victim of huge scam
Taxpayers and some city council members were both shocked and angered by the revelations found in this audit report. Officials say they were sent four fake invoices from city email addresses to city staff asking for a total of $1.2 million to be wired to a fake company, which city employees did.
EAST POINT, Ga. - The mayor of East Point is promising more transparency and accountability after an audit showed the city had fallen victim to an email scam back in 2021 which cost them nearly a million taxpayer dollars.
And taxpayers and some city council members only learned about it for the first time this week.
"I pledge to everyone that as we move forward we will move forward with full transparency," said East Point Mayor Deana Holiday Ingraham at a special called city council meeting Thursday night.
An audit report was presented to the council earlier this week that showed the city had lost $1,219,287 in an email scam in 2021.
According to the report, scammers hacked city employees’ email accounts through a phishing email.
The hackers then sent four fake invoices from city email addresses asking for the funds to be wired to a fake company.
Which city employees did.
The city was able to recover about $434,197 from the fourth wire transfer when they finally caught on to what was happening.
But they still lost $785,090 from their general fund.
The public and council only found out about it from that audit report.
"There is no transparency, we would not have known about it if it hadn’t been for that," said former East Point Mayor Earnestine Pittman.
Several city council members echoed her concerns about being kept in the dark by city management and staff.
"To be here and not express the disappointment of not knowing that this amount of money was missing, and to have it come up in a questionable audit, is not good. In fact, it’s very bad," said City Council member Joshua Butler IV.
City Manager Deron King said staff didn’t tell the council because it was under investigation by the FBI and wasn’t sure how much they could share.
But council members disputed that claim and asked city staff to be more transparent with matters like this.
City council member Stephanie Gordon questioned how city staff could wire that much money from an email request with no oversight from management.
"There was absolutely no controls in place…there’s no excuse for it," Gordon said.
King and staff leadership said they have since instituted more checks and balances, including having multiple people sign off on a wire transfer before it is sent.
"As Mayor of the City of East Point, I will continue to take responsibility when we find ourselves not where we should be," Ingraham wrote in a statement sent Friday. "The changes needed at this time have already began."
But many at the meeting Thursday said they felt the damage had already been done to their trust in the city.
"There is no accountability for how money is spent in East Point," Pittman said.
King said the city may be able to get some of those funds reimbursed through their cybersecurity insurance, but council members questioned whether that was possible now that so much time had passed.
After the response at Thursday's meeting, officials say the City Council approved hiring firm Tab & Tab LLC to complete an audit by early August 2023. The firm will also start an audit of fiscal year 2022 at the same time.
The city will also hear proposals for a forensic audit firm and add monthly financial updates to the public meeting agenda.
"I can assure you there will be full transparency during this entire process with an emphasis on accountability to include timelines and benchmarks," Ingraham said.
Josue Rosale, who is with the firm who handled the audit released the statement:
"Rosales Financial Group (RFG) is a financial advising and auditing firm that employs best industry practices. We hold a fiduciary duty to our clients, the public, and key decision makers. We fulfilled our work as auditors for the FY2021 and reported our findings to the City of East Point’s governing body. Among various recommendations, we advised to complete an independent fraud examination and encouraged transparency with its citizens and regulators."