GREATER SUDBURY, ONT. — The City of Greater Sudbury was the victim of fraud in December after a payment was made to an unknown party posing as a contractor as part of a scam.
The fraud case involves a payment of $1.5 million made to an unknown party who stated they were a construction contractor for Lorraine Street Transitional Housing, reads a statement from the city.
“The illegal activity was caught quickly by staff, and we are confident that we will be able to recover the majority of these funds,” said the email.
The statement of claim to retrieve the funds was filed in Toronto Court on Jan. 15.
“The process to recover these funds is lengthy and involves several outside agencies, such as the contractor, our insurer, banks and courts,” the spokesperson said.
“Municipalities, just like residents, are faced with complex issues of fraud. While we proactively work to prevent these types of occurrences and are continuously evaluating and implementing changes to address them, fraud events are becoming increasingly sophisticated.”
According to the court documents, the details of the fraud known to the city include:
- the fraudsters opened the BNS (Bank of Nova Scotia) account at the Scarborough Town Centre in Toronto;
- they infiltrated the network and email accounts of Flex Modular and one or more of its employees and obtained confidential information about the project;
- they impersonated employees of Flex Modular in communicating with the city;
- they intercepted emails from the city to Flex Modular seeking further information and verification of the instructions and responded to such emails;
- they created fraudulent and forged documents, including the fraudulent and forged EFT Forms, information forms, Scotiabank business account statement and letter from BNS;
- they created and provided the fraudulent and forged documents to the city to induce the city to set up the EFT using the BNS account and to send the EFT funds to the BNS account;
- and they fraudulently induced the city to transfer $1,501,380.66 to the BNS account.
The Greater Sudbury Police Service is also investigating the Sudbury contractor scam case and the city is performing a detailed internal review of the matter.
The timelines for the Lorraine Street affordable housing project completion are unaffected and work will continue.