After a frustrating month, there is good news in Rushford. According to City Administrator Hayden Stensgard, they recovered nearly all funds lost when the city fell victim to a recent wire transfer fraud.
As noted previously, on August 13, a scammer posed as the Public Facilities Authority, using a modified email address. The city made payment on a recurring bond bill, in the amount of $252,715, unaware of the fraud. Because the city caught the deception early, it made multiple efforts through its bank, insurer, and law enforcement including the police department, sheriff’s department, and FBI. However, the bank was unable to reverse the transfer, with the funds already gone, and there were limitations to the amount which could be recovered through insurance. Reports were made with the State of Minnesota IT and the Bureau of Criminal Apprehension, as well as law enforcement.
On September 10, the city received a call from Merchant’s Bank confirming that the majority of funds lost August 13 were recovered via an indemnity they’d filed with the receiving bank. The process allows one party to compensate another for losses, damages, or liabilities. According to Stensgard, the money was retracted from the receiving account, even though at the time of the reversal request, the funds were not accessible. It appears the account was still being used at the time of indemnity and nearly all funds were recovered.
Of the $252,715 in funds lost, the city was able to recover $249,199. An insurance claim filed with the League of Minnesota Cities Insurance Trust, was adjusted to reflect the outstanding amount. The Insurance Trust will pay out the remainder after the city pays a $250 deductible. The city expressed gratitude to both Merchant’s Bank and League of Minnesota Cities for their support throughout the incident.
Since the fraud occurred due to an email breach, the city sought contracted support from IT experts in the industry. In an effort to streamline processes and collaboration with city employees, the council unanimously approved entering into the $5,990 contract, plus monthly subscription fees for software, with Marco Technologies at its September 14 council meeting.
The company will assist with transferring email and website domains to rushfordMN.gov. While the domain change is a statutory requirement of all counties and cities by the end of 2027, Rushford anticipates having theirs completed by November. The current website, rushford.govoffice.com, will remain active until then and will eventually reroute users to the new site. The company will also utilize Microsoft 365 to eliminate the use of seven AcenTek web emails previously used at city hall, although current emails will still be active, with automatic forwarding, for public contact for the time being.
They will also help the city review options for sustainable city data backup, as the current server on-site is not protected if it fails. The company wishes to move through these processes first before entertaining a separate professional services contract. The approved work does not commit the city to securing additional contracted services.
“These efforts will make day-to-day operations more efficient at the city and will connect all employees under one umbrella related to the overall technology and internet services utilized for city business,” said a statement from Stensgard.
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