A sophisticated phishing operation allegedly involving a suspect in Nigeria has tricked the city of Pittsburg, California, into transferring $913,839.81 to a fraudulent bank account, exposing weaknesses in the city’s financial verification procedures.
The scam, which occurred in February, involved criminals impersonating Discovery Builders Inc., the contractor working on the city’s planned Dream Courts recreational and sports facility.
According to reports by the San Francisco Chronicle and SFGATE, investigators believe the operation involved a primary suspect in Nigeria as well as at least two other individuals in the United States. Authorities have so far issued 18 search warrants covering 116 bank accounts and accounts linked to technology, financial and telecommunications companies as they attempt to trace the money and identify those behind the scheme.
The fraud began with what appeared to be an email from Discovery Builders providing the city with updated banking information. Investigators later discovered that the email address used by the scammers differed only slightly from the legitimate address, with the addition of a lowercase letter.
The deception went further when the criminals allegedly compromised the email account of Sara Bellafronte, an assistant to the city manager, and used it to convince a finance employee that the new bank details had been verified.
The fraudulent message effectively gave the finance department confidence that the change in payment instructions was genuine.
The city subsequently transferred the money.
It was only five days later, on February 12, that officials realised the payment had not reached Discovery Builders. Instead, the funds had begun moving through a network of accounts, triggering a law-enforcement investigation involving the FBI and other agencies.
Investigators were able to freeze the receiving account, allowing the city to recover approximately $696,241. Officials said they were seeking to recover the remaining roughly $218,000 through cyber and crime insurance.
Court documents reviewed by the San Francisco Chronicle indicate that investigators followed part of the money trail to an Illinois man whom they believe may himself have been deceived as part of the wider operation.
The man reportedly believed he was working for a legitimate company called Tyco Alloy Industries. Investigators said he subsequently moved some of the money and purchased approximately $217,000 worth of Bitcoin, transferring the cryptocurrency to a digital wallet.
Despite the international dimension of the investigation, authorities have not announced arrests or publicly identified the suspects.
The case has highlighted the growing sophistication of business email compromise schemes, in which criminals impersonate legitimate companies, employees or officials to manipulate organisations into authorising large payments.
For Pittsburg, the target was a major infrastructure project. The Dream Courts development is a planned facility covering more than 42,000 square feet and is intended to help boost sports tourism in the city. The project was approved in 2020 at a cost of no more than $3 million, although rising costs and negotiations over labour agreements contributed to delays.
Discovery Builders eventually received the full $913,000 payment after the fraud was uncovered. The company’s president, Louis Parsons, said the criminals had used a sophisticated approach and that the company did not blame the city for falling victim to the scheme.
The city has since introduced tighter payment-verification procedures, changes to its financial workflows and adjustments to its IT staffing.
Pittsburg Mayor Dionne Adams described the incident as both upsetting and a lesson for the city, saying criminals had exploited weaknesses in its systems.
The FBI and the U.S. Attorney’s Office continue to investigate the case.
