City Treasurer sends $128,000 to fraudsters in email phishing scam

After an investigation, City of Ottawa Auditor General, Ken Hughes, says City Treasurer, Marian Simulik, sent nearly $98,000US to fraudsters posing as City Manager Steve Kanellakos.

It happened in July 2018. Hughes says that’s when Simulik received an email that looked like it was from Kanellakos asking the treasurer to send money to a company for work done. 

Simulik then went into an email exchange with who she thought was Kanellakos, later that day she agreed to send the money. 

Five-days later, the fraudsters sent a follow-up email asking for another $155,000US to finish payment. When Simulik received that email she happened to be in a council meeting sitting beside Kanellakos. She asked him about the payment. Kanellakos told her he knew nothing about it. That’s when the pair realized they’d fallen victim to a scam. 

It turns out the company was fake, it wasn’t Kanellakos, instead fraudsters posing as the city manager.

The breach sparked an investigation by the Auditor General to see if other payments have been made to fraudsters in the past. Hughes says he found no evidence of that. 

An emotional Simulik addressed the Audit Comittee calling the incident “embarrassing” and that for 28 years in the treasury department she has taken pride in her work. Simulik is due to retire later this year. 

Kanellakos also addressed committee saying Simulik “didn’t break any rules” and that this shouldn’t “call into the effectiveness of the accounts payable process”. 

Hughes says at the time of the fraud the Ottawa Police Cyber Crime Unit was contacted but it “wasn’t interested” in taking the case. 

In August 2018, Ottawa Police was contacted by RCMP and told that the U.S. Secret Service had discovered a bank account with funds believed to belong to the city. Arrests were made. City Solicitor Rick O’Conner is hopeful some of the money may be recovered. 

More to come...