Executive
Waste of the Day: Memphis Scammed Out of $773,000
Memphis, Tennessee fell for a phishing scam because COVID-19 protocols allowed transaction settlement by email rather than in-person.
Topline: The City of Memphis, Tennessee was defrauded of $773,000 in a phishing scam in 2022. Taxpayers are just finding out now because former Mayor Jim Strickland’s administration kept the information from the public.
Memphis fell for it by reason of COVID-19 rules
Key facts: An online scammer pretending to be city vendor Zellner Construction asked a Memphis accounts payable employee to wire $773,695.45 to a private bank account in February 2022. A spokesperson told WREG that the city was operating under COVID-19 protocols that “relaxed” the procedures for wiring money.
Once the city realized the mistake, it was too late to retrieve the cash, the spokesperson said.
The scam was revealed when a city councilman mentioned it during a public meeting this June, and officials confirmed the details to several news outlets on July 17 — over two years after the incident.
Memphis spent $40.1 million on its contracts with Zellner Construction between 2020 and 2022, according to records at OpenTheBooks.com.
Search all federal, state and local government salaries and vendor spending with the AI search bot, Benjamin, at OpenTheBooks.com.
Critical quote: City Councilwoman Jerri Green, who was elected after the incident took place, told WREG, “We have to make sure we are taking care of the taxpayers’ dollars. That’s our number one job, is to be good stewards of their funds. To learn we’ve been taken advantage of in some way is very disturbing.”
Why didn’t city officials tell the public?
Supporting quote: “These scams are very sophisticated and ever evolving,” said financial officer Walter Person. “After discovery of this incident in early 2022, we returned to our pre-COVID protocols, including verifying the proper notary indicia, telephonic verification of multiple data points for all wire transfers, and periodic phishing scam training sessions with our I-T security team.”
Background: Memphis spent over $947 million paying almost 11,200 outside vendors in 2022.
Only 216 of those payments were for more than $773,000, the amount lost to the phishing scam. Any of the other transactions could have been paid for with the stolen money.
Summary: Most taxpayers can spot an online scam when they see one. City financial officers should be a bit more perceptive — and at least be transparent with the public when they are not.
This article was originally published by RealClearInvestigations and made available via RealClearWire.
Adam Andrzejewski (say: Angie-eff-ski) was the CEO/founder of OpenTheBooks.com. Before dedicating his life to public service, Adam co-founded HomePages Directories, a $20 million publishing company (1997-2007). His works have been featured on the BBC, Good Morning America, ABC World News Tonight, C-SPAN, The Wall Street Journal, The New York Times, USA Today, FOX News, CNN, National Public Radio (NPR), Forbes, Newsweek, and many other national media.
Today, OpenTheBooks.com is the largest private repository of U.S. public-sector spending. Mission: post "every dime, online, in real time." In 2022, OpenTheBooks.com captured nearly all public expenditures in the country, including nearly all disclosed federal government spending; 50 of 50 state checkbooks; and 25 million public employee salary and pension records from 50,000 public bodies across America.
The group's aggressive transparency and forensic auditing of government spending has led to the assembly of grand juries, indictments, and successful prosecutions; congressional briefings, hearings, and subpoenas; Government Accountability Office (GAO) audits; Congressional Research Service (CRS) reports; federal legislation; and much more.
Our Honorary Chairman - In Memoriam is U.S. Senator Tom Coburn, MD.
Andrzejewski's federal oversight work was included in the President's Budget To Congress FY2021. The budget cited his organization by name, bullet-pointed their findings, and footnoted/hyperlinked to their report.
Posted on YouTube, Andrzejewski's presentation, The Depth of the Swamp, at the Hillsdale College National Leadership Seminar 2020 in Naples, Florida received 3.8 million views.
Andrzejewski has spoken at the Columbia School of Journalism, Harvard Law School and the law schools at Georgetown and George Washington regarding big data journalism. As a senior policy contributor at Forbes, Adam had nearly 20 million pageviews on 206 published investigations. In 2022, investigative fact-finding on Dr. Fauci's finances led to his cancellation at Forbes.
In 2022, Andrzejewski did 473 live television and radio interviews across broadcast, major cable platforms, and radio shows. Andrzejewski is the author of The Waste of the Day column at Real Clear Policy. The column is syndicated by Sinclair Broadcast Group, owners of nearly 200 ABC, NBC, CBS, and FOX affiliates across USA.
Andrzejewski passed away in his sleep at his home in in Hinsdale, Illinois, on August 18, 2024. He is survived by his wife Kerry and three daughters. He also served as a lector at St. Isaac Jogues Catholic Church and finished the Chicago Marathon eight times (PR 3:58.49 in 2022).
Waste of the Day articles published after August 18, 2024 are considered posthumous publications.
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