After 19 minutes of discussion, the Platte County Commission conference room fell awkwardly silent for a period of 25 seconds that seemed more like an hour.
Five elected officials met Wednesday, June 1 at the Platte County Administration Building in Platte City to discuss the apparent loss of $48,220 of county funds in an apparent email scam which ended with a fraudulent transaction. Platte County treasurer Rob Willard admitted to violating internal procedures in wiring money six days earlier to a Wells Fargo Bank account in Florida.
During the meeting, Willard detailed how a spoof email account sent messages purportedly from Platte County presiding commissioner Ron Schieber asking to send the $48,220 to pay a “tax consultant.”
“Procedurally, we have processes that should have stopped this,” Schieber said. “Simply an error on your part,” he told Willard.
On Monday, June 6, the county learned that Wells Fargo had returned more than $28,000 to Platte County’s UMB Bank general fund account. An official with UMB told Willard in an email that the bank will continue efforts to recover the remainder.
Willard said he wasn’t sure if the county would be able to get back the full amount lost but remained encouraged about the diligence of financial institutions tracing the funds Platte County lost along with other similar fraudulent transactions. He called the current experience the darkest days of his professional life to this point.
The situation started with an email that came to Willard at 1:47 p.m. on Friday, May 27 — hours before the start of the Memorial Day weekend.
A chain of emails detailed the process of the fraudulent request in an email scam progressed into a wire transaction of taxpayer money that day. Willard later in the day contacted Schieber, who was out of town on vacation in South Dakota, to discuss the transaction when both came to the realization of what occurred.
Other elected officials — including district commissioners Duane Soper and Beverlee Roper and Platte County auditor Kevin Robinson, also present at Wednesday’s meeting — were also made aware of the wire transfer on Friday night, and Willard immediately contacted the FBI to start an investigation.
The process of paying out funds should have included a verification of accounts with the auditor’s office followed by receiving authorization from two of three commissioner signatures. The auditor would then receive the request again to perform a double-check before any funds were wired.
“That’s absolutely correct, and that’s the procedure we’ve always followed and that I did not follow on Friday,” Willard said.
Wells Fargo was asked to reverse the wire transfer, a process which apparently led to the partial return of funds Monday. Officials have also made claims with the county’s insurance company and Willard’s private bonder, used to cover errors and omissions, about alleviating the county’s liability.
There was no update on the status of the insurance and bond claims.
However, officials in the meeting speculated the insurance company might not accept the claim because the county is covered under cyber-crime, but since the money was released internally, the transaction might not fall into that category. Willard’s bond could also deny the claim because the treasurer’s office did not follow internal procedures.
Schieber said the county could lose the deductible on an insurance or bond claim, which was believed to be $5,000.
“My question is how does $48,000 go out of this building on this email train, per our procedures?” Roper asked. “If those are our procedures, we definitely need to change our procedures.”
Robinson feared that the mistake could lead to a flag in the county’s upcoming external audit, which could in turn affect the governmental body’s credit rating. He might also need to source other companies to do a check of computer security that could cost taxpayer money.
However, Robinson also said the auditor’s office planned to investigate whether UMB Bank violated its contract with the county on authorizing wire transactions.
One of the emails told Willard that payment was time sensitive with the spoof account telling him to move forward without a purchase order or invoice, but with no deputy executive available to sign off as the second authorizer of the transaction, a UMB official served as the secondary authorization. It was unclear at the meeting if this would place some of the liability on UMB Bank.
Willard indicated Monday that a check revealed the institution had operated within its rights. While Schieber and Soper were out of town for the weekend, Roper said she was available on Friday and could have been consulted about the request for funds.
“The public has every right to be concerned about what has occurred,” Schieber said. “It is troubling and disturbing that this took place. This commission will do what it can to recover this money.
“We have to earn the public’s confidence back, and we have a difficult time ahead of us.”
Schieber said conversations with other officials indicated at least seven other counties in Missouri recently received similar scam emails. Barton County in Kansas and an unspecified county in Tennessee reportedly were taken by similar scams in the recent past, according to Platte County officials.
“Platte County was the only one (in Missouri) who fell for it and that’s disappointing and frustrating,” Schieber said. “The ultimate cause of this loss was failure to follow procedure.”
An IT review in the days since the recent transaction left officials confident that the county’s bank information was not accessed and no email accounts had been hacked. An outside party mimicked Schieber’s email account to make the phishing attempt, but they don’t believe there’s any current danger of more money being lost.
Robinson said a quick review showed no other suspicious transactions that might have been made due to a similar error.
While the investigations continue, the budget will be altered to account for the currently missing funds. Robinson said this error which originally wiped out basically all of the treasurer’s budget for the rest of the year pending a resolution.
Meeting with reporters on Tuesday afternoon, Schieber said his focus remains on recouping the full amount, but he also warned that the cost to taxpayers could be ongoing. If the bond or insurance claims have to be used, the county could suffer in the form of a reduced credit rating and higher insurance premiums.
When asked about his confidence level in Willard, Schieber reminded media members that the county commission doesn’t have authority over elected officials.
“It’s disappointing. It’s frustrating,” Schieber said. “We are grateful that we have been able to make a recovery of a little over half of the money. We’re going to continue to make full recovery.”
This marks the second time in a span of a little more than two years that funds were lost out of the treasurer’s office. In 2014, an employee is suspected of altering deposits to take more than $1,000 in cash, but no charges were ever filed in the case.
Elected in 2012, Willard recently filed to seek a second term in office. No other candidates filed for the August primaries.