Mobile, Ala. – Mayor Spiro Cheriogotis told reporters Friday that the city’s Finance Department ignored clear warning signs, enabling fraudsters to divert $14.7 million meant for the Regions Arena construction contract.
How the scheme unfolded
In early October, the department transferred the money after receiving an email that appeared to come from B.L. Harbert International, the lead contractor on the downtown arena project. The message used the company’s official logo, website address and phone number, and the email domain looked authentic at first glance.
However, Cheriogotis noted a subtle but critical difference: the email address contained extra characters that did not match the contractor’s genuine address. “Their email address doesn’t perfectly match that – that’s a huge red flag,” the mayor said.
Additional lapses
The fraudsters also claimed B.L. Harbert was undergoing an audit and needed updated banking information. They asked for copies of prior invoices, which city staff provided – a step that should have raised suspicion because a legitimate business would not hide during an audit.
When a supervisor tried to verify the banking change, he called the phone number listed in the fraudulent email instead of the pre‑approved vendor number, further compromising the verification process.
Mayor’s response and new safeguards
Following the discovery, the mayor terminated one employee and placed two others on administrative leave while internal and external investigations continue.
Cheriogotis emphasized that the city has already strengthened its procedures after a near‑miss fraud attempt in August that could have cost more than $900,000. New measures require multiple layers of verification, including sign‑off by the finance director, and any payment over $1 million must be made with a hand‑delivered check.
“There were opportunities well past May, well after August, where, frankly, this fraud should have been caught,” the mayor said. “Red flags were everywhere, and they were not chased down.”
What residents should know
The mayor acknowledged public frustration and shared his own disappointment. “It’s fair for the public to be frustrated. I’m frustrated,” he said. He added that quicker action on the part of staff might have stopped the transfer, which was processed on October 5 after a request on October 2.
City officials are now emphasizing the importance of using trusted phone numbers and direct contacts within vendor companies before making any changes to banking information.
Looking ahead
While the $14.7 million loss is a significant blow, Cheriogotis expressed confidence that the reinforced procedures would prevent a similar incident in the future. He urged all city employees to remain vigilant and to treat any deviation from standard protocols as a potential red flag.
Original reporting: FOX10 WALA Mobile (news) — read the source article.
