Federal and local law‑enforcement agencies are investigating a fraud scheme that diverted nearly $15 million of Mobile taxpayer money earmarked for the construction of the Regions Arena downtown, according to Fox 10.
Mayor Spiro Cherigotis said the transfer occurred earlier this month, but he did not learn of it until last Friday. “Obviously, this is bad. This is bad, and there’s nothing I can say to make it good,” the mayor told reporters.
The Association of Certified Fraud Examiners (ACFE) identified the incident as a business‑email compromise (BEC) scam. Mason Wilder, research director for the ACFE, explained that scammers typically spoof a legitimate contractor’s email address and send fraudulent wire instructions. “If you don’t realize the money has been taken within 48 to 72 hours after the payment, the chances of getting your money back are very slim,” Wilder said.
City officials have engaged outside counsel and a forensic accounting firm to conduct an internal review. Cherigotis also noted that Mobile carries a cyber‑insurance policy, though he was unsure how much the city could recover through that coverage.
Local residents expressed frustration. James Thorpe, a Mobile citizen, said, “I do think they should’ve done their due diligence and looked into the stuff they were paying for. Especially with it being taxpayer dollars. I think that’s a little negligent.”
The incident mirrors similar losses in other municipalities. Lexington, Kentucky, lost $4 million to fake housing payments; Peterborough, New Hampshire, lost $2.3 million on a school and bridge project; and smaller cities in Minnesota and Utah have each lost about $1 million. Earlier this year, the north‑Alabama town of Arab lost more than $430,000 in a phishing scheme tied to a recreation‑center construction, though the city eventually recovered the funds.
Wilder advised city employees to verify any invoice directly with contractors before processing payments and suggested training on email‑authentication practices. He added that BEC scams rank among the top ten most frequently reported crimes, with the FBI estimating over $3 billion in compromised business‑email fraud last year.
Mobile’s next steps include continuing the forensic review, pursuing recovery through law‑enforcement assistance and insurance claims, and implementing stronger verification protocols for future wire transfers.
What’s next: City officials expect to release the forensic accounting report soon and will hold a public briefing on new payment safeguards later this month.
Sources: fox10tv.com
