Feds recover more than $2M taken in email scams that hit City of New Haven, healthcare company

Federal officials have recovered more than $2 million fraudulently obtained from the City of New Haven and a New Haven-based healthcare company through what are known as “business email compromise” scams.

The U.S. Attorney’s Office for the District of Connecticut announced the recoveries Friday in a statement, saying about $2,288,385 was recovered through civil asset forfeiture actions.

According to federal officials, a business email compromise scam usually involves email spoofing and includes the creation of email messages with a deceptive sender display name. The goal is to deceive the receiver with a header that displays an inaccurate sender address that cannot be detected as fraudulent unless inspected closely, officials said.

The sender of the email is usually purporting to be someone the receiver knows and trusts, “so the receiver might open malicious links or engage in risky behavior that the receiver would otherwise not engage in,” federal officials said.

In the cases involving the City of New Haven and the healthcare company, “the bad actors impersonated one of the parties to the real transactions and replaced the intended beneficiary account with their own just prior to payment,” according to officials.

“By changing the intended beneficiary account, the bad actors commit a business email compromise scam.”

In the first case, scammers compromised an email account associated with a member of the management team of the City of New Haven’s Board of Education.

In June 2023, these scammers created a fake email account that mimicked the email of a bus company that held a contract with the Board of Education for bussing. The scammers sent several test emails between the compromised email address and the newly created fake bus company email address. Using the fake bus company email address, the scammers were able to change the bus company’s payment information from the real bus company to an account held by the criminals, officials said.

The City of New Haven sent a total of about $5.9 million to the fraudulent account.

“The government successfully seized and forfeited approximately $1,187,691 of the stolen money that was contained in two bank accounts,” the U.S. Attorney’s Office said.  “When combined with an additional approximately $3.6 million that was returned by the financial institutions with the assistance of law enforcement, the government was able to significantly mitigate the loss to the city.”

The other forfeiture action involving a New Haven-based healthcare company was reported in the spring of 2023.

In April 2023, the company’s yearly medical malpractice insurance payment was set to be paid and, shortly before the due date, the company received a fraudulent email. The sender of the email purported to be from its malpractice insurance company and provided new wire transfer instructions.

According to federal officials, the company wired about $1,652,254 to the fraudster.

The fraud was discovered in late May 2023 after the company received a payment reminder from its actual insurance company.

An investigation showed that a scammer had created an email address that mimicked that of a known employee of the insurance company. By the time the scam was discovered, about $551,000 had been transferred out of the account that the victim wired the money into.

Federal officials said the government successfully seized and forfeited the approximate $1,100,694 remaining in the account, and the company was reimbursed by insurance for the remaining loss.

“These cases demonstrate the U.S. Attorney’s Office’s commitment to helping victims of crime,” said U.S. Attorney Vanessa Roberts Avery said in a statement. “Working with our law enforcement partners, we will continue to pursue criminal prosecution of the individuals responsible for these crimes, and by using civil asset forfeiture, we can expeditiously recover as much stolen money as possible and return this money to victims prior to criminal convictions.”

Avery continued, “Although it can be difficult to come forward and admit that you were a victim of a crime, we stand ready to help you to the fullest extent possible. The U.S. Attorney’s Office will work with the victims in these cases and with the Department of Justice’s Money Laundering and Asset Recovery Section to properly return the forfeited money to the victims.”

“To avoid becoming the victim of a BEC scheme, verify email addresses are accurate when checking mail on a cellphone or other mobile device before you open any attachments or follow any instructions,” FBI Special Agent in Charge Robert Fuller said in a statement. “Never make any payment changes without verifying with the intended recipient by phone or in person.  If you think you have been a victim of a BEC scheme, immediately contact your bank to request a recall or reversal as well as a Hold Harmless Letter or Letter of Indemnity, and file a detailed complaint with the Internet Crime Complaint Center at www.ic3.gov.”