$2 Million Stolen from Town of Farmington Accounts

FARMINGTON, CT — The town of Farmington was victimized by a sophisticated computer fraud scheme last fall that resulted in the theft of approximately $2 million from the town’s accounts.

According to a written statement by Town Manager Kathleen Eagen, in late Oct. 2016, it was discovered that a payment made by the town of Farmington to the C.H. Nickerson Company, using the Automated Clearing House (ACH) system, was never received by the company. The payment of $2,042,448, was for work performed as part of a $57 million upgrade to the town’s wastewater treatment facility. Farmington police and the FBI were notified, as was Webster Bank, which the town of Farmington uses for banking services related to this project.

It was determined that a network originating in China had targeted municipal customers of C.H. Nickerson and had fraudulently manipulated some, including the town of Farmington, to send payments using the ACH system to a non-C.H. Nickerson account, Eagen said.

A thorough review of this case indicates that all proper procedures concerning use of the ACH system were followed by the Farmington Finance Department. The town of Farmington’s internal procedures related to ACH electronic payments are based on industry standards. There is no evidence that anyone in town government had any involvement in the scheme to intercept the town’s payment to the company, Eagen said.

Webster Bank’s cyber security department was able to recover nearly half the amount and the town is working with its insurer and law enforcement to recover as much of the full amount as possible. As a result of this incident, Farmington’s Finance Department has instituted new procedures to prevent similar thefts in the future, according to Eagen.

Farmington Police Chief Paul Melanson said his department continues to work with the FBI to track down anyone involved in this theft, make arrests based on the evidence, and recover any additional funds if possible.

“Our investigation indicates this was a very sophisticated international operation that was able to mimic the procedures used by a private company to collect payment from municipalities with which the company does business. The investigation is ongoing and we continue to collect and share all information related to this investigation with federal authorities in an effort to identify the perpetrators and stop those responsible from victimizing others,” Melanson said.

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