The story of that $503,026.66 that went missing from a city account is finally complete

By Pepper Parr

December 13th, 2023


The story was about the fraudulent vendor payment and recovery matter; told from the City’s perspective.

That isn’t the whole story.

In a city media release on May 23, 2019 the City discovered it was a victim of a fraud where a single transaction in the amount of $503,026.66 was made to a falsified bank account in response to a complex phishing email requesting to change banking information for an established City vendor. The transaction was in the form of an electronic transfer of funds made to the vendor on May 16, 2019.

Later in 2019, the Gazette had a conversation with a member of Council who told us at that time that the city was going to recover some of the money that was taken.  We were surprised that a Council member chose to discuss a matter that was discussed in a CLOSED session of Council – but these things do happen.

Another report made mention of the recovery of $100,000.00 by the City in November of 2023. This brings the total recovery in this case to $422,641.67 which was seen as most likely to be final recovery.

The City’s strategy to recover the defrauded funds included making a claim against the City’s insurance Cyber Crime Policy, commencing civil litigation proceedings, and negotiating a restitution order as part of the criminal proceedings in this case.

The following methods of recovery were utilized in this case:

(a)  Insurance Recovery:

A claim was filed with the City’s insurers under its Cyber Crime Policy, which had the maximum policy limit of $250,000, and was subject to a $50,000 deductible. Through negotiations with the City’s Legal Services staff, the City’s insurers, ultimately agreed to waive the $50,000 deductible, and made a payment to the City in the full amount of the policy limit, being $250,000.

(b)  Civil Litigation:

The City also retained the services of external legal counsel to commence a Statement of Claim in the Superior Court of Justice and to freeze the bank accounts into which the City funds were deposited and subsequently transferred to. The City was ultimately able to secure the recovery of $72,671.67 of those funds. The details of this litigation will be reported on separately as part of the City’s tri-annual litigation report.

(c)  Criminal Proceedings:

Milton Court House where criminal proceedings took place.

Initially, Halton Region Police Service laid charges against three individuals in connection to the fraud perpetrated on the City. Criminal proceedings were pursued against only one of the three accused individuals, and charges against the others were withdrawn.

The Gazette took part in one of the criminal hearings which, at the time, were done virtually.  One of the issues during the hearing was if the lawyers had been fully retained.  One of the accused had not, at the time, fully retained his lawyer.

The City made a request of the Crown seeking a restitution order in its favour as part of the criminal proceeding resolution. As a result of this request and successful criminal plea negotiations between the accused and the Crown, in November of 2023 the City received a recovery of a further amount of $100,000.00 in the form of restitution.

The total financial impact to the City to date is $110,406.85 which includes the unrecoverable amount plus legal and investigative expenses related to the recovery of the funds to date.

Nothing was ever done about the disclosure of background information to the Gazette.






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1 comment to The story of that $503,026.66 that went missing from a city account is finally complete

  • Anne and Dave Marsden

    Council had no part in the stolen $503,000.00 that has been the subject of police investigations that are funded by public monies and we have to suck that up. But, there is a bigger story in play right now. The Mayor was interviewed on CHCH today and told them how imprtant the Civic Square Revitalization was to the public, who will be involved in the new Civic Square design.

    Mayor Meed Ward and Paul Sharman with 5 other members of 2014-2018 council were involved in the 2018 decision to revitalize Civic Square to ensure compliance with 2016 accessibillity standards. Total cost for completion September 2019 and safety, accessibility and dead tree issues resolved, was just over $1.1 million.

    We were unjustly prohibited from delegating in June 2019 when this was before the new 5 of 7 member councillors on a consent agenda because it had gone over budget. The public were properly engaged and everyone was happy with the new civic square except newbie Councillor Rory Nisan who pulled the project from a Committee of the Whole Consent Agenda and got the support of all but Bentivegna to put the fully and properly approved revitalization project on hold.

    We now have a $3.8 million dollar project, that is questionable as to whether it is a legitimate future budget item and a civic square that has multiple empty grates where trees once grew, huge safety paving issues and has not met accessibility standards since 2016. Shame, shame shame on this council and its strong mayor!.

    Further, the difference in costs is more than four times the money that was stolen. Surely the definition of “stolen” includes improperly boosting the cost. Those who heard the Mayor this morning heard her claim the public are on board with this changed design at more than three times the original cost. Her idea of how we manage projects such as this, in times like this is wrong, wrong, wrong.

    We will be raising with the Ombdsman, if the city fail to satisfactorily address this matter, the fact that the City Manager and Clerk not only allowed this decision of a former council to be set aside but also approved the use of funds approved by the Province to improve the lot of Rural businesses for an urban downtown rainbow cross walk, light standards and downtown furinture (to ensure we did not lose the May, 2018 RURAL grant).

    Mayor Meed Ward was delighted that she did not have us at the lectern in June 2019. However, there is a review coming up and we are hopeful the province will agree this Mayor cannot continue to be a Strong Mayor when the evidence is, despite a 13 year learning curve, she has no idea of right and wrong usage of taxpayers’ dollars in the best interests of Burlington families.