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After Bridgewater was defrauded out of nearly $500K, it took Scotiabank to court

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A Nova Scotia city had to get a court order and spent nearly eight months making an attempt to recoup nearly half one million {dollars} it had been defrauded out of by an Ontario man posing as a development government, a state of affairs municipal officers say will not occur once more as a result of of stronger inner controls.

Those are some of the main points included in an access-to-information request that reveals what Bridgewater — a city with fewer than 9,000 residents alongside Nova Scotia’s South Shore — did to get the cash again, how a lot it spent on authorized charges, and the frustration officers had with banks it felt had been unhelpful in resolving the matter. 

Bridgewater’s woes started in October 2019 when an Uber driver from Brampton, Ont., posed as an government with Dexter Construction and requested types to permit the Bedford, N.S.-based firm to obtain cost through digital switch relatively than cheque. The particular person, Ayoola Ajibade, had no connection to Dexter, which does work for the city.

At the time, the city was recommending its distributors swap from being paid by cheque to digital funds switch, so the request did not appear uncommon.

After Bridgewater acquired an bill from Dexter Construction for respectable work, it wired a cost of $490,930.43 in early November right into a Scotiabank account in Brampton that belonged to Ajibade.

It can be one other six weeks earlier than the city discovered of the fraud.

How the city discovered out concerning the fraud

In an e-mail dated Dec. 18, 2019, Lee Wallet, a banker with BMO in Bridgewater — the financial institution that handles the municipality’s funds — requested the city’s accounts payable clerk to examine whether or not the $490,930.43 switch was respectable after being tipped off by Scotiabank.

Later that day, the city’s chief administrative officer, Tammy Crowder, wrote an e-mail to Mayor David Mitchell.

“The account has been frozen since 2018 for similar activity (so I question how the [money] got put in the account in the first place),” she wrote. 

‘It’s solely cash,’ says mayor’s e-mail

The mayor replied that he anticipated there can be a approach of getting the cash again.

“I hope staff are OK and nobody is feeling like this is their fault,” he wrote. “It sucks but nobody did this intentionally and it’s only money. Nobody was hurt.”

On the identical day Mitchell despatched that e-mail, the city’s director of finance, Dawn Keizer, famous two different transfers had been despatched to the fraudulent account:

  • $226,583.41 on Dec. 17. “Hoping it can be stopped. Please advise,” Keizer wrote to Wallet.
  • $17,040.75 on Dec. 17.

A Dec. 20, 2019, e-mail from Crowder to the mayor stated these two funds had been rejected by Scotiabank and the cash was returned to the city.

With the fraud recognized, city officers grew to become annoyed with BMO and Scotiabank’s dealing with of the state of affairs.

On Jan. 23, 2020, Keizer advised Crowder that she was “not optimistic” Scotiabank can be useful.

“In fact, they seem to be just the opposite, which has been very frustrating for us,” Keizer wrote to the CAO.

An e-mail from Wallet to Keizer later that day famous the “next steps” had been with Scotiabank’s fraud division.

Town hoped to keep away from authorized motion

The following day, an e-mail from Mitchell to Keizer and Crowder stated he had contacted the top of Scotiabank’s fraud division with the hope it would “expedite the matter and hopefully avoid a full-blown court order.”

An e-mail every week later from Keizer to Crowder questioned BMO’s perceived inaction. The e-mail obtained by CBC News was principally redacted, however asks, “Is there a reason BMO can’t act on our behalf in this matter?”

Four months later, Scotiabank nonetheless hadn’t returned the cash.

Bridgewater, N.S., Mayor David Mitchell is proven in a file photograph. He says the city has carried out stronger inner controls to guarantee this sort of fraud will not occur once more. (Stephanie Blanchet/CBC)

“It’s frustrating that we can’t get costs or damages though, given that we’ve incurred legal costs and they’ve had our money for all these months,” Keizer wrote in a May 22, 2020, e-mail to two city officers and the surface lawyer the city had employed.

“Disappointing that they wouldn’t at least offer to pay interest on our money.”

On Aug. 10, 2020, a Nova Scotia court ordered Scotiabank to pay again the cash after the city pursued authorized motion.

How a lot was spent on authorized charges

An e-mail from the city’s CAO to Bridgewater council 4 days later revealed the authorized charges spent had been an estimated $5,000.

By the tip of the month, the city’s lacking cash, $490,930.43, was again in its account. 

It can be one other yr earlier than the case towards the accused went to court.

In January 2022, Ajibade was convicted of fraud, which prompted city officers to focus on the messaging they would offer to residents and media.

‘Talking factors’ for city council

A Jan. 11, 2022, e-mail from the mayor famous that “people think we were easily duped.” Mitchell known as it “a sophisticated scheme” and famous, “Because the [CBC] article says he was just an Uber driver, people think he just called and asked for $500,000.”

A Answer from the city’s CAO famous they “don’t want to hang staff out to dry nor give away internal control processes.”

Later that day, Patrick Hirtle, the city’s supervisor of neighborhood attraction and communications, despatched an e-mail to city council and the CAO with “talking points” relating to the fraud.

Messaging on fraud origins

The e-mail stated the “strength of our internal processes and the working relationships with our banking institutions allowed this elaborate fraud to be caught before it could go any further.”

In an interview, Mitchell advised CBC News that whereas the primary fraud went undetected by the city, its inner processes performed a task in catching the second and third transfers.

When requested why he responded, “It’s only money,” when advised concerning the lacking $490,930.43, Mitchell stated he was talking solely out of concern for the well-being and security of his employees.

“When you have mistakes, you can have loss of life, you can have someone physically injured,” he stated. “That was my comparison … I wouldn’t want people to kind of think, ‘Oh, the mayor’s just throwing around money.'”

He stated the city has strengthened its controls to stop this sort of fraud from ever occurring once more, however declined to present specifics, likening it to gifting away “the combination to the safe.”

Mitchell stated that as a result of governments publish a lot data and the e-mail addresses of their workers publicly, it makes them a goal for fraud.

“Fraud is being constantly attempted on municipalities and provincial and federal governments, daily,” he stated. “And in this case, one slipped through. But we’ve learned from it, we’ve changed the processes and it’s not going to happen again.”

What the banks are saying

Asked for remark concerning the frustration city officers felt with the banks, Scotiabank declined remark, saying the matter was earlier than the courts, whereas BMO stated it has sturdy safety measures in place to defend prospects.

Ajibade is scheduled to be sentenced at this time.

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