BLAINE, Minn. — Editor's note: The video above first aired on KARE 11 on Aug. 5, 2024.
Nearly a year after the city of Blaine mistakenly sent $1.5 million to fraudsters – and one day after KARE 11 Investigates first revealed the scam – officials posted a statement on the city’s website saying it has implemented “enhanced fraud prevention measures.”
The statement defended the city’s decision not to disclose the financial fraud earlier because “the case remains an active Federal investigation.” Withholding information, they said, was meant to “preserve the integrity of the investigation.”
Earlier this week, KARE 11 reported that Blaine had sent a $1,577,186.58 payment last August to someone impersonating a legitimate contractor working on a large city construction project.
Blaine’s statement says, “City Staff became aware of the scam on September 14, 2023.”
That’s apparently when New Look Contracting of Rogers contacted the city asking why it hadn’t been paid on time.
City records show a second $1.5 million payment was issued to New Look in September – this time to the real company.
As part of the ongoing investigation, Blaine says that to date, “over $700,000 has been recovered.”
Sources tell KARE 11 the fraud is connected to a larger investigation into scammers who use fake emails and bank accounts to impersonate legitimate companies owed money by businesses, school districts and local governments.
In February, federal authorities announced multiple indictments charging a sophisticated network of alleged fraudsters operating out of Maryland who used a series of shell companies to launder the stolen money before wiring much of it overseas.
In its statement confirming the fraud, Blaine announced:
“The Finance Department has taken multiple steps to ensure the City is not victimized again and remains committed to updating internal controls and safeguards, including regular monitoring of vendor files to identify and verify changes, implementation of enhanced fraud prevention measures, screening to authenticate vendor change submissions, and continuing to conduct extensive employee training.”