City of Swanville falls victim to email scam; may lose $68,000

City Clerk Julie Hollermann told the Swanville City Council, Wednesday, that the city was defrauded in an online scam and may have lost $68,000 because of it.

When Hollermann returned to work after vacation, Monday, she noticed she had received an email that appeared to have been sent June 27 by Mayor Sandy Lange. The email instructed Hollermann to complete a wire transfer for the city to pay for street repair.

“The only thing is that I never sent her an email,” Lange said.

Hollermann replied to the email for further instructions, believing that she was communicating with Lange. The original email and the responses she received were worded similar to the way Lange communicates so Hollermann never suspected anything, even though wire transfers are not common for the city.

“I was gone on vacation and when I saw the email, I just thought that maybe someone had just come in and did some roadwork that needed to be done and now we needed to pay for it,” Hollermann said.

Following the instructions, Hollermann wired $68,300 to Alobwede Charles Mesonge LLC in Decatur, Ga. who had an account with Bank of America. The email asked Hollermann to reply after the transaction was done with the payment receipt.

“She then sent me an email saying she had wired the money,” Lange said.

Once Lange saw the email two hours later, she contacted Hollermann and asked her about the wire transfer. It was then it was discovered that the city had been defrauded and reported it to First State Bank of Swanville and to the Morrison County Sheriff’s Office.

Lange said both banks are now working together to attempt to stop the wire transfer so that the city may be refunded. The city’s insurance company, League Minnesota, has been contacted, as well.

“We don’t know yet if they will cover it or not,” Lange said.

Auditor Jon Archer with Schlenner Wenner and Company recommended the Council inform the state auditor of the fraud.

As a result of the fraud, the Council decided to change its policy regarding payments by credit card or bank transfer to prevent fraud. When any amount above $1,500 is requested, First State Bank will call Lange to confirm the transfer.

Hollermann said she’s devastated about what happened and hopes that the banks will be able to get the city’s money back.

Lange said Hollermann will remain as the city clerk, but doesn’t yet know if Hollermann will be held financially responsible if the city can’t recover the money.

“It’s very easy to be defrauded with emails and banking online. I think people need to be more diligent on what they’re doing,” Lange said.

Swanville City Council Briefs

In other business Wednesday, the Swanville City Council:

  • Adopted a resolution to vacate the alley behind 320 Rhoda Avenue (west of lots 1, 2, 3 and 13 of block 13 of McRae’s addition) to Allen Kruzel;
  • Discussed the current curb and gutter work on the North Berkey project and to ensure that it is done correctly to avoid possible future water wear-outs. City engineer Mark Hallen will inspect it;
  • Heard from Hallen that a second fire hydrant was installed on North Berkey;
  • Approved a land use permit for Tim and Linda Dally to build a four-plex apartment building on 101 North Berkey Avenue;
  • Approved a contribution to the Initiative Foundation of $700. Last year, the city contributed $650; and
  • Heard from Mayor Sandy Lange that the city received a thank you from the Senior Center for installing a handrail.

The Swanville City Council’s next meeting is Tuesday, Aug. 8, at 7 p.m.

  • MichaelP

    Maybe a nice Nigerian prince will offer them a portion of his fortune to help recover the money…….

  • J Scott

    First where were the city’s financial controls?!!!! There should be a set of policies and procedures in place that prevent such things from occurring. Talk to your accountant! Previous audits didn’t show material weaknesses? If proper financial controls were already in place and the employee violated them, then she should have been fired.But in this case we have Council voting to implement policies after they’ve lost the money, these are policies that should have been in place since from the start! This lands on the Mayor and the Council, not the city clerk!

    Seriously, they’re putting financial controls in after the fact? I’m stunned