Conference victim of 'spoofing' scam


By Paul Black
SPRINGFIELD – A $98,500 invoice owed to a Bloomington construction company was used to scam the Illinois Great Rivers Conference out of funds in late September, conference officials disclosed Oct. 29.
A payment via wire transfer was executed as payment on the invoice where the money was fraudulently diverted to an unidentified third-party. Reports of the incident were filed with Springfield police, the FBI Internet Crime Complaint Center and with Church Mutual, the conference’s insurance carrier.
Church Mutual provides cyber fraud coverage through Beazley Breach Services, an industry leader in privacy and security coverage. The cyber fraud coverage is part of the conference’s multi-peril liability policy with Church Mutual. The maximum deductible which the conference will assume is $5,000.
Bloomington-based Catalyst Construction has been building cabins at East Bay Camp and had sent an invoice for $98,500 to the conference in early September.
On Sept. 11, an email was sent, purportedly from Catalyst, requesting that payment be made via wire transfer, which included documentation of the billing. Further correspondence directed that the payment be made to a Bank of America account in Jacksonville, Fla. The company contacted the conference Oct. 18 when no payment had been received, alerting the conference to the scam.
The incident is what is known as “spoofing,” where a victim is targeted, a fake email domain is spoofed and no verification outside the email is made with the company.
Church Mutual will be doing a forensic investigation on both the conference and Catalyst’s IT systems since the proper documentation held between the two parties was used to commit the fraud.
“We don’t do wire transfers very often,” said IGRC Director of Administrative Services Mike Potts. “We have received monies from the sale of conference camp sites and we have sent international monies to Liberia. But in both cases, we have initiated the wire transfers. This is the first case where a purported vendor has asked us to remit payment.”
Conference officials will also be revising payment policies and procedures to prevent such activity from occurring in the future. Additionally, the Conference Council on Finance and Administration will be providing information on internal controls that each church should incorporate to prevent cyber fraud.
The 2019 Association for Financial Professionals (AFP) Payments Fraud and Control Survey Report stated that payment fraud schemes appear to be the “new normal” for organizations, as a record-setting 82 percent of financial professionals said they experienced attempted and/or actual payment fraud in the last year.
The FBI’s Internet Crime Complaint Center reports that this very common scheme resulted in 20,373 complaints last year, with adjusted losses of over $1.2 billion across the United States.
On Friday, UM News reported that a Texas man faces charges stemming from an email scam that targeted The United Methodist Church’s finance agency, among other organizations.
Reuben Alvarez Sr. was indicted on money laundering charges that stem from a scam that targeted The United Methodist Church’s finance agency, among others.
Investigators accuse him of using email scams from March 2018 to August 2019 to steal more than $100,000 from three companies as well as the denomination. The targets were located in multiple states.
The General Council on Finance and Administration’s total loss from fraudulent action was $49,560, said Sharon Dean, the agency’s spokeswoman. The agency’s insurance, she said, reimbursed the full amount, minus a $500 deductible.
Dean added that the agency is taking steps to guard against fraud in the future.
“GCFA is constantly working on ways to improve our security systems.” Dean said.
The agency is responsible for administering millions of dollars that fund United Methodist ministries around the globe. The current general church budget for 2017-2020 is $604 million.