Fresno officials should have noticed a phishing scam that cost taxpayers more than $600,000, jury says

• Fresno lost over $600,000 to a phishing scam in 2020.
• Officials failed to spot red flags on a contractor invoice, a jury found.

The city of Fresno lost more than $600,000 to to a phishing scam in 2020. Now, a grand jury says that city officials should have noticed the scam before it cost taxpayer dollars.

City officials discovered the fraud after realizing an invoice from a contractor working on a section of the Fresno police station was fake, according to The Fresno Bee.

The contract included the real contractor's letterhead but an incorrect account number, according to the Bee. City officials did not publicly comment on the scam until reporting by the paper uncovered it in 2022.

A civil grand jury found on Thursday that the city failed to notice "conspicuous red flags" that should have tipped them off to the fraud, the Bee reported.

The jury found that the city's finance department followed policies that were "understood" through training but never written, according to the Bee. Employees were also supposed to get approval from another employee for large payments, but failed to do so when making the payments that resulted in the scam, the jury said.

"Phishing" attacks are carried out by criminals who usually send an email or some other message pretending to be a company or individual asking for credit card information, passwords, or other sensitive information. The goal of the scam is to trick users into sharing personal information so the scammer can gain access to their computer, company, or finances.

One study from Harvard Business School predicted that phishing scams could "increase drastically in quality and quantity over the coming years" with AI now able to automate the "entire phishing process."

Earlier this month, scammers targeted a tiny Idaho town, stealing more than $1 million from the town government through a similar scam. Criminals there tricked an employee into thinking that the city's payment information for a contractor needed to be updated.

Fresno Mayor Jerry Dyer — who was not in office when the scam occurred — did not immediately return a request for comment from Business Insider on Sunday.

He told The Bee in a statement that the city has already met many of the jury's recommendations following the case, including implementing new training.

"I am appreciative of the Civil Grand Jury's time and attention on such a relevant issue in our city and our nation," the statement said. "I am also pleased with the grand jury's confidence that internally updated procedures appear appropriate for preventing this type of fraud from happening again."