Here's how a city in Minnesota sent phishing scammers $1.2 million for a sewage project after being conned with lookalike company emails

• A Minnesota city fell victim to a phishing scam while setting up a new sewage treatment contract.
• The city was scammed out of $1.5 million after a local company scored a $3.5 million contract.

A city in Minnesota was swindled out of $1.2 million dollars by a routine email scam, sending the money for a local sewage treatment vendor to bank accounts overseas, federal agents alleged in civil forfeiture documents.

In the summer of 2021, the city of Cottage Grove, Minnesota finalized a sewage treatment project contract with the company Geislinger & Sons for over $3 million dollars, according to court documents first obtained by CourtWatch.

Over the ensuing three months, almost half of that sum was sent to phishing scammers who were accused of tricking city administrators by using a lookalike email address with three extra letters in it.

In August 2022, the Justice Department began investigating the case, according to the Minnesota Star Tribune. And in court documents filed on March 3, federal agents said that they had traced where a portion of the money went and asked a judge to approve their civil forfeiture of the funds.

The agents wrote that they traced the money to two individuals who had moved portions of the funds to UK bank accounts, where British authorities worked with the US Department of Homeland Security agents to seize the funds, according to their report.

The city of Cottage Grove did not immediately return Insider's request for comment.

According to civil forfeiture documents, on June 16, 2021, the City of Cottage Grove inked a $3.5 million contract with local company Geislinger & Sons, Inc. for its "South District Sanitary Sewer Project." Geislinger & Sons did not immediately return Insider's request for comment.

City officials were sent legitimate W9 and work authorization forms from the vendor. By October, payments were scheduled to be sent to the company by the end of the month, the documents said.

But by October 19, the scam was fully in motion: Phishing scammers sent emails to the city administration, letting them know there had been a change in the bank, and a city employee overlooked the new email that the requests were sent from, the federal agents alleged.

Throughout the phishing scam, the imposters repeatedly emailed city employees, told them that their banking information had changed, and that future payments should be sent to the new bank accounts, according to federal agents.

The city official obliged, and on two occasions between October and December, large payments for the sewage project were sent to the new bank accounts and not the company's actual bank account.

But by December, members of the real company started to check in with the city's finance director for the two large outstanding invoices.

The finance director assured the company that a city employee had been handling the payments with Jeff, the contracting company's president.

The Office Manager told city administrators that "Jeff had been in Florida for the past several weeks," prosecutors said. "At this point, the City staff realized they had fallen victim to a wire fraud scam, which resulted in the loss of $1,276,061.33 of City funds."