City of Frederick lost $280,527 to a phishing driven wire fraud scheme

The City of Frederick, Maryland was defrauded of $280,527.30 in a wire transfer scheme tied to the construction of a new police headquarters, city and state officials confirmed in January 2024.

The project involved converting the former William Donald Schaefer Building into a headquarters for the Frederick Police Department, a renovation valued at about $26 million. In a statement issued through the mayor's office, the city said it had been the victim of a wire fraud perpetrated by an unknown actor or actors outside the city in connection with the project. Staff became aware of the loss in November 2023, alerted the Frederick Police Department, which contacted the FBI and the Maryland State Police, and the State Police formally took over the case on December 4, 2023.

Mayor Michael O'Connor publicly acknowledged the incident on January 23, 2024, saying the city was working with authorities to track down those responsible and describing defence against such schemes as a constant effort involving the city's IT staff, police and employees. Officials declined to release details while the investigation remained active.

The city subsequently described the scheme as an online phishing attack in which the sender posed as a legitimate city vendor. In an announcement at the end of March 2024, the city said it had recovered the diverted funds through its cybersecurity insurance provider, less a $50,000 deductible. Work on the police headquarters remained on schedule for completion in December 2024.