City of Arab loses over $400K in phishing scheme tied to new rec center project

ARAB, Ala. ( WAFF ) - Arab city officials said they lost more than $430,000 in a sophisticated phishing scheme tied to the construction of the city’s new recreation center.

The City of Arab discovered last week that it had been the victim of a socially engineered scam involving a fraudulent payment of $432,739.21, according to a news release sent to WAFF 48 News.

An unknown individual posed as a legitimate officer of FITE Construction, the contractor building the recreation center, and submitted a fraudulent invoice that redirected the payment to an unauthorized entity, officials said.

City leaders said an internal review determined the incident was a one-time occurrence involving invoice fraud and payment redirection. No private personal data, employee information, or citizen data was accessed or compromised, and the scheme was limited to a single financial transaction, according to the release.

The city said it has implemented additional safeguards and strengthened verification procedures to prevent similar incidents.

The phishing scheme is under investigation by the Arab Police Department, the Alabama Law Enforcement Agency, the FBI, the Department of Homeland Security, and the U.S. Secret Service. The city is also working with its bank and the recipient’s bank in an effort to recover the funds.

City IT staff reviewed municipal technology systems and confirmed they remain secure and operational, officials said, adding that further protections have been put in place.

As part of the investigation, Arab officials said they learned that similar fraudulent schemes have recently targeted other municipalities and school systems across the country and may be originating overseas.

City leaders said they are deeply concerned the theft of taxpayer dollars and are committed to pursuing every available avenue to recover the money and hold those responsible accountable. They emphasized that this was an isolated financial scheme and did not involve a breach of personal or confidential information.

Mayor Bob Joslin and other city officials said the City of Arab remains committed to transparency, fiscal responsibility, and protecting public resources. The investigation is ongoing, and the city said it will release additional information as it becomes available and as permitted by law enforcement.