In a court ruling earlier today, Justice Michael Penny found, “The evidence supports the conclusion that the City (of Greater Sudbury) has been defrauded by persons unknown.”
The ruling affirms the city’s allegation, made public in a media release issued last month, that they’d been defrauded of $1.5 million in December.
The matter was heard in Toronto today, which the city reported on in a media release sent to local media this afternoon, accompanied by a copy of the court order affirming a fraud had been committed.
In the court order, the Bank of Nova Scotia, Royal Bank of Canada and any other financial institution through which the $1.5 million was deposited into, have been directed to freeze affected accounts and proceeds, disclose information required to trace the funds and return the funds to the city.
The City of Greater Sudbury alleged a fraudster made off with $1.5 million in a case Greater Sudbury Police Service is investigating.
Municipal staff are also performing “a detailed internal review of the matter.”
In a statement of claim filed by the city in a Toronto court on Jan. 15, it’s noted the city issued an electronic funds transfer of $1,501,380.66 on Dec. 21, 2023.
The court action, filed against several banks, aims to recover these funds.
An unknown fraudster is alleged to have opened a Bank of Nova Scotia account, and infiltrated the network and email accounts of Flex Modular, which is the general contractor in charge of the municipal Lorraine Street transitional housing complex project.
The email account of a Flex Modular senior project manager who was in regular contact with the city regarding the project was included in the alleged hack.
Using this email address, the fraudster reportedly convinced a city staff member to change banking information for an electronic funds transfer.
This email included an entire legitimate chain referenced, and some documents previously submitted by the project manager.
The $1.5 million was sent by the city via electronic funds transfer on Dec. 21, and municipal staff learned on Dec. 28 that Flex Modular did not receive payment, according to the Jan. 15 statement of claim.
It was at this point they realized they were victims of a fraud.
"The City and its legal counsel will now take steps to action the Order," according to today's media release from the city.
The fraud case is returning to court on Feb. 16, at 10 a.m., at which time “further and other relief as may be appropriate” might be granted.
