Downtown Naples renovation project will continue despite lost funds after spear phishing attack

A Downtown Naples renovation project will continue as planned despite the city being scammed out of $700,000 project funds.

“The city’s financial reserves are strong and funds are available to keep our capital project on schedule without interruption,” said Charles Chapman, the Naples city manager.  

The city fell victim to a “sophisticated and targeted spear phishing strategy,” Chapman said during a press conference Tuesday at City Hall. 

More:Scammers trick City of Naples out of $700,000 in spear phishing cyber attack

Naples Mayor Bill Barnett addresses the recent spear phishing cyber-attack that cost Naples $700,000 at a press conference Tuesday, Aug. 6, 2019, at City Hall.

The attack was limited to a vendor relationship between the city and Wright Construction Group — the company performing work on underground wastewater, potable water and storm water utility on the Eighth Street South project. 

The city's data systems are safe and secure, and the attack was not malware or ransomware. There was also no data breach, Chapman said. 

The city is working with insurance carriers and banking institutions to recover the money, if possible. 

"This process however, does take time," Chapman said. 

The cyber attacker sent an email to the city posing as a vendor representative from Wright Construction Group informing about a change of bank account on June 24. 

A city employee sent funds to the fake bank account that the attacker provided July 11. The city became aware of the fraudulent bank account Aug. 1 when a representative from Wright Construction Group asked about the money the city owed. 

“It is important to note the process of any invoicing is a multi-layered process of checks and balances,” Chapman said. "The change of bank account procedure also has checks and balances but is a separate process from the invoice payment system.” 

The employee who made the payment was put on paid administrative leave following a criminal investigation and a human resources investigation, Chapman said.

The city is working with law enforcement and the FBI to learn more about the attacker.

City leaders said they could not provide more information about the employee because of the investigation. 

The city has paid Wright Construction group what it owed. 

The money that was stolen is being replaced by general utility sewer and stormwater utility funds. 

Christian Wartchow, president and CEO of CyberSecure IT Solutions in Naples, said avoiding these kinds of crimes comes down to awareness. 

"Spear phishing attackers are crafty," he said. "This was very planned." 

Wartchow said the cyber attacker could have identified an employee working with the city and what their position was. The attacker had specific information that could have been learned through the bidding process with the construction company.  

“Everyone in the Naples city Government and every member from the city council take this crime very very seriously," Naples Mayor Bill Barnett said.

"No matter how many outside experts tell us how common this is and how difficult this is to prevent, our goal is to make sure this type of crime never happens again in the city of Naples."

More:City of Naples victim of targeted cyber attack resulting in $700,000 theft