On October 3rd, 2024 Eagle Mountain City released a press release stating that it had “recouped $400,000 in its recovery efforts.” after losing $1.13 million in cybercrime attack in August 2022. The city mentioned that they had used a multi-pronged approach to “recover the lost finds, including seeking accountability for the contractor for their role in the loss.” The contractor was WW Clyde, a construction company that Eagle Mountain City has used numerous times over the years.
Eagle Mountain City has collected $400K in recovery efforts, but still is missing $730K that may not be recovered.
| Source of Recouped Funds | Amount of Funds |
|---|---|
| Total Amount Stolen | – $1,130,000.00 |
| City Liability Insurance | + $250,000.00 |
| Vendor (WW Clyde) | + $75,000.00 |
| Vendor Liability Insurance | + $75,000.00 |
| Outstanding Funds Missing | – $730,000.00 |
Eagle Mountain City explained the loss in their 2024 budget document the following way:
“Special and Extraordinary Loss – On Aug. 31, 2022, Eagle Mountain City determined that it was the victim of an organized cybercrime, resulting in the loss of nearly $1.13 million. This crime was orchestrated through an email impersonation wherein the individual(s) responsible were able to portray themselves as a representative of a vendor working closely with the City on a major infrastructure project. Eagle Mountain City took immediate action, contacting the Federal Bureau of Investigation (FBI), Utah County Sheriff’s Office and the vendor within minutes of learning of the incident.”
WW Clyde Contribution $150K
The press release was referencing $75K that was paid by WW Clyde to Eagle Mountain City as well as $75K from the insurance company that WW Clyde uses for liability insurance. The City was given a check for an additional $75K from Beazley USA Services Inc. WW Clyde was involved when $1.13 million was to be wired to their account, but prior to the money being wired an Eagle Mountain City Employee was tricked into changing the destination of the transfer to a different account. The money was then wired to a different account that did not belong to WW Clyde.
The money that was stolen was a transfer for the Eagle Mountain Blvd Widening Project, over the last couple of years WW Clyde had been awarded a total of $9.3 million in bids for road construction projects in Eagle Mountain.
| Eagle Mountain Blvd Widening Pre Construction Project (2/15/22) | $35,700.00 |
| Eagle Mountain Blvd Widening Project (5/17/22) | $9,034,844.75 |
| Walden Park Road Extension Project (6/2/23) | $324,000.00 |
| Total: | $9,394,544.75 |
Liability Insurance $250K
Eagle Mountain City has liability insurance for “Public Officials’ Errors and Omissions” The policy document states that the coverage for this type of loss is $5 million. The underwriter for the policy through Utah Local Governments Trust is American International Group, which sent a check to Eagle Mountain City for $250K on 8/4/2023. They insurance company only covered ~22% of the total amount lost when the policy documents show that 100% of the loss was within the coverage amount.
Eagle Mountain City was invoiced and paid $146,895.00 for the year the $1.13 million was stolen. Over the last 7 years the city has paid a total of $841,128.95 for liability coverage through Utah Local Governments Trust.
| Amount Paid for Insurance | Date Paid |
|---|---|
| $79,761.23 | 2/2018 |
| $90,635.00 | 2/2019 |
| $96,510.00 | 2/2020 |
| $104,925.00 | 3/2021 |
| $67,209.49 | 3/2022 |
| $146,895.00 | 7/2022 |
| $146,895.00 | 8/2023 |
| $108,298.23 | 7/2024 |
| $841,128.95 | Total Paid |
When I asked why the insurance only paid out $250K when Eagle Mountain City had been paying for $5 million in coverage the Communications Manger Tyler Maffit responded with the following. “Eagle Mountain city will refer to its October 3 press release for comments on this matter, while continuing to pursue those responsible for any criminal wrongdoing. The City is also exploring ways to enhance liability insurance coverage and improve financial policies with strengthened best practices.”
What about the $730K still missing?
In the press release, Eagle Mountain City stated that the civil portion of the legal dispute has been settled. Which means that the only way more funds will be collected is if they come from those responsible for committing the crime. The Cedar Valley Sentinel did a Freedom of Information Act (FOIA) request to the FBI to find out what information we could on the incident. The FOIA request confirmed that the incident occurred, was reported, and investigation is ongoing. “The records responsive to your request are law enforcement records; there is a pending or prospective law enforcement proceeding relevant to these responsive records, and release of the information could reasonable be expected to interfere with enforcement proceedings.”
Beazley USA Services, Inc., the insurance company that paid $75K of the recouped funds talks about the challenges of a vendor related incident on their website. “All the usual issues involved in a response – conducting a forensic investigation, determining notification obligations, notifying in a way that preserves customer relationships – become much more complicated when the breach has occurred at the vendor.”
The FBI would classify this as a Business Email Compromise (BEC). “A BEC is a scam targeting businesses or individuals working with suppliers and/or businesses regularly performing wire transfer payments. These sophisticated scams are carried out by fraudsters by compromising email accounts and other forms of communication such as phone numbers and virtual meeting applications, through social engineering or computer intrusion techniques to conduct unauthorized transfer of funds.”
According to FBI statistics in 2022 Business Email Compromise (BEC) victims, which the Eagle Mountain incident would be classified as, lost a total of $2,742,354,049 to BEC cybercrime. Utah had a total of 4,325 Cybercrime victims reported to the FBI in 2022, with a total loss of $98,840,388.
Crimes like this are handled by the Recovery Asset Team (RAT). The team was established in 2018 to streamline communications with financial institutions and assist FBI field offices with freezing of funds for victims who made transfer to domestic accounts under fraudulent pretenses. RAT has a 73% success rate, but can only freeze funds located in the USA, or that are in domestic institutions. While some of these funds were recovered domestically, recovery from foreign sources remains particularly challenging due to varying international cooperation and jurisdictional limitations. The FBI works with financial institutions and global law enforcement partners to maximize recovery efforts where possible, but obstacles often make this a complex endeavor.
Mike Kieffer is an IT geek by hobby and trade, with a BS in Information Systems & Technology. He is a proud father of 10, a grandpa, an author, a journalist, and internet publisher. His motto is to “Elevate, Inspire and Inform”, and he is politically conservative and a Christian. Mike has a passion for technology, writing, and helping others. With a wealth of experience, he is committed to sharing his knowledge with others to help them reach their full potential. He is known for his jackassery or his form of self-expression that encourages boldness, creativity, and risk-taking. It can be a way to push the boundaries and challenge traditional norms, leading to creative solutions and positive change.