The City of Laredo scammed out of $1 million in taxpayer dollars

Updated: Aug. 9, 2022 at 10:04 PM CDT
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LAREDO, Tex. (KGNS) - An investigation by the ‘KGNS On Your Side’ team reveals that the City of Laredo was the victim of a phishing scam that resulted in the loss of over 1 million in taxpayer dollars.

In February 2022, KGNS obtained a grievance filed by then Assistant City Manager Kristina Hale.

In the 20-page document were many allegations that the ‘On Your Side’ team wanted to look into, but there was one specific claim that stood out, and that was the claim of the million-dollar scam.

KGNS has learned throughout the seven-month investigation, that the scam happened in 2019 after an employee with the city’s finance department paid out $1 million to an email scammer posing as a city vendor. The money was stolen from a city department, and to date, less than half of the money, roughly $400,000, has been recovered.

No disciplinary action was taken against the employee because the city felt the employee did nothing wrong. A city spokesperson tells KGNS the email scam was so elaborate that it duped the city staffer.

The information comes after KGNS filed a public information request to the City of Laredo on February 23, 2022, requesting the details of the scam, but the city failed to meet the 10-day deadline required under state law to provide the documents; the reason: was to get an opinion from the Texas Attorney General.

KGNS sent a letter to the Texas Attorney General insisting the document be made public. In May 2022, the Texas Attorney General allowed for the release of “basic information” that would not interfere with an ongoing federal investigation, but still, no information was made public by the city.

In July, KGNS attorneys notified the city of their failure to release documents deemed public.

On August 3, 2022, the city issued a copy of the Laredo Police report confirming that a total of $1.1 million was stolen.

The city tells KGNS the reason for the delay in releasing the documents was due to the revolving door of city attorneys coming in and out of the office.

Additionally, city officials say Laredo was one of many government agencies from across the state that get scammed out of money. A city spokesperson says the city of Bruni and Fresno, Galveston County, and a school district in Manor were also targets of a phishing scam.

The United States Secret Service confirmed with KGNS that they are actively investigating the case and cannot comment any further.

On Wednesday, the ‘On Your Side’ team will explain how the city plans to prevent similar scams from happening in the future and what they can tell us about the ongoing investigation.

Copyright 2022 KGNS. All rights reserved.

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