The crooks who robbed $14.7 million of Mobile taxpayer money started their con in May, talked city employees into sending them a legitimate contractor invoice, and got paid on October 2 like any other monthly bill, Finance Director Logan Gewin Jr. told the Mobile City Council on Tuesday.
“This was a communication which began in May. An inquiry that was put into the department from a false vendor, false documents exchange,” Gewin said. “There were some efforts in that communication to make it look legitimate, copying people who had actual names, and through a series of conversations, phone conversations, email, document exchanges over the next couple months, a level of trust was established to get some vendor information altered.”
The scammers also got some unwitting help from inside the building, Gewin said.
“One of the key problems that I believe is that an invoice from the real vendor was exchanged with a fake vendor, which, as this moves up the chain, helped to legitimize that communication,” Gewin said. “Also, the mere fact that there had been a two-month-long communication helped to legitimate that in the eyes of some of the other people as it went up the chain.”
The payment was the regular monthly installment to B.L. Harbert International, the contractor building the $300 million Regions Arena downtown. “I would describe it as clockwork,” Gewin said. The mechanics of the payment, he added, “are simply below” the mayor’s level.
The first questions came October 7. Then Hurricane Isaias hit.
“There was still a lot of circumstantial luck across the entire chain. That was very unfortunate,” Gewin said. “Threading the needle 100 times, but one of those pieces with it was I do not believe the hurricane helped. The hurricane distracted vendor, other financial parties, city for what appears to be four or five days. There’s also a bank holiday the Monday following.”
Gewin said he learned the money was gone on Friday, October 16.
Mayor Spiro Cheriogotis disclosed the loss four days later. On Monday he fired one employee and put two more on paid leave. On Tuesday he identified the systemic failure.
“In the end, there was a failure in that account information was able to be updated without proper verification. That was a failure, and there were others that we can’t detail at this time,” Cheriogotis said.
He also confirmed it had happened before. “There is one time that, as I discussed in pre-council, I was under the impression that this council was informed on it,” Cheriogotis said. “Thankfully, we were able to claw that money back because it was within that 72-hour time window.” The council had not been told.
The mayor’s fix: paper. “I’ve talked about hard checks for anything, any amount with two commas in it, to limit our exposure to these cyber criminals,” he said. Other new controls he declined to describe “so as not to make us a target and give bad guys a playbook.”
“Good people make bad mistakes,” Cheriogotis said. “Bad people steal life savings without a moment’s care. Bad people enter themselves into legitimate transactions and steal money. I assure you, they deserve your anger.”
Residents at the podium were not buying the paper-check plan. “A hand-delivered check is not a financial safeguard,” Nina Dortch said. “Acknowledgement is not the same as accountability. Acknowledging that something happened is only the beginning.” She asked the council to publish the invoice.
Matthew Miller of District Six did the math for the room: 230 brand-new Chevy Tahoes. He reminded the council that state law gives it subpoena power over city departments.
“You don’t have to wait for the mayor’s administration to tell you what happened,” Miller said.
Estella Trotter went further. “Many city officials need to resign and need to be fired,” she said.
Vice President Gina Gregory said the $15 million owner’s contingency built into the arena budget is covering Harbert’s bill, and the leftover the council hoped to spend on 2028 projects is gone.
The council’s attorney said neither the invoice nor a vendor’s change in payment instructions would ever have come before the council.
Councilman Cory Penn said he has 40 questions for the administration. Councilman Josh Woods set Finance Committee meetings for November 3 and November 17 and will ask the council next week to seat a citizen committee of bankers and CPAs to review the finance department’s policies. “Iron sharpens iron,” Woods said.
Cheriogotis said the FBI and Secret Service are investigating and that this type of fraud nationally grew from about $4 billion in 2020 to $20.8 billion last year.
“There’s no way to spin this as a good thing,” he said.
Grayson Everett is the editor in chief of Yellowhammer News. You can follow him on X @Grayson270.
