Lexington mayor addresses $4M theft of federal funds from city

Lexington mayor addresses $4M theft of federal funds from city
Published: Aug. 30, 2022 at 5:08 PM EDT
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LEXINGTON, Ky. (WKYT) - It’s been an expensive lesson on cyber security for the city of Lexington after $4 million was transferred into the wrong hands.

The missing money, meant for federal rental assistance and transitional housing, is causing concern amongst residents in Lexington.

“We don’t need to be worried about our eviction funds, our rental assistance, because we have places in the budget, we’re moving money to fully fund that. We’ll go to the council to do budget amendments and put it back where it needs to go,” Lexington Mayor Linda Gorton said.

On Friday, the city released details about three electronic funds transfers into a private bank account that was originally intended for Community Action Council. They later learned CAC never received the money.

They say that account has since been frozen by the financial institution. City leaders don’t believe the government’s financial system was compromised.

“I don’t think in the long term, this will be an issue because we’re looking into whether our insurance funds can cover this. They may recover the money. We don’t know that yet, but that is the goal to recover that money and to find the person who did it,” Mayor Gorton said.

Now the FBI and Secret Service are stepping in to investigate.

“They looked at all of that, I was told they looked at the dollar amount, the way it seemed to be done when they looked at all of those pieces of the situation, they determined it would be worth their while to pursue it. They don’t take every case but we’re really happy that they took our case,” Gorton said.

The mayor tells WKYT she has ordered an in-depth examination of the city’s internal wire transfer process to ensure their measures are airtight.

The city is now working through the fund recovery process to make sure that community action council’s services and housing assistance is not interrupted.