City of Chetek recovers $2.6M stolen in phishing scam

The western Wisconsin City of Chetek has recovered more than $2 million stolen in a wire transfer scam.

The city’s treasurer says it was a “shock” when they learned the full amount had been returned after the community fell prey to scammers who posed as contractors building a new wastewater treatment plant.

Chetek is a small city of just more than 2,000 residents, about 40 minutes north of Eau Claire. Contractors have been at work on a new wastewater treatment plant for the community since May of last year.

City Treasurer and Administrator Laura Stelzner told WPR city officials realized in November that fraudsters had stolen $2.6 million from the community.

A statement from the city said “fraudulent actors” sent a fake email, purporting to come from general contractor Market & Johnson, with new wire transfer instructions. The payment was made to the “new” — and phony — account, and the money was gone.

Chetek is not alone in falling victim to a phishing scam. According to a report from the Federal Bureau of Investigations, $12.5 billion was stolen through internet crimes worldwide in 2023. Phishing scams, in which thieves often impersonate a legitimate contractor or vendor, were the most common type of online theft, with nearly 300,000 cases reported.

In Chetek, the loss of $2.6 million meant the community needed to borrow additional money to continue work on the treatment facility.

“So, we then had to secure a loan to be able to continue paying our contractor to make sure there weren’t any interruptions with our wastewater treatment project going on,” Stelzner said.

The city contacted local and state police, every financial institution it does business with and alerted the FBI. On Wednesday, the city’s Facebook page announced the full $2.6 million had been recovered on March 1.

“It was a big shock to all of us that we were able to recover all of it,” Stelzner said.

With the money returned, the city was able to pay off its loan. Stelzner said that was a big relief. 

“Having that amount of money taken in the form that it was would have been very detrimental if we were not able to recover the funds the way that we were,” Stelzner said.

Stelzner said part of Chetek’s investigation included hiring third-party forensic analysts to review the city’s email and user accounts, which found the scammers had not infiltrated any accounts or systems. She said the city has since enhanced its fraud and computer virus detection capabilities and employees have received additional training on how to detect suspected phishing emails.

A number of Wisconsin communities and organizations have been victimized in similar schemes in recent years.

In 2019, Marshfield School District lost $660,000 in what officials called a “very elaborate” and “authentic” looking scam. Ultimately, the district was able to recover nearly $500,000.

That same year, St. John XXII Catholic Parish in Port Washington was scammed out of $510,000 in a nearly identical attack. And in 2020, the West Allis-West Milwaukee School District reported a scam that sent more than $800,000 to accounts around the world.