Sudbury city announced that it was defrauded and robbed of more than $1.5 million last month when it was tricked into transferring cash funds to a bank account created by scammers in downtown Scarborough.

In a lawsuit filed in Toronto earlier this month, the city of Sudbury alleges that unknown suspects "hacked" into the email accounts associated with a construction company contracted to build affordable rental housing units in a Northern Ontario municipality.

According to the claim statement, the suspects managed to access the legitimate email of the project manager and pretended to be the employee in communications with the city.

The lawsuit alleges that the scammers convinced city employees to send a wire transfer of $1,501,380.66 to a different bank account than the one originally created by the construction company.

The municipality is now trying to recover those funds and is seeking a court order to compel several major banks to track the funds, freeze them, and return the money to the city.

An Ontario numbered company based on Blackley Road in North York was also mentioned in the lawsuit.

A statement from a city spokesperson said, "The illicit activity was quickly detected by staff, and we are confident that we will be able to recover the majority of these funds."

It confirmed, "The process of recovering these funds is lengthy and involves multiple external agencies, such as the contractor, insurance company, banks, and courts."

According to the claim statement, before the transfer, city employees noticed discrepancies between the bank account information and contacted the company to provide further documents; the lawsuit alleges the suspects "intercepted" those emails and proceeded to create and submit "fraudulent and forged documents" to carry out the theft.

The funds were transferred to the scammers on December 21 to an account created at a Scotiabank branch in downtown Scarborough, as stated in the lawsuit, and this account has since been frozen.

Internal review and police investigations are ongoing

The suit stated that it took about a week before it was discovered that the construction company did not actually receive the transferred funds.

According to the city's statement to CP24.com, "Municipalities, like residents, face complex fraud-related issues. While we proactively work to prevent these types of incidents and continuously assess and implement changes to address them, fraud events are becoming increasingly sophisticated."

"The Greater Sudbury Police Service is investigating, and we are conducting a detailed internal review of this matter."

The city said the timelines and work on the transitional housing project on Lorrain Street, a 40-unit affordable residential building at the center of the incident, "were not affected" by the fraud.