Five residents asked the Mobile City Council on Oct. 27 for answers on the $14.7 million fraud. One employee has since been fired and two are on paid leave.

Five residents were scheduled to speak to the Mobile City Council on Oct. 27 about the $14.7 million in city money that was sent to a fraudulent entity. One of them asked for an independent audit of the city’s financial controls.

Updated Nov. 4: The council’s Nov. 3 agenda listed three residents to speak on the loss. One asked for an independent review of financial controls and a forensic accounting investigation looking back 10 years. The agenda also carried a resolution, sponsored by all seven council members and the mayor, to create a seven-member volunteer Advisory Committee on Financial Transaction Security. Under the draft resolution in the agenda packet, the committee would study payment and verification procedures and advise the council. It could not investigate specific incidents or employees. The city has not yet published minutes, so we cannot yet confirm the outcome.

Updated Oct. 31: The day before the meeting, Mayor Spiro Cheriogotis said one city employee had been fired and two put on paid leave, and that a fraudster had impersonated a legitimate vendor. Read our story on the mayor’s statement. The city has not yet published minutes of the Oct. 27 meeting. Three residents are on the council’s Nov. 3 agenda to speak on the loss.

The requests are on the agenda for the council’s Oct. 27 meeting, published by the city clerk. It is the council’s first regular meeting since the city disclosed the loss.

What the city has said

The city announced the loss in a news release on Tuesday, Oct. 20. It said the city had recently found it was the target of a criminal fraud. The fraud ended with $14.7 million in city funds transferred to a fraudulent entity.

The release said:

  • the city notified the FBI and the U.S. Secret Service as soon as the fraud was identified
  • the matter is under active investigation
  • the city is cooperating with investigators and “taking every available step to recover the funds”
  • because of its financial reserves and “other available contingencies,” the loss will not affect the city’s financial stability, its services or the timeline of its capital projects

The release did not say when the transfer was made, which payment or account was involved, how the fraud was found or whether insurance covers any of the loss. Nobody has been charged.

What is on Tuesday’s agenda

The meeting starts at 10:30 a.m. Tuesday, Oct. 27, in the auditorium at Government Plaza, 205 Government St. Five residents are listed under petitions and communications to the council on the fraud. According to the agenda, their requests include:

  • a special City Council meeting on the loss
  • an independent audit of the city’s financial controls covering 10 years
  • a targeted forensic investigation into the $14.7 million transfer
  • accountability and transparency to taxpayers

Speakers in that part of the meeting address the council. The agenda lists no resolution or vote on the fraud.

The agenda also has two standing items near the top: communications from the mayor and the monthly finance reports. Mayor Spiro Cheriogotis’s administration issued the Oct. 20 release.

What it means for you

  • City services. The city said the loss will not affect its ability to deliver services or the timeline of its capital projects.
  • Watch or attend. The meeting is open to the public. The council office is 251-208-7441, and other numbers are on our guide to who to call at City Hall.
  • Your tax money. The city did not say whether the money has been recovered. Our property taxes page explains how city and county taxes are set.

We will update this story when the city publishes the record of the Oct. 27 meeting and when the city or a federal agency says more.