Gilbert Plains loses $514K in alleged fraud

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This article was published 23/11/2022 (1271 days ago), so information in it may no longer be current.

A municipal employee in Gilbert Plains has been fired after an internal investigation revealed more than half a million dollars was illicitly transferred out of a municipal bank account.

As first reported by CBC Manitoba on Tuesday, accounting firm Meyers Norris Penny recently presented findings that the $514,571.86 was removed from the bank account without council’s authorization. The matter has been referred to the RCMP for further investigation.

The incident is being considered a case of wire fraud, according to a Nov. 15 letter sent to residents on behalf of Reeve Jim Manchur and the rest of council.

The name of the terminated employee has not been made public.

The municipal council for Gilbert Plains, located roughly 200 kilometres north of Brandon, was said to be working on a claim for the loss with its insurance provider.

The municipality is now working to implement several safety measures to prevent incidents like this from happening in the future. Those include requiring dual authorization for any e-transfers from the municipality’s banking accounts, requiring council to approve all financial reports, increased monitoring to ensure bank statements are reconciled with records on a regular basis and performing audits.

However, Manchur told the Sun that the municipality is considering a requirement of four authorizations for any e-transfer, for added security.

“[The RCMP] have committed to keeping us updated as their investigation goes on,” Manchur said. “We have multiple people overseeing wire transactions now. Our financial reporting is greatly improved and up to date. Believe me, we’re taking our finances seriously and trying to repair confidence with the community.”

Gilbert Plains isn’t the only community whose finances have been attacked in recent years.

Two years ago, the Municipality of WestLake–Gladstone, located near the southwest shore of Lake Manitoba, lost $425,000 from its account with Stride Credit Union.

That crime, which the Winnipeg Free Press reported in August had yet to be solved, involved money from the municipality’s account being converted into Bitcoin and transferred away. That makes it very difficult to trace, according to an RCMP officer quoted by the Free Press.

WestLake–Gladstone is suing its credit union and insurance providers over the incident to recover the lost funds.

The province issued an order-in-council earlier this year asking the auditor general to perform a special audit of WestLake–Gladstone and several other unnamed municipalities after the Department of Municipal Relations learned of “citizens’ concerns with respect to council governance, financial management, oversight and public accountability.”

Asked if Gilbert Plains is one of the municipalities under investigation, Manchur said he had not heard anything indicating this was the case.

The Gilbert Plains case involved 30 separate transactions between April 2020 and June 2022, Sgt. Paul Manaigre of the Manitoba RCMP told the Sun on Tuesday.

The incident, he explained, is being considered wire fraud instead of a cybercrime because unlike in the WestLake–Gladstone case where an outside entity broke into the account, the suspect in Gilbert Plains was an employee with internal access.

Manaigre said the two cases are the only ones he’s aware of right now involving this kind of theft from municipal finances. Additionally, he said, the entities usually involved in these cases are small community associations doing fundraising projects.

The next step is to go through the document provided by MNP and gather the evidence needed to substantiate any charges that could be laid, he said.

The provincial government would not divulge any information about the investigation it requested, or the municipalities involved when reached for comment, saying inquiries about an auditor general investigation should be directed to that office.

In an email, auditor general Tyson Shtykalo wrote: “In September, I received a request for a special audit under Section 16 (1) of The Auditor General Act to examine and audit the accounts of various municipalities. I am currently undertaking preliminary procedures to determine if I will conduct an audit, and what the scope and the subject of that audit would be.”

The Association of Manitoba Municipalities wrote in an email that these kinds of incidents are a growing concern not just in the province, but across Canada.

“The AMM has shared informational materials with all municipalities related to cybersecurity risk management while we have also offered sessions to help mitigate risks to cyber-attacks and data breaches,” a spokesperson wrote.

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