Ottawa police took ‘proper steps’ when city flagged treasurer’s transfer to fraudster: chief

Ottawa’s chief of police claims his officers took “the proper steps” when the City of Ottawa reported that the city’s treasurer mistakenly wire-transferred the equivalent of about $128,000 from municipal coffers to a fraudulent city supplier last summer.

The city’s IT department notified the Ottawa Police Service of the fraudulent transfer soon after it happened and met with a constable to file a report, city auditor general Ken Hughes said on Monday. But police reportedly said they couldn’t help because the wire transfer had been completed and they didn’t investigate the case, according to Hughes’ office.

The police service, however, is defending itself, saying it did treat the city’s complaint “seriously” and followed the file over the following seven months.

“The proper steps were taken to ensure that relevant authorities were engaged in the investigation,” Ottawa Police Chief Charles Bordeleau said in a statement released through the police service’s media relations department on Wednesday afternoon.

“Throughout the process, OPS investigators remained aware of the file and continued to keep the City updated.”

A startling report Hughes issued on Monday revealed city treasurer Marian Simulik fell for a fraud scheme known as “whaling” or the “fake CEO scam,” which targets senior executives with access to company money.

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On July 6, 2018, Simulik exchanged a series of emails with someone who she believed was her boss, city manager Steve Kanellakos, and fulfilled what she thought was a legitimate request to transfer money to a supplier.

In reality, she had corresponded with a spoofed email address that impersonated Kanellakos’s authority and writing style, according to the auditor general’s report. She didn’t realize what had happened until five days later.

After the police service was notified of the transfer on July 11, Ottawa police officers collected evidence — including emails — and determined “the money was wired to an account outside of Canada,” according to Bordeleau’s statement on Wednesday.

Bordeleau said the Ottawa police “became involved in an investigation along with U.S. Secret Service and RCMP” — but did not indicate when that occurred — and that funds were seized in a U.S.-based investigation. (Auditor General Ken Hughes said the U.S. Secret Service, by “pure luck,” happened to be monitoring the second American account that the city’s money was transferred to and seized the account by early August.)

As this was going on, Ottawa police investigators “acted as the liaison between the Secret Service and the city,” according to Bordeleau. The police force closed its investigation into the transfer in mid-February after learning someone had been arrested in the U.S. in relation to the file, a spokesperson said.

In a statement on Wednesday, city solicitor Rick O’Connor said the individual allegedly responsible for defrauding the city is also “facing 11 unrelated counts of money laundering and conspiracy in the U.S. District Court for the Southern District of Florida, stemming from a raid on his office in July 2018.”

The city is now hoping to recoup some of the money Simulik transferred to the fraudster.

Mayor says he has ‘full confidence’ in treasurer

Hughes, in his report, said he found “no indication of any fraudulent wrongdoing by City staff related to this incident.”

On Wednesday, Mayor Jim Watson said he has “full confidence” in Simulik, who has worked for the city for 28 years, and suggested she shouldn’t face consequences for what she did.

“Unfortunately we’re all human beings, and from time to time something is going to slip through the cracks and that’s why we have an auditor general, to try and alert us to these kinds of fraudulent activities,” Watson told reporters after city council’s meeting on Wednesday.

A visibly emotional Simulik briefly addressed the audit committee on Monday, where the July 2018 scam transfer was made public. She told councillors the ordeal has affected her “deeply both professionally and personally,” her voice breaking as she spoke.

Watson said Simulik was “obviously” upset over the matter and suggested it wouldn’t be “reasonable” in this case to punish her for what happened, emphasizing the volume of email that city managers have to sift through every day.

“You’ve seen her present her comments and apologize, and I don’t think it’s really up to us to go on some chase where we start firing people for something that was clearly a human error.”

Watson said he’s written and spoken to Simulik to tell her he has “full confidence in her.”

“The great thing about auditor general reports is they allow us to learn lessons and hopefully not do that again,” the mayor said. “We’re hopeful that we’ve going to be able to get some of those dollars back.”

On March 20, the city announced Simulik would be retiring on Jan. 2, 2020.