CITY OF GALVESTON SCAMMED OUT OF $695,000

Trash truck scam suspect extradited to Galveston

 

By B. Scott McLendon 

The Galveston County Daily News

Feb 19, 2024

Kamala reacts to learning about the City of Galveston being scammed out of $695,000

 

GALVESTON -- Sheriff’s deputies traveled about 2,300 miles to Kentucky and back on Sunday to extradite a 52-year-old woman charged with felony theft in connection to a phishing scam that bilked the city for about $700,000 in July.

Two deputies from the warrant division of the Galveston County Sheriff’s Office flew to Prestonsburg, Kentucky, to collect Fawn Ann Sloan, who is accused of acting out an online scam that duped Galveston officials into sending $695,000 to a bogus account.

Sloan acted with a man from Germany she met through an online dating site, according to an arrest affidavit.

A judge could rule for Sloan to pay restitution in the case, City Attorney Don Glywasky said. It’s unclear whether the suspect still has any of the city’s money because Sloan told Houston investigators she no longer had access to a bank account the money was directed into, according to the affidavit.

The criminal proceedings against Sloan might complicate attempts to recover the money, Glywasky said.

“If she’s given any jail time, that would delay the return to her career,” he said.

It’s premature to discuss whether the city might pursue a civil lawsuit to recoup any stolen money, Glywasky said.

Sloan on Sunday was booked into the county jail on a $1.4 million bond for theft of property greater than $300,000, according to jail records.

Last week, Sloan signed an extradition waiver for her transfer to Galveston County deputies, Maj. Ray Nolen said.

Her previous refusal to do so could have forced deputies to seek a waiver from the governor for permission to extradite her to Texas, which no longer is necessary with her signature, Nolen said.

Sloan had been in a Floyd County, Kentucky, jail since Jan. 30, when Galveston police initially flew there to arrest her.

Houston detectives who worked on the case tracked the transactions to bank accounts owned by Sloan, who on LinkedIn is listed as a waitress for Texas Roadhouse, according to the affidavit.

Sloan and the man also are accused of stealing more than $900,000 from companies across the country, according to the arrest affidavit obtained from Prestonsburg police.

Sloan told investigators she exchanged tens, sometimes hundreds, of thousands of dollars with the man in the form of cryptocurrency, which is a type of digital money that uses encryption to make it secure, according to the affidavit.

THE SCAM

City officials April 7 entered into an agreement with Longhorn International Trucks to purchase three 2023 model trash trucks for about $1 million, according to attorneys for Longhorn.

But a phishing email told Galveston staff members to send about $695,000 of the money to the wrong account.

Phishing is the common, fraudulent practice of sending emails or other messages purporting to be from a reputable source to lure someone into sharing sensitive information such as bank account details.

The scam caused a stir on the island, causing many to question the city’s oversight of tax dollars.

THE FALLOUT

For their roles in falling for the scam, city administrators demoted Controller Tammy Jacobs and suspended her for 10 days, along with suspending David Smith, executive director of fleet, mass transit and special events, for five days for their role in agreeing to the scam purchase, according to the city.

Both had received the city’s annual cyber-security training, which includes information about phishing scams, according to the city.

The two failed to follow established city policy for executing wire transfers to pay vendors, city officials said.

Assistant City Manager Dan Buckley, Finance Director Mike Loftin and Jacobs signed off on the $695,000 transfer scam, according to documents received through a public information request.

The city council Sept. 14 agreed to pay $591,000 to avoid a lawsuit by Longhorn International Trucks, which in April made a deal to sell the city three trash trucks for about $1 million. The city recouped $50,000 of that settlement cost through insurance.

The city spent $347,000 for the first truck, sent $695,000 meant for the next two to a scammer and paid about $541,000 in a settlement after insurance reduced the cost by $50,000.

That means the city ultimately spent about $1.5 million on trucks priced at about $1 million.