After losing a colossal amount of funds in a check fraud incident in early 2025 involving an individual impersonating a current city contractor, the city of Mercer Island recovered a massive portion of the stolen funds later in the year.
Recovery efforts of the public funds involved a comprehensive Mercer Island Police Department (MIPD) investigation in collaboration with banking institutions to seize $314,998.95 of the $420,350.94 stolen money in April and August of 2025, according to a city notice to the community on Jan. 28. The city moved closer to recovering the total stolen amount when its insurance provider added a $55,351.99 reimbursement.
“Despite these efforts, the city ultimately lost $50,000 in this accounts payable fraud scheme — the deductible under the city’s ‘impersonation fraud’ insurance coverage,” reads the notice. “The city recognizes its responsibility to accurately track, safeguard, and invest the public’s resources. Staff have worked tirelessly to mitigate the financial impact of this incident.”
After the impersonator — using the contractor’s actual name and title — requested that city staff change the mailing address for their upcoming payments last January, the request appeared to originate from a legitimate email domain and was internally forwarded to the city’s finance department. After the department processed the address change, it mailed a check for $420,350.94 to the fraudulent address, the notice states.
The city learned of the fraudulent activity when the actual contractor notified the city on Feb. 24, 2025, that they hadn’t received their last progress payment. After the city promptly alerted MIPD, its banking institutions and the Washington State Auditor’s Office, “immediate actions were taken to implement additional vendor verification procedures to strengthen internal controls over the vendor database and prevent additional loss,” the city said.
MIPD’s investigation involved a detective working closely with the King County Prosecuting Attorney’s Office and serving warrants to multiple financial institutions to obtain records and request the seizure of $314,998.95 — which was traced across state lines — after identifying the suspect.
MIPD Commander Jeff Magnan said the suspect — who has not yet been apprehended — opened a bank account in Washington, DC, deposited the check into that account and some funds were then moved into other accounts. MIPD followed the accounts and eventually seized the funds.
“Until the King County Prosecutor’s Office issues a warrant for the case, she’s still outstanding,” said Magnan, adding that they believe the female suspect is working with some co-conspirators and has moved from Maryland to Colorado to Texas over the last year.
“MIPD’s investigation also determined that there was no evidence that any city employees or the city’s contractor were involved in the fraud scheme,” the city said, adding that MIPD will assist the prosecuting attorney’s office in filing charges. “Due to the fraudulent activity crossing state lines, the case was referred to the FBI, which declined to take it on because the net loss was below the threshold to engage on these types of cases.”
Magnan said the collaboration with the prosecuting attorney’s office involves apprising them of needed warrants and approval of the documents.
“It’s a good working relationship, and it helps us in the long run. If it’s a warrant that they have approved and looked at, then when it comes time to run the case into court and actually adjudicate the case, they have been on board from the beginning,” he said.
The city, which had already established fraud-prevention protocols, said that it has strengthened some of its existing safeguards following this incident.
“City staff remain dedicated to the continuous improvement of internal controls to protect the community’s resources,” the city said, noting a review of city accounts payable disbursement policies and the control environment; vendor payment review; implementing an internal policy for vendor account management and maintenance; implementing stricter digital workflows following the completion of a financial software transition; and staff training with additional focus on identifying and preventing email fraud schemes.
According to the notice, the city of Mercer Island remains proactive and vigilant against all types of fraud and reached out to locals with this message: “As check fraud becomes increasingly common across the country, the city is sharing this information not only to be accountable to the Mercer Island community but to remind residents and local business owners to remain cautious with their own financial data and transactions.”
Following the post of this incident on the city’s Facebook page, a pair of residents thanked the MIPD for its work on the investigation.
On the King County Prosecuting Attorney’s Office front, the Reporter received the following message from them regarding the case: “We appreciate the work of Mercer Island police, and that strong communication between the investigating detective and the King County Prosecuting Attorney’s Office will continue. When you see a loss of any kind, but particularly a loss of thousands of dollars, (we) think everyone involved — police, prosecutors and the public — wants to see accountability for that loss. It’s encouraging to see that Mercer Island police have already recovered a significant portion of the money lost, and we know this is still an active police investigation.”
