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The city of Portland sued a Manhattan law firm in New York state court last week, alleging $6.7 million in city funds ended up in a bank account the law firm controlled after someone posing as a city vendor routed the money to the firm’s account.
City spokeswoman Carrie Belding says the city plans to drop the lawsuit imminently, however, after lawyers at the firm, Raiti PLLC, cooperated with the FBI’s investigation and “provided information supporting that they were also a victim.”
The $6.7 million stolen from the city’s Bull Run Filtration Project, Belding says, is in the hands of the feds and will be returned to the city.
In the meantime, the city says, the FBI and local law enforcement are conducting a criminal investigation into how the money landed in the firm’s bank account—and who made it happen.
The city’s lawsuit offers some information about how the millions may have landed there.
The lawsuit alleges the perpetrator “presented himself as a vendor on one of the city’s high-profile water purification projects, manipulated city representatives into changing the bank account information on file for that vendor, and caused the city to direct a $6.7 million vendor payment to an account of his choosing at JPMorgan Chase Bank.” The lawsuit was first reported by law.com.
The Bull Run Filtration Project is an increasingly embattled Water Bureau project that has ballooned in cost, more than quadrupling since initial estimates. The current price tag, as The Oregonian has reported in recent months, is $2 billion.
The lawsuit states that the city, with the help of the FBI, tracked the stolen money to an “attorney trust account” at Chase owned by the Raiti law firm. Raiti did not immediately respond to a message seeking comment.
The lawsuit alleges the perpetrator posed as an actual employee of one of the city’s biggest general contractors on the Bull Run project, MWH-Kiewit.
The city said in its lawsuit it does not believe the MWH-Kiewit employee committed the theft, but instead believes the perpetrator fraudulently posed as the employee. (The perpetrator, in emails sent to the city, identified himself as a proposal manager by the name of someone who does work at MWH-Kiewit; that person is listed as the point of contact for an active MWH-Kiewit contract listed in the city’s vendor database.)
“We are presently unaware of the relationship between [the perpetrator] and the Raiti firm,” the city added in its filing, “but are compelled to seek emergency relief now, while the investigation is ongoing, to ensure that the money is not secreted out of the trust account pending the outcome of this action.”
The city did not catch the errant payment until Wells Fargo, the bank from which the city’s money was sent to the bank account, alerted the city’s Treasury of potential fraud, the lawsuit states.
“The city is taking this matter seriously,” Belding says, “and is making every effort to ensure the return of public funds and that those responsible are held accountable.”