Blaine investigating billing scam that cost city $1.5 million

The north metro suburb of Blaine lost $1.5 million in a billing scam in 2023, city spokesperson Heidi Andrea confirmed to the Star Tribune amid an ongoing investigation into the theft.

Blaine has recovered about $700,000 of the stolen money, according to a statement posted on the city’s website. Police Chief Brian Podany confirmed the theft happened in August 2023 and is still being investigated by the U.S. Department of Homeland Security.

“We are not the only victim,” the chief said.

The city learned of the theft in September 2023 when a contractor called asking for payment for a road construction project. The city believed it had paid the bill and reported a fraud case to the Blaine Police Department and federal authorities. Over the past year, the City Council has been updated multiple times in closed sessions and was advised by authorities and the city attorney to keep the matter confidential.

News of the scam was first reported by Twin Cities TV station KARE 11. After the station’s report, the city said it had not disclosed the scam sooner to comply with federal data privacy laws and to not compromise the integrity of the ongoing investigation, the city’s statement said.

“No attempts were made to mislead or ignore the issue,” the city’s statement said.

The chief in an interview reiterated that the city was instructed not to talk about the case.

“I get why people are upset,” Podany said.

At a June 3 City Council meeting, Council Member Lori Saroya made a vague reference to the loss during discussions about giving the city manager a raise: “Under this city manager our city lost $1.5 million dollars. People do not know this in our community, and I have not been allowed to speak on this publicly, but we need to be transparent.”

Some suspects behind the crime have been arrested, but others have not, the city’s statement said. The city also has instituted changes within its Financial Department to ensure that the city is not victimized again, including the “regular monitoring of vendor files and enacting enhanced fraud prevention measures.”