At the Oak Bluffs special town meeting last week, voters had some pointed questions for town officials over a mistaken wire transfer that could lead to a slight increase in taxes.
Residents approved eight different warrant articles at the special, but the hot topic of the night was warrant article 4, which sought approval to replenish the $332,000 lost in a fraudulent email scam earlier this year. The funds — which were intended to support an affordable housing project — were intercepted during a payment process.
New details emerged on the scam as well: The FBI identified that $80,000 of the lost money was invested in “some form of bitcoin,” Oak Bluffs town administrator Deborah Potter said, although she added the town was unable to retrieve the funds, as they are part of an ongoing investigation.
On the town meeting floor, residents were not shy about reprimanding the town’s officials as to what policies or lack thereof were in place to allow a single person to successfully extract such a large sum of money so effectively.
Voter Michael Friedman inquired about a lack of staff in the IT department.
“We have a part-time IT manager,” responded Potter. “Because we recognize that threats can come at any time of day, we have also supplemented our IT staff with an on-call service.” The goal is to provide backup so if something were to happen, IT is available 24 hours a day.
“We have already implemented some additional processing roles,” said Potter.
Some voters wanted to know why the insurance provider had not refunded the town. Potter responded that the cyber insurance did not cover the fraud, because it was not deemed a cyber intrusion. The scam came through a legitimate email, and it didn’t involve shutting down, capturing, or preventing access to online systems.
According to Potter, the town was and still is in the process of receiving a higher level of insurance that would have helped recoup the funds.
Registered voters questioned what protocols enabled one person to steal such a large portion of money, and asked if the same protocols would continue in the future.
“There were no formal policies in place,” Potter said. “It was not a written policy, but a written policy is being implemented as a result of this. I am pretty confident that the next time anybody comes with either a new wire or change in wire, that’s going straight to the shredder.”
Residents also had concerns if this would have an impact on the town’s potential to receive state grants in the future.
“If we don’t pay it, yes,” said Potter. “There has not been any indication from the state that they are concerned about our ability to manage grants; they are more just concerned that this one grant gets closed.”
Oak Bluffs initially received the targeted funds as part of a state grant to support an enhanced denitrification wastewater system for the Southern Tier affordable housing project. However, fraudulent emails compromised the first payment.
Following the fraud, the town conducted an internal IT review, confirming that town systems had not been breached. While the FBI investigation has recovered some of the funds, Oak Bluffs is still pursuing other potential recovery avenues, including insurance claims.
“I think we have a solid shot at recovering about $150,000 between two sources,” said Potter. “And I am aggressively going for more than that by any means possible … any legal means possible.”
Select board members emphasized that new security protocols, including multi-step verification for large transactions, are in development to prevent future incidents.
Other residents recommended suspending wire transfers, with exceptions only for necessary transfers, until stricter safeguards are in place.
Voters eventually approved the request unanimously.
The other significant article approved was the $750,000 to support a solar photovoltaic (PV) system and battery energy storage on municipal land. The project, which was originally handled by the Cape and Vineyard Electric Cooperative (CVEC), stalled due to COVID-19 and other setbacks.
Residents raised questions regarding clarification on where the allocated funds would go, and if the town would assume ownership and maintenance responsibilities.
Potter clarified that while Oak Bluffs would not own the solar arrays, the town stands to earn a minimum of $80,000 in revenue once operations begin.
Resident Steve Allen inquired if the project might lower residents’ electricity rates. Dion Alley, select board member, explained that state regulations control electricity rates, and while the solar project will not reduce energy costs directly, it will provide a tax offset through revenue generation.
Other articles passed including allocating $5,000 to pay for maintenance and upkeep of the Oak Grove Cemetery, approved with no discussion. Article 3, to see if the town will transfer an additional $4,000 from the Water Line account to cemetery expansion, was approved with no discussion. Article 5, streamlining some of the wording in section 201-10 in the General Bylaws of 2023, was approved with no discussion. Article 6, updating and modifying wording in section 201-11 from General Bylaws of 2023, was approved with no discussion. Article 7, cleaning up language and making sure it is consistent with the best management practice, modifying Section 205-2 of the 2023 General Bylaws, was approved with little discussion. Article 8, to see if the town will update language in Section 205-6 of the General Bylaws, was approved with no discussion.
