(The Center Square) – The Arizona Department of Housing lost $2 million as the result of getting duped for a fraudulent transfer of taxpayer dollars, according to a new report from the Arizona Auditor General.
The report said the department did not have proper policies in place to limit “fraud, theft, waste and abuse” which led to money from the State Housing Trust Fund being taken by “fraudulent actors impersonating officers from a title company and nonprofit housing organization.”
According to the report, the scam became evident when the actual affordable housing nonprofit the department was working with said it did not receive the money in December 2023. However, insurance did cover the missing funds, Fox 10 Phoenix reported.
Overall, the analysis of the department’s “Sunset Factors” led to 13 recommendations. Some were accepted by the department and others rejected. The recommendations ranged from better ways to assess how programs are doing, as well as implementing improved processes to prevent future wire transfer issues.
Notably, the report response notes the department has already taken action to prevent future fraud, including improved training for agency staff.
“The Department has established policies and procedures to prevent incidents of wire fraud,” the report stated. “The policies include a secure method of obtaining and verifying wire transfer instructions. The policy has been updated to include notification protocols consistent with [State of Arizona Accounting Manual] and how to address changes to wiring instructions. The updated policy has been shared Department-wide.”
Sunset reviews are a common practice in state government to assess what agencies are doing well or poorly as part of making sure they are in compliance with the state Legislature’s goals for the agency. Ultimately, the Legislature gets to decide whether the entity continues, according to the Auditor General website.