Mobile Loses $14.7 Million in Arena Payment Scam

TL;DR: Mobile lost $14.7 million in a fraudulent payment tied to Regions Arena construction. Federal agents are investigating, and the Mayor says insurance will not cover the full loss.

Mobile lost $14.7 million in a single fraudulent transfer tied to construction of Regions Arena, leaving City Hall facing questions about how such a large payment cleared its safeguards. Mayor Spiro Cheriogotis disclosed the arena connection Wednesday, Oct. 21, according to FOX10 News.

The city first announced the loss Tuesday. In a statement carried by NBC 15, officials said city funds had been sent to a fraudulent entity. The FBI and Secret Service were notified when the fraud was discovered.

“This is bad, and nothing I can say will make it good today,” Cheriogotis said.

The transfer occurred in early October, but the Mayor said he learned about it Friday, Oct. 16. He has since ordered tighter payment controls, including hand-delivered checks for payments of $1 million or more.

Key details remain undisclosed. Cheriogotis ruled out ransomware but would not confirm whether someone had posed as a vendor. He also declined to say whether employees followed existing payment rules or whether anyone had been disciplined.

The city has hired a law firm and a forensic accounting firm to review the loss and its financial controls. It is also pursuing insurance coverage, though the Mayor said that will not repay the full amount.

Cheriogotis said city services will continue and the $300 million arena project is still expected to finish within budget. The project has funds set aside for unforeseen costs.

The city’s initial statement also said its reserves and other available funds would protect its financial stability and keep capital projects on schedule. That assurance addresses the city’s ability to absorb the loss. How the payment reached a fraudulent recipient remains under investigation.