PHOENIX — The Arizona Department of Housing may have mistakenly transferred $2 million to "fraudulent actors" in 2023 and the agency did not become aware of the alleged fraud for about six months, according to an audit report released Tuesday.
The state agency responsible for funding and overseeing affordable housing projects has been criticized by the Arizona Auditor General for not having policies in place that could have detected a substantial loss from the State Housing Trust Fund.
In June 2023, the agency reportedly wired $2 million to people impersonating officers from a title company and nonprofit that the housing department was working with to purchase property for affordable housing programs.
The department was later notified in December 2023 that the nonprofit organization had not received the wired funds, resulting in the agency notifying the FBI.
According to the audit report, the department had worked to process an insurance claim and received a payment to cover the loss of the wired funds. The auditor general indicated that the office is continuing to investigate the matter.
The housing department has apparently begun taking steps to address the auditor's concerns.
"The Department has established policies and procedures to prevent incidents of wire fraud. The policies include a secure method of obtaining and verifying wire transfer instructions," the housing department recently wrote in a response to the audit.
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