Oak Bluffs town leaders are taking steps to recover from a cyber scam that resulted in the loss of hundreds of thousands of dollars late this summer. 

Although complete details about the cyber scam, which is under investigation by Oak Bluffs police and the FBI, have not been made public, the town has confirmed that the incident is connected to a wire transfer on August 16 involving grant money intended to go to two vendors who are developing an affordable housing project in town.

The town had received the grant money from the state for wastewater improvements that would aid the town-sponsored Southern Tier affordable housing project. The money was meant to be wired to Affirmative Investments and Island Housing Trust, the two developers of the 60-unit project. 

At a select board meeting called Tuesday to discuss the warrant for an Oct. 29 special town meeting, town administrator Deborah Potter presented the board with a draft article asking voters to transfer $332,000 from the town stabilization to help cover the theft.

An executive summary that accompanied the draft article partly explained the incident.

“ . . . when the payment to [Affirmative Investments/Island Housing Trust] was being coordinated, the [Affirmative Investments] representatives account was intercepted and fradulent emails were substituted,” the executive summary said in part. “Additional cross checks regarding the confirmation of the banking data were inadvertently omitted ultimately resulting in the theft of the first payment . . . A second payment was not affected.”

The summary continued: “Upon discovery of the issue, the town did perform a full IT review to determine if any town systems were compromised which did not appear to be the case and reported the fraud to the OBPD and FBI.”

Ms. Potter and Oak Bluffs police Lieut. Nicholas Curelli both declined to confirm excatly how much money had been lost because the investigation remains ongoing. 

Explaining the draft article on Tuesday, Ms. Potter told the board: “This would give us the ability to fill the gap now, while we’re working on the recovery in the other segments with the FBI and the insurance companies. You’re taking the money out to pay this, period. Whether you got any money back or not, is immaterial to the approval of this amount.”

According to the executive summary, the FBI has recovered some of the funds and the town will seek to have them returned. The summary also stated that the town is working on possible insurance settlements, although neither Ms. Potter nor Lieutenant Curelli could speak to the likelihood of funds being recovered through the FBI or through insurance.

“The investigation is still ongoing and no further update on either the recovery of these funds or the availability of any applicable insurance proceeds is available at this time,” Ms. Potter said in an email to the Gazette on Wednesday.

Philippe Jordi, executive director of the Island Housing Trust, declined to comment on the cyber scam, referring to Ms. Potter’s statement. Craig Nicholson, senior vice president of real estate at Affirmative Investments, did not immediately return a request for comment.