FORT BEND COUNTY, Texas — A Fort Bend County municipal utility district is working with federal authorities to recover more than $8.2 million in unauthorized transfers made from its investment account, an incident that has raised concerns about public fund security and internal financial oversight.
Officials with Fort Bend County Municipal Utility District No. 35 (MUD 35), located about 25 miles west of downtown Houston, confirmed the transfers were made on April 7 without authorization from the district’s board.
The administrator of the district’s public funds investment pool discovered the suspicious activity on April 8 and promptly alerted the FBI, district leadership, and the contracted bookkeeping firm.
“Through swift action, $3.4 million has been recalled, recovered, and returned to MUD 35’s investment account,” the district said in a May 2 statement. Recovery efforts for the remaining balance are still underway, and the district has not disclosed the specific financial institutions involved in the transfers.
The unauthorized activity only affected the district’s investment account, which holds funds for debt service and operations while earning interest. MUD 35’s separate operating banking account, used for deposits and accounts payable, was not compromised.
“MUD 35 is solvent and fully capable of meeting its current debt obligations and operating expenses,” the statement said, assuring residents and stakeholders that utility services would continue without disruption.
The district serves approximately 2,075 homes and 25 businesses. It provides critical infrastructure services, including water, sewage, and drainage, and is one of over 900 municipal utility districts across Texas. These entities typically rely on revenue generated from property taxes and water usage fees to fund operations and capital improvements.
MUD 35’s board of directors has hired forensic accountants and retained outside legal counsel to support the ongoing investigation. The FBI and other federal agencies are involved, but no suspects have been identified publicly, and the district has not speculated on whether the breach was the result of an external cyberattack or internal misconduct.
Officials at MUD 35 could not comment on an active investigation. The district has said updates will be released to the public as new information becomes available.
The incident underscores the importance of robust internal controls and financial safeguards for public entities handling millions in taxpayer dollars. The scale of the fraudulent transfers has prompted renewed discussion among local officials and residents about transparency and accountability in public finance.
Anyone with information related to the unauthorized transfers is encouraged to contact the district at 713-623-4531.
