You know that old phrase “Go with your gut?” It’s one that some employees at Sacramento Municipal Utility District (SMUD) apparently forgot when they received an e-mail from a vendor requesting a bank account change. (TransAmerican Power Poles, Inc. v. Sacramento Municipal Utility District (August 26, 2025) Cal.App.3d, Case No. C100384)
A SMUD employee had been legitimately communicating with its steel pole supplier vendor, TransAmerican Power Poles located in Texas, about invoices totaling $248,885. Then, the employee received an e-mail from what appeared to be the same TransAmerican employee… only instead of the customary @tappinc.com domain, the sender had used @tappincs.com (the extra s is for “sneaky”). The employee failed to notice the difference.
Another e-mail arrived from the fake address requesting a bank account change regarding payment for the invoices. This e-mail appeared to CC the actual TransAmerican controller at his legitimate e-mail address, although he never received it.
The SMUD employee was suspicious. Another employee called the situation “sketchy” and a third labelled it “shady.” They decided to call TransAmerican and check it out. They even called twice… at 6:54 PM and 6:55 PM Texas time, which was after hours at TransAmerican, and so no one picked up. The SMUD employees didn’t leave a voicemail, overrode their guts, and wired $248,885 to the scammer’s account.
When the real TransAmerican came looking for payment, SMUD essentially replied, “we already paid you” and refused to pay again, arguing the imposter was TransAmerican’s “ostensible agent” and that paying twice would be an unconstitutional “gift of public funds.”
The shocking conclusion
The court held that SMUD had failed to exercise “ordinary care,” which is a very technical legal term meaning “call back during business hours.” The lesson for tax professionals: when a vendor suddenly changes their banking details, trust your gut and verify through a known contact method.
The court ruled that SMUD was liable to pay TransAmerican the full $248,885 for the steel poles that were actually delivered, even though SMUD had already lost $248,885 to the scammer.
