$8.2 Million in Public Funds Fraudulently Transferred from Fort Bend County MUD 35 Investment Account
Fort Bend County Municipal Utility District No. 35 (MUD 35) is actively working with federal authorities following a serious financial breach involving the unauthorized transfer of $8.2 million in public investment funds. The incident, which occurred in early April, has prompted an ongoing investigation and a partial recovery of funds.
MUD 35 is one of approximately 900 municipal utility districts across Texas, providing essential services to a community of more than 2,000 residential properties and 25 businesses in the Katy area—roughly 25 miles west of downtown Houston. The district borders notable developments including Meadowbrook Farms Golf Course, Cinco Ranch, and Katy-Gaston Road.
According to a statement released by MUD 35 on May 2, 2025, the unauthorized transfers were made on April 7 from the district’s investment account, which is held by a public funds investment pool. The pool's administrator detected the irregularities on April 8 and immediately notified the Federal Bureau of Investigation (FBI) and MUD 35’s contracted bookkeeping firm.
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Swift action allowed for the recovery of $3.4 million, which has already been returned to the district’s investment account. The remaining $4.8 million is still under investigation, and recovery efforts are continuing in coordination with federal authorities and legal counsel.
In an official statement, a spokesperson for the district emphasized that “MUD 35 is solvent and fully capable of meeting its current debt obligations and operating expenses.”
Limited Scope of Breach, Broader Implications for Public Trust
MUD 35’s finances are managed through two separate accounts: a traditional bank account used for daily operational expenses, and an investment account designed to support debt service and long-term funding through interest earnings. The district clarified that only the investment account was affected in this incident.
“The District hopes to see the remaining funds recovered as soon as possible,” stated MUD 35’s Board of Directors, who purport to be fully cooperating with the FBI’s ongoing investigation.
The incident has raised questions among residents and officials about cybersecurity and fraud prevention in public financial systems. MUD 35 has retained outside legal counsel to provide guidance and support as the recovery and investigation processes continue.
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Community Reassurance and Continued Operations
Despite the financial disruption, MUD 35 reassures residents and business owners that all district services remain fully operational and that no interruption in utility services or financial commitments is anticipated. The board has committed to transparency throughout the investigation and will release public updates as more information becomes available.
Residents or individuals with knowledge related to the unauthorized transactions are encouraged to contact the District directly at 713-623-4531.
For more information on Fort Bend County MUD 35 and its services, visit the official website at fbmud35.com.
Tiffany Krenek has been on the My Neighborhood News team since August 2021. She is passionate about curating and sharing content that enriches the lives of our readers in a personal, meaningful way. A loving mother and wife, Tiffany and her family live in the West Houston/Cypress region.
