City loses $ 2.3 million in taxpayer money – NBC Boston

The city of Peterborough, New Hampshire, said Monday it lost $ 2.3 million in taxpayer dollars in a cyberattack.

“It hurts us to inform the residents and taxpayers of Peterborough that, like so many other cities, we have been the victims of an internet crime that defrauded our taxpayers of $ 2.3 million,” said Select board chairman Tyler Ward and city administrator. Nicole MacStay said in a press release posted on Facebook.

They said they did not believe the funds could be recovered by voiding the transaction and that they did not know if the losses would be covered by insurance.

“It’s really a punch, for sure,” said William Kennedy, Select board member, when reached by phone Monday. He said he had already answered several calls from residents within the hour since the press release was first posted online.

Peterborough, a city of just over 6,000 residents, is located in southern New Hampshire, about 35 miles west of Manchester.

Ward and MacStay said city officials learned on July 26 that the ConVal School District, which serves Peterborough and eight other surrounding towns, had not received its monthly transfer of $ 1.2 million from the city. .

After further investigation, city officials realized the city had been the victim of email fraud.

“They were incredibly sophisticated fakes,” MacStay told NBC10 Boston on Monday. “These e-mail exchanges would require a much closer look than anyone usually looking at an e-mail to see that it was in fact fake. They really understand how these transactions worked and took the time to understand how we were working with the school district and the vendor to be able to embezzle the funds like they did. ”

Finance Ministry staff placed an order to oppose the transfer, but the funds had already left the city’s account at Peoples United Bank, the city said. The city’s IT staff also contacted the U.S. Secret Service and cybersecurity firm ATOM Group.

The Secret Service Cyber ​​Fraud Task Force began tracing the funds through transactions that ultimately converted them into cryptocurrency, the city said. The ATOM group and city IT staff were able to identify email exchanges between Peterborough finance staff and thieves posing as ConVal School District staff using documents and email accounts forged, but they were unable to identify who had perpetrated the fraud.

On August 18, as the initial investigation continued, staff from the city’s finance department learned that two bank transfers intended to be sent to Beck and Bellucci, the general contractor working on the street bridge project principal, had also been fraudulently diverted to thieves by similar means. The secret services and the ATOM group were again warned.

Kennedy, who was elected in May, said he was first told about the theft about a week ago and could hardly believe it.

“It was an anomaly, as it was,” he said. “They were apparently about to grab us at a vulnerable time. It’s a common thing. We transfer funds to ConVal on a monthly basis. It was an automated process. They grabbed us at a low time.”

Investigations into the exchanges of falsified emails have shown that they came from abroad.

“These criminals were very sophisticated and took advantage of the transparent nature of the public sector’s work to identify the most valuable transactions and focus their actions on hijacking those transfers,” Ward and MacStay said in their statement.

They said it was not believed that city employees were criminally involved in the money transfers, but finance ministry staff directly targeted by the fraud were put on leave until the ongoing investigation of the secret services is completed.

ConVal Superintendent Kimberly Rizzo Saunders released a statement Monday saying the school district was aware of the ongoing investigation. She said school district IT staff looked at email and server access logs and found no signs of malicious activity.

“We are working alongside the City of Peterborough, the US Secret Service, legal counsel and our insurer to support this investigation as much as possible and develop a better understanding of how this theft happened, as well as to recover lost funding to the extent possible. ” she said.

Ward and MacStay said the city is still waiting to hear from its insurer whether the losses will be covered in full or in part. Meanwhile, the city has canceled all automated transfers, and all electronic transaction policies and procedures are currently under review.

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