By Justin Mason $3M stolen electronically from Duanesburg schools; $2.5M recovered
Christine Crowley DUANESBURG — Authorities revealed today they're investigating the theft of about $3 million from the Duanesburg Central School District. About $2.5 million has already been recovered, leaving $497,200 missing, officials said at a news conference. The funds were stolen through electronic transfers from the school district's bank account. The district first learned of the fraudulent activity on Tuesday, Dec. 22, when contacted by an NBT bank representative, questioning the validity of a request for an electronic transfer of funds to multiple overseas accounts that day. Upon confirming with the district that the transfer was not authorized, the bank immediately canceled the pending transaction, which totaled approximately $759,000, according to the district Web site. After further review, it was discovered that an additional $3 million in unauthorized electronic transfers to various overseas banks had already been executed over the previous two business days, between Dec. 18 and 21. Both district officials and the bank immediately contacted the FBI, which opened an investigation along with the state police. NBT Bank has worked with several overseas financial institutions to recover the $2.5 million. “Thanks to NBT Bank’s aggressive pursuit of the stolen funds, we are fortunate that the vast majority of the money has been recovered,” said Christine Crowley, district superintendent. “However, $497,200 of Duanesburg taxpayers’ money is still missing, and we are committed to doing everything in our power to recover the remaining funds.” In the event that any or all of the missing funds are not recovered, Crowley said she hopes the district can avoid any effect on the tax rate or district programs. The FBI and State Police Cyber Crime and Critical Infrastructure Unit are investigating the unauthorized electronic transfer, the district said.
DUANESBURG Hacker loots $3M from school FBI, state in probe; $500K still missing BY JUSTIN MASON Gazette Reporter
Authorities are investigating how a hacker transferred more than $3 million from a Duanesburg Central School District account at NBT Bank to a number of overseas financial institutions during a five-day period last month. NBT Bank was able to recover roughly $2.5 million of the stolen funds after discovering the online transfers on Dec. 22. The district’s account with NBT remains $497,200 short, but school administrators expressed optimism that they’ll be able to cover the shortfall as the FBI and state police investigate the theft. “We remain confident that we will retain that money,” said Christine Crowley, Duanesburg’s superintendent, during a news conference at the Duanesburg Elementary School library on Tuesday. “I think the district can weather this until we know whether or not we can recover these funds through the FBI.” The first unauthorized electronic transfer occurred on Dec. 18, when $1.86 million was moved from the district’s money market account to an overseas destination. Three days later, illegal transfers totaling more than $1.19 million were wired to multiple destinations outside the United States. On Dec. 22, a third attempt to transfer money occurred, directing NBT to transfer $758,758 to a number of areas overseas. The transfer flagged the account for abnormal activity, prompting an NBT representative to contact the district to confirm the validity of the transactions. QUICK RECOVERY Upon learning of the illegal transactions, NBT was able to deny the pending transfer from Dec. 22. Both the bank and the district contacted the FBI, which launched an investigation and helped recover $2,555,600 of the money. The district also closed out all of its bank accounts, established new ones with restricted online access, hired an external auditor and ordered a bi-weekly review of all transactions. School officials are also requesting that all payments be sent and received via paper check until further notice. Crowley declined to discuss further details of the theft other than to assure that no one from the bank or school district is a suspect. She said only the school’s business administrator, treasurer and payroll clerk — all longtime employees of the district — had access to the online account. “Obviously, this incident has shaken our confidence,” she said. The Albany division of the FBI and the state police are jointly investigating the case with assistance from the state Office of Cyber Security and Critical Infrastructure Coordination. All declined to comment. Likewise, representatives from NBT refused to discuss the case, citing the privacy rights of the bank’s clients. Spokeswoman Florence Doller also declined to discuss NBT’s policy for monitoring accounts or the threshold of activity that might prompt suspicion. “It is our policy to protect not only our customers’ funds but their privacy as well,” she said. “As this matter is related to a customer account and is subject to an ongoing investigation by law enforcement, we are not able to comment on it.” DIFFICULT TIME The money still missing — amounting to about 3.3 percent of the $14.8 million budget passed by Duanesburg voters in 2009 — comes during a time when the district is already anticipating a difficult year for finances. Last month, the district had to contend with a $31,764 shortfall because of a delay in state aid ordered by Gov. David Paterson. .............>>>>..............>>>>....................http://www.dailygazette.net/De.....r00101&AppName=1
School theft highlights problem of cyber-attacks BY JUSTIN MASON Gazette Reporter
Like most small school district administrators, Duanesburg Superintendent Christine Crowley is accustomed to handling a shoestring budget. She’s used to keeping a tight spending plan, and she’s no stranger to fluctuations in the district’s state aid. But nothing could have prepared her for more than a quarter of the district’s operating revenue vanishing somewhere into the depths of cyberspace. Just two days before Duanesburg’s Christmas recess, an unseen hand used the Internet to gain access to the district’s money market account with NBT Bank and then attempted to electronically transfer $758,758 to a destination overseas. The move triggered an alert with the bank, which subsequently determined that more than $3.8 million in transfers had been ordered over the course of five days. “The first reaction was sheer shock,” Crowley recalled last week. “The second reaction was anger over how the district and taxpayers could be subjected to cyber crimes.” Bank representatives quickly contacted authorities after the discovery and were able to stop the final transfer. Over the next week, they managed to recover another $2.5 million from the earlier thefts. Nearly a month after the initial transfer, Duanesburg’s account is still short roughly $497,000. That’s about 3.3 percent of the 950-student district’s $14.8 million operating budget. And school officials are no closer to learning how a hacker or group of hackers was able to break into a banking system they believed to be safe. “It’s extremely scary to think that somehow someone out there can break into your banking system and then steal $3 million without anyone noticing,” Crowley said. Authorities won’t release any details about the theft, citing the ongoing investigation. Likewise, a spokeswoman for NBT refused to discuss the online thefts or any of the bank’s safeguards to prevent such fraud. But December’s cyber-attack occurred only a month after the FBI’s Internet Crime Complaint Center issued an alert about a “significant increase” in online banking fraud targeting government and school district accounts via “spear phishing” attacks. ...................>>>>..............>>>>...................http://www.dailygazette.net/De.....r00101&AppName=1
DUANESBURG Cyber-heist complicates tough budget year School district sees few good options BY JUSTIN MASON Gazette Reporter Reach Gazette reporter Justin Mason at 395-3113 or jmason@dailygazette.net.
Uncertainty is clouding the Duanesburg Central School District’s budget this year. Gov. David Paterson’s proposed budget would shave more than $787,000 in state aid from the school and the continuing federal investigation into the online theft of roughly $497,000 is forcing the district to dip heavily into its reserves. As a result, the only thing certain about the budget planning is that it’s going to be difficult for the small district. Superintendent Christine Crowley said the governor’s proposed gap elimination adjustment — a large funding cut on top of the fl at aid — combined with continued rising costs will result in a $1.19 million shortfall for the district. The addition of federal stimulus fund will help reduce this by roughly $400,000, which is not enough to prevent draconian cuts. “We’re going to have to work at this point under the assumption that we’re going to have to cut another $800,000 out of our budget,” Crowley said Friday. And that’s before even considering the nearly half-million dollar deficit caused by December’s cyber-heist. Over the course of fi ve days, hackers attempted to transfer an estimated $3.8 million from the district’s account with NBT Bank to destinations overseas. The bank was able to reverse the bulk of the transfers. Yet federal investigators haven’t given the district any indication as to whether the lost amount will ever be recovered. ............>>>>.............>>>>...............http://www.dailygazette.net/De.....r01600&AppName=1
In this tough economy with people who are without jobs the school districts may have to cut expenses, layoff staff, and eliminate unfunded programs like everyone else because raising taxes again isn't going to be an option that people will vote for.
I don't understand something here ... wasn't the school insured against things like this? The bank holds no responsibility/liability?
I thought the same thing!! It just doesn't make any sense! Could it be an 'inside' job?? No accusations here...but that bank isn't the most 'tech savvy'!
Oh...let's ask ally...she'll know the answer. Oh that's right...the people who stole the money were either friends or perhaps they really needed the money to buy food and clothing! They were doing it out of compassion!!! Probably liberal socialist progressives as well, so they can just get a pass.
.....the banking/monetary system is ALL cyber now.....someone/thing is liable......are we talking about insurance/derivitives and the like that guarantees those damn pensions that taxpayers have to guarantee????
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
[b]SCHOHARIE School’s computers are more secure State audit found information wasn’t properly safeguarded BY EDWARD MUNGER JR. Gazette Reporter
Following a state audit that pointed out shortcomings, Schoharie Central School District offi cials say they have made changes that will make it difficult for hackers to compromise the district computer system. The district faced criticism after auditors from the state Comptroller’s Office determined computer information wasn’t properly safeguarded. The review revealed that someone had downloaded a “key logger” program on one of the general classroom computers, which records all strikes of a keyboard and sends them to the hacker. “Fortunately, it wasn’t something that had secure information on it,” Superintendent Brian Sherman said. Since the audit, which reported several shortcomings Sherman himself noticed upon his arrival at the district, he said the school administrative, financial and general computer systems are now “completely locked down.” Before, any user on one of the school computers could make changes, add programs and access Internet sites considered inappropriate in a school. Now, unauthorized users are unable to load key loggers, viruses or any other program — it all disappears the moment one logs off, he said. ................>>>>..............>>>>...............http://www.dailygazette.net/De.....r00702&AppName=1[/b]
DUANESBURG District may sue NBT Bank Legal options eyed in wake of big theft BY JUSTIN MASON Gazette Reporter
Duanesburg Central School District officials are exploring their legal options to recover roughly a half-million dollars stolen by a hacker in December. The district decided to solicit proposals from area law firms after determining NBT Bank and its insurance carrier will not reimburse the $497,000 that hasn’t been recovered by federal investigators. Superintendent Christine Crowley said the district is now exploring different avenues that may be available to seek the funds, including a possible lawsuit. “The bank has said they have no liability at this point and the insurance company said the same thing,” she said before a school budget forum Monday. “At this point, we’re exploring our options.” Over the course of five days, hackers attempted to transfer an estimated $3.8 million from the district’s account with NBT Bank to destinations overseas. The bank was able to reverse most of the transfers, but has been unsuccessful in returning the full balance of the stolen funds. Federal investigators continue to probe the theft. However, they’ve given no indication when the investigation will wrap up or whether the district’s money will be returned. Crowley said the request for proposals sent out by the district doesn’t include an estimated cost for the service. She said the district’s Board of Education may work out a situation where a law firm would keep a percentage of the funds that are recovered. “That’s another thing the board will have to decide,” she said. The district also moved a step closer to choosing a new bank in wake of December’s cyber theft. About a half-dozen banks answered the district’s request for proposals calling for a financial institution to provide a heightened level of security. NBT Bank did not respond to the district’s request. Crowley said board members normally designate the district’s bank during their organizational meeting in July. “I think we owe it to the com- munity to get the highest level of security as we can,” she said. ..............>>>>........................>>>>....................http://www.dailygazette.net/De.....r00703&AppName=1
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