Over 80 people charged in $3 million computer-bank scam

Middletown was one of dozens of municipalities and businesses victimized

By Art Gallagher

Federal and state authorities from NY and PA arrested over 80 “money mules,” primarily eastern Europeans ages 19-25 visiting the United States on student visas, who facilitated hackers using the “Zeus Trojan” virus to empty the bank accounts of dozens of municipalities and small businesses throughout the nation.

As reported by MMM on September 20 , Middletown was hit for over $370,000 over the Labor Day weekend.  Thanks to prompt action by the township’s finance staff and police department, all but $13,400 was quickly recovered.

According to the complaints unsealed in Manhattan federal court on Thursday, the cyber-attacks began in Eastern Europe, and included the use of a malware known as the “Zeus Trojan,” which was typically sent as an apparently-benign email to computers at small businesses and municipalities in the United States. Once the email was opened, the malware embedded itself in the victims’ computers, and recorded their keystrokes – including their account numbers, passwords, and other vital security codes – as they logged into their bank accounts online. The hackers responsible for the malware then used the stolen account information to take over the victims’ bank accounts, and made unauthorized transfers of thousands of dollars at a time to receiving accounts controlled by the co-conspirators.

These receiving accounts were set up by a “money mule organization” responsible for retrieving the proceeds of the malware attacks and transporting or transferring the stolen money overseas. To carry out the scheme, the money mule organization recruited individuals who had entered the United States on student visas, providing them with fake foreign passports, and instructing them to open false-name accounts at U.S. banks. Once these false-name accounts were successfully opened and received the stolen funds from the accounts compromised by the malware attacks, the “mules” were instructed to transfer the proceeds to other accounts, most of which were overseas, or to withdraw the proceeds and transport them overseas as smuggled bulk cash.

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Breaking News: Middletown Victim Of Cyber Attack

By Art Gallagher

An international crime syndicate with ties to the Ukraine hacked into Middletown Township’s computer system early this month and withdrew over $370,000 from the township’s bank accounts, according to confidential sources within the township.  All but $13,000 of the stolen funds have been recovered.

“Who told you?” was Deputy Mayor Tony Fiore’s confirmation that the cyber attack occurred, when asked about it by MoreMonmouthMusings.

The theft was discovered by finance department personnel on September 9. The Middletown Township Police Department was able to get all but the $13,000 that had already been withdrawn from the thieves accounts frozen and returned to the township.

Mayor Gerry Scharfenberger confirmed that the majority of funds had been recovered and said there were ongoing efforts to recover the missing $13,000.  Scharfenberger also said that he was told that the federal government was already investigating similar incidents at other municipalities.

Fiore said that the method of the attack was new and blocks for such attacks had not yet been developed.  He said that social networking sites were being restricted from the township’s computers are a precaution against future attacks.

Special Agent Bryan L. Travers of the FBI declined to comment on a ongoing investigation or to divulge what other municipalities or businesses have be victimised.

Travers said the these types of cyber attacks usually occur on holiday weekends and advised that finance managers should conduct pending business before a holiday and shut their systems down until returning to work.

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