MIDDLEPORT – Town of Royalton officials learned Wednesday a whopping $367,000 had been stolen from town coffers in two illegal wire transfers filed through the town computer system and immediately alerted the FBI.
Thursday, they learned that $275,000 had been recovered, and they are hopeful that the remaining $92,000 lost in the scam also will be returned.
“I want other towns to know that this happened to us,” said Town Supervisor Jennifer H. Bieber. “One wrong click on the computer and this is what can happen. We were panic-stricken when we found out. It’s absolutely horrible.”
Town Attorney Thomas Brandt, who called the FBI on behalf of the municipality, said, “A major financial crime has been committed. We were happy to get some of the money back, and we hope we get all of it back.
“This was a sophisticated operation, with a great deal of expertise in this area,” Brandt said. “The town has safeguards in place, we pay an IT consultant, but this shows it can happen to anyone because these criminals try to stay one step ahead of security.”
Bieber said she does not know, specifically, how the scam was executed but was quick to point out that the town is vigilant about maintaining a secure computer system.
“We have a great IT group at Town Hall,” she said. “We think a worm got into the computer system. It can happen if someone opens a suspicious-looking email, and nowadays, it doesn’t even have to look that suspicious. If the town could get scammed, you see how easily it could happen to anyone.”
Brandt said an investigation is currently underway by the FBI.
The FBI was tight-lipped about the incident. Maureen Dempsey, spokeswoman for the FBI in Buffalo, said, “I can confirm we are working with the Village of Middleport Police Department.” She gave no other details of the investigation.
Bieber added, “I look forward to the FBI’s findings, not only to find out who did this, but also to help us and others so that this doesn’t happen again.”
Bieber said she was on vacation in Albany on Monday when the town’s bank, KeyBank, called Town Hall and asked if the town had authorized two wire transfers – one for $275,000 to the Bank of New York and the other for $92,000 to the Bank of America.
She said her staff said, “‘No, absolutely not.’”
Bieber said KeyBank did not specify the dates the transactions took place but said it would investigate and report back to the town.
“We were told Wednesday that the transfers actually went through,” she said Thursday from her home in Royalton. Bieber said a total of $275,000 was withdrawn from the town’s capital water improvement fund, while the other $92,000 was transferred out of a water operations and maintenance account.
“When we learned the money had actually been transferred, we hit the full-fledged panic button,” she said. “That’s town money and belongs to the Town of Royalton taxpayers, and we are responsible for it.”
Bieber said she called Middleport Police Chief John Swick and Brandt, who both advised taking the matter to the FBI. Swick said he filed a local report and Brandt called the FBI on behalf of the town.
Swick, Brandt and Bieber said they have not heard of any other local municipalities being victimized by this sort of scam.
“I’ve never heard of this happening to anyone for this amount of money,” said Brandt. “The lesson here is to make sure you check your electronic banking. It happened to us, and we have safeguards in place. This is the age we live in. It can happen to anyone. You have to be vigilant.”
Bieber said Thursday, “We received the call this afternoon that $275,000 had been recovered. Now we have to see if we get the rest, but I’m having a hard time being patient.”
A KeyBank official said he could not comment on the matter, as it is under investigation.