Cybecriminals targeted a California based Escrow firm and stole $1.5 million earlier 2014. This left the firm with no option other than to close shop and lay off its staff. The court-appointed law firm which is representing the company holds the other cyberheist victim’s money. The law firm is working on a lawsuit against the escrow’s bank to recover the stolen cash.
In Dec 22, a fraudulent wire transfer of $432,215 was sent from the Efficient Services Escrow Group’s banks accounts to a bank in Moscow. The firm’s accounts are based in Huntington Beach, California. A month later, the cybercriminals came calling again. They managed to siphon off $1.1 million via two wire transfers. This time, the funds were directed to the Northern region Chinese province of Heilongjiang.
Heilongjiang Province which borders Russia was a subject of an FBI cyberheist investigation a year before. The FBI had warned that cyber criminals had managed to steal $20 million in the previous year alone. The victims were mainly the medium and small size firms. The cash stolen had been transferred to Chinese economic and trade companies.
Even though Efficient Services did manage to chase and get hold of the funds siphoned off to Russia, the $1.1 million to China was long gone. All Escrow companies and title companies are required to report of any lost funds immediately; under California law. When Efficient came forward with the theft report, The California Department of Corporations ordered the firm to come up with the funds. Efficient Services had not traced the money nor was it able to replace it after the three days grace period given by the state regulators. The authorities had no other option but to force the firm to close down.
The state established a conservatorship under which Efficient Services’ funds would be held. This meant that the firm’s owners could not in any way access any of their remaining funds. The state went ahead to appoint a receiver in July to help in the winding up process of the firm’s finances.
Peter A. Davidson affiliated with the Ervin Cohen & Jessup LLP law firm based in Beverly Hills is the court-appointed receiver. Peter insinuated that the company was weighing their chances of recovering the stolen monies from the Foundation Bank which is based in Irvine California.
Peter said that the firm is exploring the chance of it recovering the stolen money for clients who had escrows with it and also with those it owes money. The company had already filed a claim with the insurance and was even looking for possible ways through which they can engage with the bank, added Peter.
The lawyer said that customer logins for business customers of the bank were only protected by a username and a password. In addition, the bank protected the business customers with an active token code. However, at the time of the cyberheists, the one-time token code system was not working. The First Foundation Bank failed to respond to any of these claims.
According to Daniel J. Crenshaw, the co-founder of Efficient, the bank had issued a report immediately after the money was stolen that the funds were not stolen by cybercriminals but by one of the Efficient Services’ employees. After the state appointed forensics experts to examine the loss of the funds, the banks hurriedly withdrew from its former claim. Crenshaw adds that investigators found that the bank’s system had been compromised remotely just before the heists began.
However, by the time the investigators were establishing that the bank’s systems had been compromised by cybercriminals, the money had already been stolen and Efficient Services had sunk. In addition, 9 employees had lost their livelihood. According to Crenshaw, at the time the firm was forced to close shop, it was in the process of clearing half a million dollars in profit. It was supposed to reach a million dollar profit target in 2014.
Crenshaw insisted that Efficient Services’ primary job now is to get back the stolen money that belongs to their former clients. He added that 20 client’s the firm had before it went under have been very helpful in as far as getting back the stolen money. However, the most disappointing thing about the whole incident is that 9 people are out of employment, he added.
Peter, on the other hand, says that he is puzzled as to why the bank did nothing when it realized that money was being wired overseas. He added that despite Efficient Services never having sent any money overseas, the bank went ahead and confirmed the fraudulent transactions. But as it is, many banks do not intervene when an international wire transfer is being done.
