Firm Sues Bank over Cyberheist
A California escrow firm that was forced out of business last year after a $1.5 million cyberheist is now suing its former bank to recoup the lost funds.
Efficient Services Escrow has filed suit against First Foundation Bank, alleging that the bank’s security procedures failed, and that it failed to act in good faith when it processed three fraudulent international wire transfers totaling $1,558,439 between December 2012 and February 2013, said security blogger Brian Krebs. Efficient Services Escrow allege that a component of the bank’s core security protection failed in the days leading up to the fraudulent transfers.
According to Krebs, "the heist began in December 2012 with a $432,215 fraudulent wire sent from the accounts of Huntington Beach, Calif. based Efficient Services Escrow Group to a bank in Moscow. In January, the attackers struck again, sending two more fraudulent wires totaling $1.1 million to accounts in the Heilongjiang Province of China, a northern region in China on the border with Russia. This same province was the subject of a 2011 FBI alert on cyberheist activity. The FBI warned that cyber thieves had in the previous year alone stolen approximately $20 million from small to mid-sized businesses through fraudulent wire transfers sent to Chinese economic and trade companies."
Efficient Services and its bank recovered the wire to Russia, but the two wires to China totaling $1.1 million were not recovered, said Krebs on Security. Under California law, escrow and title companies are required to immediately report any lost funds. When Efficient reported the incident to state regulators, the California Department of Corporations gave the firm three days to come up with money to replace the stolen funds, Krebs reports.
Three days later, when Efficient could not recover the funds, the state stepped in and shut the company down.