Hackers rip off Ephrata Borough - LancasterOnline: News

Hackers rip off Ephrata Borough

Municipality loses about $80,000

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Posted: Tuesday, February 15, 2011 10:16 pm | Updated: 12:33 am, Thu Sep 12, 2013.

Ephrata Borough has been robbed.

Internet hackers apparently gained access to a borough general fund account about a month ago and transferred about $100,000 to a Midwest bank. The money was then moved from the bank to an unknown destination.

Ephrata Mayor Ralph Mowen said the hackers might have been Russians because the names on the accounts the money was initially wired to were "of Russian extraction."

Russians, he said, have "replaced the Nigerians" in running international fraud schemes.

Mowen believes the money has left the country.

"The money went to banks out in the Midwest," Mowen said. "When it hit those banks, it immediately went out and across the big water."

The borough, however, did not lose all the money.

The siphoning of cash from the borough's account had been going on for a few days when it was discovered through normal bookkeeping procedures.

Borough officials contacted Ephrata National Bank, which holds the accounts. The bank then contacted the Midwest banks, and about $20,000 was frozen "and sent back," Mowen said.

"We locked it down and stopped any further loss," Mowen said. "The end result was a loss of about $80,000 that we had to file with our insurance company."

An independent consultant was called in to try to discover how the borough's computers were hacked. In the meantime, increased safety measures are being installed.

"You guard against it by increasing your firewall, which is what we are in the process of doing," Mowen said.

Mowen, who works as head of security for Susquehanna Bank, said he sees this type of fraud "all the time."

He said businesses pay invoices and bills through an automated government clearing house, which in turn moves money "from bank to bank to bank." Professional hackers, he said, "periodically" get into these accounts and siphon off funds.

"I know the $80,000 we lost seems like a lot of money, and it is, to us," Mowen said. "But in the scheme of things, that's peanuts. There are billions lost every year to international fraud."

lalexander@lnpnews.com

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