FBI Joins Probe into $1.75M Theft at Boardman Molded Products
BOARDMAN, Ohio – Local law enforcement is working with agents from the Federal Bureau of Investigation to determine who hacked into a company executive’s email and stole $1.75 million from its bank accounts.
Boardman Molded Products, 1110 Thalia Rd., reported to Boardman Police on Jan. 25 that it was the victim of fraud and theft amounting to $1,759,415.
Daniel Kessler, who owns the business with his father, Ron, told police that someone hacked into his father’s email account and started sending bogus invoices to its accounts payable department beginning on Jan. 16. Accounts payable then contacted First National Bank to have the money wired, since there appeared to be nothing out of the ordinary with the invoices.
“The emails all came from his account and seemed legitimate to accounts payable,” the report said.
Between Jan. 16 and Jan. 25, six invoices similar to the ones Ron Kessler had used in the past were sent requesting payment of more than $1.7 million to companies in Hong Kong and Cambodia, and the money was wired, the report says.
On Jan. 25, another request was received for $765,000, but there wasn’t enough in the account to cover the transaction, which alerted the company’s owners to the problem, the police report said.
According to Kessler’s statement, his father did not receive Excel spreadsheets as he normally would that contained the bank account balances.
The party responsible for the theft faces charges of aggravated theft, telecommunications fraud, and unauthorized use of property.
Kessler told police that the company’s employees are not suspect, noting the two employees in accounts payable have worked at the company “a long time.” He has contacted the FBI white-collar crimes unit in Cleveland, the report said.
Kessler said he couldn’t comment on the ongoing investigation when contacted by The Business Journal on Friday.
Wire transfer scams are unfortunately quite common, says the FBI. In a report the agency released last May, it said during the last six months of 2016, fraudsters attempted to steal more than $3.5 billion through compromising business emails.
Often such scams involve compromising an executive’s email account and a request is then made for a wire transfer from the compromised account to a second employee within the company responsible for processing such requests, the FBI says. In some cases, a wire transfer from the compromised account is sent directly to a financial institution with instructions to send funds to another bank.
“A third version of the scam starts with an employee’s e-mail account getting hacked. Once compromised, the fraudster will send requests to various vendors identified from the employee’s contact list for invoice payments to fraudster-controlled bank accounts,” reports BankInfoSecurity.com.
Boardman Molded Products provided a copy of the emails and bank transactions to police, which show that the money was deposited from Boardman Molded Products’ line of credit into two accounts and wired to Hong Kong or Cambodia from there. Five transactions were taken from one account and a single transaction was wired from the second account, the statement said.
At this time, it is not known whether Ron Kessler’s computers were affected or just his email, the report states.
Boardman Molded Products was established in 1957 and engineers, prototypes, and produces components that range from small plastic caps to PVC flooring systems.
Daniel Kessler is also a partner in Riviera Creek LLC, Youngstown, which was awarded one of 12 large cultivation sites from the Ohio Department of Commerce to grow medical marijuana. The company owns a building on Crescent Street and, according to the state’s timeline, needs to be growing product by September.
Copyright 2020 The Business Journal, Youngstown, Ohio.