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Baltimore City was Duped Out of $376K

 

A new report from the Office of the Inspector General (OIG) reveals that a cyber-criminal posing as a vendor duped Baltimore city out of hundreds of thousands of dollars last year. In October 2021, the OIG initiated an investigation after obtaining information from Baltimore's Bureau of Accounting and Payroll Services (BAPS) about an alleged fraudulent Electronic Funds Transfer (EFT). The Mayor's Office of Children and Family Success (MOCFS) issued the Vendor with EFT payment funds.

BAPS and MOCFS were contacted by email on December 22, 2020 and January 7, 2021, from an email address linked with an employee of the Vendor firm, asking for a change to its EFT remittance details. On December 16, 2020, the email linked with the Vendor Employee sent BAPS a Vendor Payment & Electronic Funds Transfer Form. 

The OIG later determined that the Vendor Employee's email account had been hacked by a malicious actor who had set up rules within the Vendor Employee's email account as a result of a phishing assault. As a result, the malicious actor was able to correspond with City workers without the Vendor's awareness. 

On January 5, 2021, the fraudster contacted MOCFS and BAPS once more, this time requesting that the funds be transferred to a new account at a third financial institution. As verification, the fraudster sent a bank letter and a copy of a voided check with the same details as the third account. BAPS paid $376,213.10 into the third account on January 7, 2021, believing the fraudster's assertions. 

The OIG discovered that BAPS employees do not have access to a list of authorized signatories for vendors and must rely on the information given by representatives from City agencies. Furthermore, instead of independently validating information and requests, BAPS relied on MOCFS to assist the request and accepted an incoming phone call from someone pretending to be the Vendor's Chief Financial Officer. 

In his response to this report, Director of Finance Henry Raymond notified the OIG that new protocols had been implemented requiring Department of Finance (DOF) workers to independently verify bank changes with an executive-level employee. DOF has also devised processes to exclude City agencies from vendor accounting procedures.

Ransomware tool causing chaos in Baltimore was developed by NSA



A recent spate of ransomware attacks in Baltimore and other U.S. cities has been executed using a tool developed by the National Security Agency (NSA). Thousands of people in Baltimore have been locked out of their computers in the past three weeks, causing disruption across the city. And this has been enabled by a piece of software created by the NSA, according to a report in the New York Times.
The EternalBlue exploit takes advantage of a vulnerability in Microsoft Windows machines to infiltrate target computers. The software was stolen from the NSA and leaked by hackers in 2017, and since then has been used in a wide variety of cybercrinimal schemes. 2017’s WannaCry attack used the software, as did Russia’s NotPetya attack on Ukraine last year.
Now the same software is being used against U.S. citizens, causing particular problems for local governments with machines which have been disrupted. Many local governments do not regularly update their computers, leaving them vulnerable to exploits. In Baltimore, hospitals, airports, ATMs, shipping operators, and vaccine-producing factories have all been effected in the last few weeks.
The software locks the target computer’s screen, then shows a message demanding a payment of around $100,000 in Bitcoin for the target to regain access to their files. “We’ve watching you for days,” the message says, according to The Baltimore Sun. “We won’t talk more, all we know is MONEY! Hurry up!”
The NSA has never acknowledged the theft of the software or its responsibility for the cyberattacks conducted using it.
“The government has refused to take responsibility, or even to answer the most basic questions,” Thomas Rid, a cybersecurity expert at Johns Hopkins University, said to the Times. “Congressional oversight appears to be failing. The American people deserve an answer.”
EternalBlue may have been developed with good intentions to protect national security, but this event shows the problems with law enforcement or intelligence agencies having tools which allow them access to computers and phones. When such a tool is leaked, it can no longer be controlled.