The money appears to have been stolen by an overseas entity that converted the funds to cryptocurrency, Peterborough officials said in a statement. The U.S. Secret Service is investigating.
"It pains us to inform the residents and taxpayers of Peterborough that, like so many other towns and cities, we have fallen victim to an Internet-based crime that has defrauded our taxpayers of $2.3 million," said Peterborough Select Board Chair Tyler Ward and Town Administrator Nicole MacStay in a joint statement.
"We do not believe that the funds can be recovered by reversing the transactions, and we do not yet know if these losses will be covered by insurance."
On July 26, Peterborough town officials learned that ConVal School District had not received a $1.2 million monthly transfer from the town. Officials said at that time they realized the town was the victim of email-based fraud.
"Finance Department staff immediately put a stop payment order on the transfer, however the funds had already left the town's account at Peoples Bank," officials said in a statement. "At the same time, IT Department staff followed the protocol for alerting the U.S. Secret Service and the cybersecurity consulting firm ATOM Group through NH Primex, the town's property and liability coverage provider."
The U.S. Secret Service Cyber Fraud Task Force began tracing the funds through transactions and determined the dollars were converted to cryptocurrency. Email exchanges between Finance Department staff and thieves posing as ConVal School District staff using forged documents and email accounts were identified, but officials were not immediately able to identify who was behind the fraud.
On Aug. 18, Finance Department staff learned two bank transfers intended for Beck and Bellucci, the general contractor working on the Main Street Bridge project, also had been fraudulently diverted to thieves in a similar manner.
"Investigations into these forged email exchanges showed that they originated overseas," Peterborough officials said in a statement. "These criminals were very sophisticated and took advantage of the transparent nature of public sector work to identify the most valuable transactions and focus their actions on diverting those transfers. The U.S. Secret Service Cyber Security Fraud Task Force continues to diligently work through the subpoena process and investigate the case."
Peterborough officials said while they believe no town staff were criminally involved in the transfers, Finance Department staff who were directly targeted in this fraud are on leave until the U.S. Secret Service's investigation is concluded.
"We are now waiting to hear from our coverage provider if these losses will be covered, whether in whole or in part; town administration is exploring all options available and has reached out to our legislative delegation and the governor's office for support," Ward and MacStay said in a statement.
The Peterborough Finance Department has canceled all Automated Clearing House transfers, and the town's policies and procedures relating to electronic transactions are under review.
©2021 The New Hampshire Union Leader. Distributed by Tribune Content Agency, LLC.
