Cyber Heist Crushes Bank



Dwelling House Savings and Loan, a 119-year-old thrift, was shut down by federal regulators on Friday August 14th. The small thrift was said to have had only about $13.8 million in deposits. Federal regulators have been concerned about account security at Dwelling House Savings & Loan for several years.

The S&L suffered a severe blow to its viability late in 2008 when federal auditors uncovered that around $3 million had been electronically drained out of its capital account and that the bank was actually operating with $500,000 in a negative equity position. The cyber theft equated to 21.7 percent of the S&Ls deposit assets.

According to bank officers, cyber thieves (10 to 12 individuals) were behind the heist via electronic bank transfers that are now being given as the biggest reason the institution became insolvent and ultimately failed. Bank officers blamed the heavy losses on the work of a ring of cyber thieves. Pittsburgh police and FBI agents are investigating the case.

We looked at the FBIs Q4 2008 Bank Crime Statistics report which identified 29 robberies of Savings and Loan Associations. In the details that describe the specific ways the crimes were committed (armored car, vault, safe teller etc) did not have a category for cyber/electronic.

It should be noted that the S&L was said to have had other issues. That is clearly evidenced by officers of the organization being fined about $10,000 in the past weeks by the Office of Thrift Supervision. The reason was said to be for failing to implement anti-money-laundering measures and internal controls that was ordered by the OTS back in 2006.

Could this be SilentBanker? At this point the exact attack modality is unknown. But this could be evidentce of a growing trend -- only time will tell.

-- Kevin Coleman

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