Category: Public/Legal Notices/Resolutions

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FOR IMMEDIATE RELEASE—January 21, 2025
Contact: Jon Schneider, (631) 897-5439
j.schneider@mcbrideny.com

GARDEN CITY PARK WATER/FIRE DISTRICT FILES SUIT AGAINST FIRST NATIONAL BANK OF LONG ISLAND TO RECOVER $11M+ IN STOLEN FUNDS
Suit Details How Bank’s Negligence and Failure to Follow Established Procedures Allowed Cyber-Criminals to Steal $15M+ From District’s Accounts

Mineola, NY—Today the Garden City Park Water/Fire District (District) filed suit in New York State Supreme Court against First National Bank of Long Island for allowing the theft of more than $15 million in funds from the District’s accounts.  After the District was able to recover some funds with the help of law enforcement, there is currently approximately $11 million outstanding which is being sought through this action.

This lawsuit follows the District’s extensive efforts to recover the stolen funds, including working with federal and local law enforcement. Unfortunately, these efforts have not resulted in the recovery of the full amount of the District’s stolen funds.

“As the complaint outlines, First National Bank of Long Island’s failures allowed cybercriminals to steal more than $15 million from the District,” the Garden City Park Water/Fire District Commissioners said in a statement. “As fiscally responsible stewards, we are undertaking this legal action because the District should not suffer for the Bank’s failures and incompetence.  We will continue to do everything possible to fight for our residents and hold responsible parties accountable.  Because we are now in a legal process, we will refer all future comments to counsel.”

“What happened to the District is every bank customer’s nightmare,” lead attorney for the District in the litigation, Jon Ward, Co-Managing Member, Sahn Ward Braff Coschignano, said. “The District relied on their bank to protect the security and integrity of its deposits, and First National Bank of Long Island failed. Now, we are asking the Court to hold First National Bank of Long Island accountable for its failure.”

As the filing outlines, cybercriminals, impersonating District personnel, contacted First National Bank of Long Island and convinced the Bank to make a number of unauthorized changes to the District’s account settings, including allowing online international and domestic wire transfers, services never previously requested or used by the District. They also convinced the Bank to provide them with confidential login information, or the means to create such information, that then enabled them to access the District’s bank accounts to initiate wire transfers.

The next business day, the cybercriminals logged in to District’s banks accounts and initiated and authorized 15 wire transfers, totaling more than $15 million, including over $12 million sent to banks in China, within a span of just four hours. Despite numerous irregularities and red flags, including exceedances of the Bank’s own limits on wire transfers by a customer, the Bank processed each of the unauthorized transfers.

Upon discovering the fraudulent activity, the District immediately contacted the Bank and federal and local law enforcement authorities. As a result, over $4.4 million of the stolen funds were recovered. The District continues to work with law enforcement to track the remaining funds. In addition, the District has moved its banking relationship to a different banking institution.

The lawsuit lists eight causes of actions against the Bank requesting approximately $11 million plus interest in addition to attorney’s fees and punitive damages through the lawsuit.

In a note being sent to District residents today, the District outlined several important points:

— This theft has not impacted the District’s operating funds or in any way impeded the District’s work and ability to serve the community.
— At no time was personal information of District residents compromised.
— At this time, the District does not anticipate increases in the District’s tax rate or taxes as a direct result of the fraud.  The stolen funds were in an account for prospective capital projects.
— The District is also consulting with other Town, County and State agencies and representatives to keep them informed of the situation.

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The following letter has been mailed to all residents of the Garden City Park Water and Fire District.

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