Monadnock Ledger-Transcript – YEAR IN REVIEW 2021: Scammers steal $2.3 million from Peterborough

Peterborough became the target of a phishing scam, accidentally transferring $2.3 million to internet scammers.

The scam, which was announced in August, consisted of criminals forging emails to disguise themselves as employees of ConVal and Beck & Bellucci before rerouting payments from the town intended for these organizations. 

“It was a really horrible day,” Town Administrator Nicole MacStay previously said of the day she learned of the missing money. “And then it was actually multiple horrible days.”

Although the scam was revealed to residents in August, the first time town officials became concerned was on July 26, when the ConVal district informed them that they had not received their payment of $1.2 million. 

The other misdirected transfers occurred on July 9 and Aug. 13, both intended for the contractor Beck & Bellucci and consisting of $528,513 and $585,237 respectively.

In hindsight, the scam began much earlier, with a series of fraudulent emails sent to town officials in the spring posing as outside organizations. Many of the forged emails, MacStay later said, were not from either of the two organizations whose payments ended up being stolen. The emails themselves contained misspellings and other errors that could have been flagged.

The scammers got town employees to change vendor payment routing information so they could get the money, then converted the stolen funds to cryptocurrency to keep the transactions from being reversed. Afterward, MacStay stated that town policy calls for employees to verify those changes with vendors, but such verifications were never made.

Two town employees left in the wake of the scam. Shannon Kelley resigned in September from her position as accountant for the town, a position responsible for electronic fund transactions. Finance Director Leo Smith retired on the last day of August after announcing his intention to do so earlier in the year.

MacStay repeatedly stated that no staff were believed to be criminally involved in the transfers, and that personnel issues were private.

Ultimately, the U.S. Secret Service recovered $594,000 working closely with People’s Bank and HSBC Bank. In early November, they recovered an additional $3,500. 

In late September, the Select Board voted to overspend the town budget for the year by the remaining $1.7 million, dipping into the town’s unrestricted fund balance which stood at the time at $3 million. 

“I am sorry,” Select Board member William Kennedy said at the time. “I am really sorry that we’re in this situation. It is a horrible situation. And, frankly, I am angry as well. I’m angry at the perpetrators of this scheme.”

The town paid the balance of what was owed to Beck & Bellucci and worked out an arrangement with ConVal to pay an additional $125,000 each month from October to December, an arrangement completed in mid-December.

After months of back and forth with Primex (the New Hampshire Public Risk Management Exchange) the town’s insurer, MacStay stated that $125,000 of the scam would be covered. Additionally, Primex covered the expenses related to work done by ATOM Group, a cybersecurity firm that handled parts of the investigation along with the Secret Service. 

These funds and that of the unrestricted fund balance are intended for “regular business,” according to MacStay, who added that in addition to regular business, the town will try to be careful with spending in an attempt to rebuild the unrestricted fund balance.

In December, MacStay said that the aftermath of the scam was more or less concluded.

“I don’t think there’s going to be a whole lot else after this,” she said. “Now we’re just back to pretty much regular business.”