Russian hackers steal $2.4 million from Blacksburg bank, lawsuit states

Bank's insurance company refuses to pay bank for stolen money

By Rachel Lucas - Weekend Anchor / Reporter

BLACKSBURG, Va. - An investigation shows Russian hackers breached a New River Valley bank not once, but twice in eight months.

The first hack happened in May 2016 at First National Bank of Blacksburg and the same group hacked the system again only months later.

Now, the bank has filed a lawsuit against its insurance company, Everest National Insurance Company, which is refusing to pay the bank back for the money stolen.

According to the lawsuit filed on behalf of the National Bank of Blacksburg, or NBB, Russian hackers were able to steal $2.4 million after an employee opened a phishing email containing malware that gave the hackers access to the bank's computer system.

The first hack happened during Memorial Day weekend in 2016, when the bank was closed for the holiday. The email allowed the hackers to disable all security, anti-theft and anti-fraud protections.

The hackers used hundreds of ATMs across the country to withdraw more than $569,000 from customer accounts.

VIEW DETAILS OF THE NBB INSURANCE POLICY WITH EVEREST NATIONAL

NBB investigated and added more security protocols, but the hackers accessed the bank's computer systems again, this time stealing more than $2 million.

The hackers again gained access by sending another phishing email to an NBB employee.

"National Bank wants to make it clear that its customers did not lose a penny as a result of the hacking into our computer systems. The bank has taken multiple steps to secure its systems, but unfortunately, hacking attempts directed at financial institutions have become more common. What is important to note is that no National Bank customer lost any money and that customer funds are safe and secure and as they always have been," said NBB CEO Brad Denardo. All the money stolen was covered by NBB.

While customers didn't lose any money, according to the lawsuit, NBB did.

In a statement, NBB's attorney said they could not comment on pending litigation, but that the insurance company filed a response last week stating they weren't responsible for the claim.

NBB is suing Everest for $2,433,632.82, as well as fees and costs. 

The civil case could go to a jury trial.

READ THE MOTION TO SEAL

According to Randy Marchany, an information technology expert at Virginia Tech, hacking attempts such as this one are becoming more common.

Marchany said the method these hackers used has been around for about a decade and is the same one used in a recent political scandal.

READ THE ORIGINAL ANSWER AND AFFIRMATIVE DEFENSES OF DEFENDANT
EVEREST NATIONAL

According to the suit, all customers who were affected have been notified.

READ THE (PROPOSED) ORDER GRANTING THE NATIONAL BANK OF BLACKSBURG’S
MOTION TO FILE DOCUMENTS UNDER SEAL

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