News and Commentary

Puerto Rico Falls For Phishing Email, Losing Millions Of Taxpayer Funds
ST PETERSBURG, RUSSIA - FEBRUARY 6, 2017: A man in a balaclava mask sitting at a laptop computer, with computer code in the background. Sergei Konkov/TASS
Sergei KonkovTASS via Getty Images

Puerto Rico, the unincorporated U.S. island that is home to over three million Americans, accidentally sent $2.6 million to cyber-criminals in January after government employees were tricked by a scam email claiming that someone had authorized changes to a government bank account. 

According to The Associated Press, Ruben Rivera, the finance director of the government-owned Industrial Development Company, filed a police report Wednesday alleging that the agency mistakenly initiated the transfer almost a month ago. 

According to Info Security Magazine, “the email falsely claimed that the existing bank account used for remittance payments should no longer be used for this purpose and informed the agency that the money should be sent to a new bank account. It was this new account that turned out to be fraudulent and in the control of cyber-criminals.”

The company told The Associated Press that the FBI was informed of the fraudulent multi-million dollar payment as soon as officials discovered the mistake earlier this week. It’s currently unclear what exactly the email said, or who authorized the transaction. 

“This is a very serious situation, extremely serious,” said Manuel Laboy, the executive director of the agency and the governor’s chief economist, reports AP. “We want it to be investigated until the last consequences.”

“I cannot speculate about how these things might happen,” said Laboy, who assured the news agency that he takes seriously the “big responsibility” of managing taxpayer money. 

According to The New York Times, the money was intended for Puerto Rico’s public pension fund, and the mistake was discovered after an employee noticed that the money intended for the retirement system hadn’t arrived. “We think that the hacker might have breached the system through the retirement agency,” said Jose Ayala, director of the bank robbery division of Puerto Rico’s police force, reports the news agency. 

The phishing scam has brought increased attention to the territory’s public pensions system, whose unfunded liabilities contributed to the island declaring bankruptcy last year. Puerto Rico’s bankruptcy has been the largest government bankruptcy in U.S. history. 

Earlier this week, the Times reported that the territory has “passed an important milestone” in re-negotiating the nation’s $129 billion in debt. 

Puerto Rico has reached a deal with creditors who hold $35 billion in its general obligation bonds, passing an important milestone as it tries to resolve its $129 billion debt crisis.

The agreement, contained in a regulatory filing made Sunday evening by the territory’s federal oversight board, revises parts of the debt-adjustment plan it announced last year and makes peace with some of its most litigious creditors, potentially opening a shorter path out of bankruptcy.

Under the restructuring plan released in September, the board suggested paying the general obligation bondholders $11.8 billion, including $2 billion up front. Under the new agreement, the debt would be settled for $10.7 billion, with $3.8 billion up front.

However, the news organization notes that the agreement doesn’t touch Puerto Rico’s $50 billion public pension debt, the island’s largest financial liability.

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The Daily Wire   >  Read   >  Puerto Rico Falls For Phishing Email, Losing Millions Of Taxpayer Funds