Nonprofit sues in MD over $2.1M phishing wire fraud scheme

Listen to this article

The National Association of Black Accountants has filed a federal lawsuit against an Arizona-based investment company, alleging the “shell corporation” effectuated a phishing attack on the nonprofit that caused it to wire more than $2.1 million to the investment company.

In a complaint filed Monday in the U.S. District Court for the District of Maryland, the National Association of Black Accountants alleges White Investments LLC executed what’s known as a “man-in-the-middle” phishing attack by sending an email to the Greenbelt-based nonprofit that appeared to be a delivery reschedule notice from FedEx.

Once an employee provided login credentials, NABA says White Investments effected two fraudulent financial transactions: the first being a wire transfer on May 20 of $870,000 to a bank account designated by the investment company and a second wire transfer three days later of $1,270,000 to the company.

NABA has filed its lawsuit under the Computer Fraud and Abuse Act, Stored Communications Act and Electronic Communications Privacy Act, which aim to address the unauthorized access of a computer and unauthorized access to stored electronic communications. In addition to causes of actions under these laws, NABA has also sued White Investments for conversion, trespass to chattels and unjust enrichment.

Though NABA says, according to its complaint, that it has since recovered $1,272,800 of its funds wired to the National Bank of Arizona, the nonprofit said it is seeking the remaining $867,200.

Keith Watanabe, counsel for NABA and senior counsel at Whiteford, Taylor & Preston’s New York City office, said his client worked in close coordination with federal law enforcement authorities and the company’s outside legal and forensic advisers to recover a substantial amount of stolen funds. Watanabe said the recovery is “an outcome that exceeds industry norms in cases of this nature.”

“A highly sophisticated cyber fraud was orchestrated against our client,” Watanabe said in an email. “What occurred here is precisely the kind of sophisticated cyber fraud that threatens businesses everywhere, and we are working with law enforcement to bring the perpetrators to justice. At this time, we cannot comment on details of an active investigation, but we can say that the digital fingerprints already uncovered give us tremendous confidence in developing leads to identify the perpetrators.”

According to a 2023 report by Forbes, phishing is one of the most prevalent types of cybercrimes, with more than 500 million phishing attacks reported in 2022, double the amount of attacks reported in 2021.

In its complaint, NABA said it discovered the alleged fraud on May 28, but did not specify how. The nonprofit said it has since “acted promptly to secure its computer systems and email account” and undertook an investigation, including a forensic analysis that totaled more than $20,000.

NABA has also alleged that White Investments “is a shell corporation that does not conduct any apparent legitimate business,” with the purported company having a false domain name and a disconnected phone number and listing as persons associated with the company either fictitious persons or actual individuals who have no legal or professional association with the company.

The Daily Record emailed and left a voicemail for the company’s resident agent, neither of which were immediately returned.

NABA’s complaint also lists 100 “John Doe” defendants, who the nonprofit says aided in the alleged fraud. Their names, identities and physical locations are not known at the time of the complaint’s filing, according to NABA.

NABA is a nonprofit that provides support, including education and training opportunities, for members of minority groups to increase their knowledge of accounting, finance and related business practices and methods, according to its website.