County to sue bank to recover stolen funds

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By The Staff

SHEPHERDSVILLE - Between June 22-29, Bullitt County government had over $415,989 stolen from its payroll account in a cyber-crime.

Since that time, over $105,813 has been recovered.

On Tuesday, Bullitt Fiscal Court voted unanimously to have county attorney Walter Sholar pursue litigation to recover the remaining stolen funds.

The defendant in the litigation will be First Federal Savings Bank, where the county banking accounts are located.

After a lengthy executive session, the court voted to adopt a resolution that said it was clear that First Federal officials had no intention of replacing the stolen funds.

Bank officials have maintained that its security system had not been breached and that its customers were not in danger.

During several days in June, bank transactions were done on-line from the county's payroll account. Several of the accounts were frozen and $105,813.06 was recovered.

In its resolution, the court said that it felt First Federal should stand behind its customer and cover the lost funds.

The court approved having Sholar file litigation to recover the lost funds, interest and legal fees.

The court also voted to authorize Sholar to hire any experts to assist with the further recovery of lost funds.

Earlier in the meeting, the court approved the purchase of equipment to better secure the county's computer system.

County treasurer Kenann Bradley said that the Auditor of Public Accounts and the FBI made several recommendations on additional equipment. This would include a new router with firewall, a new tower and an off-site backup system.

The cost would be $2,683 plus labor.

County Judge/Executive Melanie Roberts said that the system had all the security features available at the time.

Sholar said that in talking with cyber-crime experts with the FBI, the question wasn't the system but the response to the hacking.

Viruses change daily, according to Sholar, and criminals are trying to infiltrate computers throughout the world on a constant basis.

"We were as protected as we could be," said Sholar.

The question was the response when the hacking of the system was identified.

The new equipment will be the state-of-the-art and the county needs to look at how its vendors would respond to a future hacking, said Sholar.

At this time, Roberts said the county still has accounts at First Federal. She said the county would look at the security of local banks before making any decision.

Despite the loss, the county had a carryover of $1.57 million on June 30.

Greg Schreacke, president of First Federal Savings Bank, had not been notified of the court's action.

He hoped that the matter did not reach this point but could not comment on any litigation.

"The bank is safe," said Schreacke. "No security at the bank was breached."

He said the bank's customers are safe and there was never any danger as the bank's security was never jeopardized.