Bank's Blunder: $15.5M Stolen in Sophisticated Scam

A New York-based bank, First National Bank of Long Island, is facing a lawsuit from Garden City Park Water and Fire, a public utility firm, alleging gross negligence and a shocking display of incompetence. The bank is accused of losing $15.5 million from the utility firm's account to criminals in a sophisticated scam.

The lawsuit, reported by the New York Post, claims that the bank acted with reckless disregard and without even slight care and diligence. The scammer posed as a company employee and emailed the bank in July, requesting authorization forms for new international and domestic wire transfers. The forms were sent back with forged signatures, which the bank blindly accepted, leading to the theft of 85% of the funds in the account over four hours.

The thieves made a total of 15 transfers, with 10 of them exceeding the bank's daily transfer limit of $2 million. The funds were moved to accounts based in the US, China, and Mexico. Garden City Park Water and Fire alleges that the bank showed shocking incompetence and negligence in complying with the scammers' request.

Lead counsel Jon Ward and the public utility firm's co-managing member, Sahn Ward Braff Coschignano, stated that this was "every bank customer's nightmare." They are asking the court to hold First National Bank of Long Island accountable for its failure to protect the security and integrity of the deposits.

However, the bank's attorney, Tanweer Ansari, shifted the blame to Garden City Park Water and Fire, claiming that the theft occurred due to unauthorized access to banking information within the customer's control. The bank maintains that it had taken reasonable procedures to prevent such an incident.

As of now, authorities have recouped $4.4 million of the stolen funds, leaving First National Bank of Long Island accountable for $11.1 million. The bank merged with ConnectOne Bank in September 2024 and is now operating under the ConnectOne brand, managing about $14 billion in total assets.