Summary: MariMed, a multistate marijuana operator, mistakenly transferred $646,000 to a fraudulent recipient due to a forged email. The company is working with the FBI and local police to investigate the sophisticated global fraud.
Cybersecurity Breach Leads to $646K Loss for Cannabis Operator MariMed
MariMed, operating in five states, faced a significant financial setback when it erroneously transferred $646,000 to a fraudulent recipient. This incident occurred after the company received a forged email, as revealed in their latest quarterly filing with U.S. securities regulators. The timing of this fraud coincided with the resignation of MariMed’s CFO, although it remains unclear if these events are connected.
The company’s Chief Communications Officer, Howard Schacter, stated that they expect to recover the lost funds either from the bank or through their cybersecurity insurance policy. He emphasized the sophistication and global scale of the fraud, which reportedly took months of planning. MariMed has been working closely with the FBI and local police during the investigation.
The fraudulent transfer was related to a term-loan payment and was sent to a Chase Bank account specified in the forged email. Initially, Chase Bank indicated that the payment was on hold pending investigation, but later confirmed that the funds were delivered to the fraudulent account. MariMed is currently awaiting a formal response from the bank and is pursuing all channels to recover the funds. Additionally, they have filed a claim under their corporate cybersecurity insurance.
MariMed has accounted for the $646,000 as an expense in its financials, with plans to reverse the expense if the money is recovered. The company has also implemented additional safeguards to protect against future fraudulent activities.
Cybersecurity expert Joseph Steinberg reviewed MariMed’s filing and highlighted the complexity of such corporate cybercrimes, often involving strategic targeting, reconnaissance, and possibly multiple steps by the fraudster. He warned that criminals could exploit security weaknesses in third-party businesses to breach a company’s cybersecurity.
Why It Matters: This incident highlights the vulnerabilities of businesses, including those in the cannabis industry, to sophisticated cybercrimes. It underscores the importance of robust cybersecurity measures and the need for vigilance against increasingly complex and targeted fraud schemes.
Potential Implications: The financial loss and subsequent investigation could lead to heightened security protocols across the cannabis industry. It may also prompt businesses to scrutinize their cybersecurity policies and third-party interactions more closely to prevent similar incidents.
And we would like to know how can businesses in the cannabis industry enhance their cybersecurity to prevent such sophisticated frauds?
Source: MJBizDaily
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