National

An Attack on Power Lines

Tens of thousands of people in a rural North Carolina county remained without power Monday as authorities worked to repair two power stations damaged by targeted gunfire Saturday night, an attack that Gov. Roy Cooper said raised “a new level of threat.”

Beyond reiterating that whoever carried out the attack “knew exactly what they were doing” and that the damage had been substantial, officials gave few new details about the investigation during a news conference at the Moore County sheriff’s headquarters. Cooper, a Democrat, said that the incident had drawn attention to the importance of protecting critical infrastructure.

“I know that with our power sector, water infrastructure — we know that potential vulnerabilities are there,” he said. “We will be evaluating ways to work with our utility providers and our state and federal officials to make sure that we harden our infrastructure where that’s necessary.”

The attack on the North Carolina stations left roughly 45,000 people without power in Moore County, which lies about 60 miles southwest of Raleigh. Power had been restored to about 7,000 customers by late Monday afternoon, officials said, but they added that most would likely have to wait until Thursday, even as temperatures in the region fell into the 40s. The Federal Bureau of Investigation is working with state and local law enforcement on the investigation.

On Monday, Carthage, the county seat, had the quiet and somewhat improvised feeling of a coastal town in the wake of a hurricane, with traffic lights dark at busy intersections and church groups and other volunteers lining the roads to hand out hot dogs and barbecue to their neighbors.

A county sports complex was serving as a shelter — about 20 people stayed there Sunday night, officials said — and the public library in the town of Southern Pines was offering warm drinks, phone chargers and board games “for an escape from reality.” Schools were closed, stores took only cash, restaurants gave away refrigerators full of food, and some residents stood in their front yards warming their hands over barrel fires. (© The New York Times)

Chinese Hackers Stole $20M in Covid Benefits

Hackers linked to the Chinese government stole at least $20 million in U.S. Covid relief benefits, including Small Business Administration loans and unemployment insurance funds in over a dozen states, according to the Secret Service.

The theft of taxpayer funds by the Chengdu-based hacking group known as APT41 is the first instance of pandemic fraud tied to foreign, state-sponsored cybercriminals that the U.S. government has acknowledged publicly, but may just be the tip of the iceberg, according to U.S. law enforcement officials and cybersecurity experts.

“It would be crazy to think this group didn’t target all 50 states,” said Roy Dotson, national pandemic fraud recovery coordinator for the Secret Service, who also acts as a liaison to other federal agencies probing Covid fraud.

The Secret Service said that there are more than 1,000 ongoing investigations involving transnational and domestic criminal actors defrauding public benefits programs, and that APT41 is “a notable player.”

As soon as state governments began disbursing Covid unemployment funds in 2020, cybercriminals began to siphon off a significant percentage.

The Labor Department Office of Inspector General has reported an improper payment rate of roughly 20% for the $872.5 billion in federal pandemic unemployment funds, though the true cost of the fraud is likely higher, administration officials from multiple agencies say.

In-depth analysis of four states showed 42.4% of pandemic benefits were paid improperly in the first six months, the department’s watchdog reported to Congress last week.

A Heritage Foundation analysis of Labor Department data estimated excess unemployment benefits payments of more than $350 billion from April 2020 to May 2021.

“Whether it’s $350, $400 or $500 billion, at this point, the horse is out of the barn,” said Linda Miller, the former deputy executive director of the Pandemic Response Accountability Committee, the federal government’s Covid relief fraud watchdog. The Secret Service said in a statement that it considers APT41 a “Chinese state-sponsored, cyberthreat group that is highly adept at conducting espionage missions and financial crimes for personal gain.”

SBF: “Management Failures” to Blame

Sam Bankman-Fried, founder of the collapsed cryptocurrency exchange FTX, made his first public appearance last week since his business empire imploded this month, insisting that he “did not ever try to commit fraud” and repeatedly saying he didn’t know the extent of what was going on within his crypto businesses.

In a live interview at The New York Times’ DealBook conference, Bankman-Fried blamed “huge management failures” and sloppy accounting for the collapse of his $32 billion company, which has sparked civil and criminal investigations.

Those investigations are focused on whether FTX broke the law by lending its customers’ funds to a trading firm, Alameda Research, which Bankman-Fried also owned. Speaking via a video feed from the Bahamas, where FTX was based, the 30-year-old said he didn’t “knowingly commingle funds.” At another point, he said, “I didn’t know exactly what was going on.”

Bankman-Fried also took responsibility for the collapse. “Look, I screwed up,” he said. “I was CEO.”

FTX disintegrated practically overnight after it was unable to meet a run on deposits that left the company with an $8 billion hole in its accounts. Within a week, the crypto exchange filed for bankruptcy.

Bankman-Fried, who became a billionaire as FTX soared and was viewed as a wunderkind, faces significant legal trouble. The Justice Department and the Securities and Exchange Commission are investigating FTX’s transfer of funds to Alameda.

On Wednesday, Treasury Secretary Janet Yellen called FTX’s collapse a “Lehman moment” for the cryptocurrency industry, referring to the bankruptcy of the Wall Street bank Lehman Brothers at the start of the 2008 financial crisis.

For someone facing possible criminal charges, Bankman-Fried has been surprisingly willing to speak publicly. Two days after FTX’s bankruptcy filing this month, he spoke with the Times for more than an hour about how he had managed his business empire while dodging questions about his company’s use of customer money.

On the video stream at the DealBook conference, Bankman-Fried fidgeted at times, as he often does during interviews. He said he was speaking publicly against the advice of his lawyers, who have instructed him to keep quiet.

“That’s not who I am,” he said. “I have a duty to talk.”

But he declined to speak in detail about his possible criminal liability. “There’s a time and a place for me to think about myself and my own future,” he said. “I don’t think this is it.” (© The New York Times)