MariMed Fell Victim to Fraudulent Email; Here's How Scammers Used it to Siphon off Money
The cannabis industry has emerged as a profitable sector that has attracted several entrepreneurs as well as celebrities who want to invest in a product that has always been in high demand. One such enterprise, selling medical marijuana across different states, is MariMed and it was recently shaken up after falling prey to a highly sophisticated email fraud scheme, resulting in the inadvertent transfer of $646,000 to a fraudulent recipient. This attack on MariMed was orchestrated using a meticulously forged email, leading to the funds being transferred to an account at Chase Bank.
Understanding the mail fraud
MariMed, a Massachusetts-based MSO with operations spanning five states, confirmed the loss in its latest quarterly filing, was quick to emphasize that the incident was not a result of any shortcomings in financial discipline or governance. Instead, the company characterized it as a "very sophisticated, global fraud that took months of planning."
The initial response from MariMed suggested that the company acted with an urgency to halt the transfer. Chase Bank initially said that MariMed had identified the problem before the payment was delivered, prompting an investigation. But updates from the bank revealed that the funds had indeed been delivered to the scammer's account. MariMed is now collaborating with the FBI and local law enforcement in efforts to trace and apprehend those responsible.
The financial impact on MariMed
The loss of $646,000 has been recorded as an expense in MariMed's financial statements, pending recovery efforts. Chief Communications Officer Howard Schacter expressed confidence that the company will recover the lost funds, either through the bank or via cybersecurity insurance.
CFO's resignation and speculations about a link
The recent resignation of MariMed's Chief Financial Officer, Susan Villare, in the middle of a fiasco, has also raised eyebrows. The official statement from the company on Villare's departure provided no explanation or commentary, leaving room for speculation regarding a potential connection between her resignation and the email fraud incident.
Sophisticated corporate cybercrime
Joseph Steinberg, a cybersecurity expert based in New York, emphasized that these incidents typically go beyond simple phishing attacks, involving meticulous planning, strategic targeting, and multiple steps. He warned firms and individuals against tactics such as reconnaissance, phone calls, and the exploitation of weak links, deployed by cybercriminals.
While Steinberg refrained from commenting specifically on MariMed's case, he highlighted the potential involvement of various factors, such as compromised information, confirmation over phone calls, or the exploitation of third-party weaknesses. Steinberg's warning serves as a critical reminder for businesses, especially those in lucrative industries like cannabis, to fortify their cybersecurity defenses against ever-evolving and sophisticated cyber threats.
Lessons learned
As MariMed grapples with the aftermath of this email fraud incident, the episode serves as a cautionary tale for businesses across industries. Businesses must recognize the potential indirect routes through which criminals can breach their systems, emphasizing the importance of safeguarding against vulnerabilities in third-party interactions.
In response to the incident, MariMed has implemented additional safeguards to protect against future fraudulent activity.
Navigating the rough digital landscape
In conclusion, MariMed's experience serves as a stark reminder that even companies operating at the highest standards of financial discipline and governance are not immune to the evolving tactics of cybercriminals. As businesses navigate the ever-changing digital landscape, they need to fortify cybersecurity defenses.
