$1.4M stolen from CHET school savings account
A Fairfield resident lost $82,000 from their state college savings account. A Darien woman saw $50,000 siphoned from her Connecticut Higher Education Trust Direct account.
They are part of a larger $1.4 million breach of the state program announced Wednesday by state Treasurer Denise L. Nappier after an inquiry from Hearst Connecticut Media.
CHET Advisor accounts managed by The Hartford, a financial services company, were not affected by the breach.
“This is the first time that we are aware of fraudulent account activity in CHET’s 20-plus-year history,” Nappier said, “I am deeply concerned that these criminal activities have impacted CHET account holders.”
The money was withdrawn after unauthorized individuals gained online access to the CHET accounts, according to the release from Nappier’s office.
David Barrett, executive assistant for communications for Nappier’s office, said they were notified of the breach in June by TFI, when the firm discovered the widespread withdrawals. Law enforcement sources said the unauthorized withdrawals may have started in late 2014.
In addition to the investigation being conducted by the Cybersecurity Unit of the State Police, local departments and the FBI, Barrett said TFI is conducting an internal investigation.
A spokesman for TFI’s said its ongoing investigation has found no indication the personal information used to steal the money from the CHET account holders was “sourced or taken” from the CHET website, or from TFI or any associated vendors. Instead, Mike Tetuan said, it appears the suspects got account holders’ personally identifiable information from some other source in order to gain access to the accounts and illegally redirect payments.
“We contacted all impacted account holders to assure them that they will not suffer any financial loss as a result of this incident,” Tetuan said. “Further, we have examined all of the 529 plans managed by TFI, and have found no evidence of any additional fraud or unauthorized account access.”
He said they will continue to work closely with the state and law enforcement agencies.
“We have asked TFI to supply us with the management report when that investigation is complete,” Barrett said.
Any account holder who was affected by the breach will have their CHET accounts fully restored by TFI, and TFI will also provide two years of identity fraud protection services, identity restoration services and $1 million in identity theft insurance coverage. Barrett said it is too early to say whether the state will take any action against TFI because of the security breach.
The breach, which happened between October 2017 and June of this year, is under investigation by federal, state and local law enforcement agencies. Two of the account holders were notified of the breach in March and April, and the rest in June when the larger breach was discovered, and were advised to contact their local police department.
Fairfield Lt. Michael Gagner said his department has received three reports since June 12. In addition to the $82,000 loss, residents reported $25,000 and $26,000 taken from their accounts.
There are more than 150,000 CHET accounts, and a list has not been released by TFI or the state on what accounts were breached.