Warner Bros. has accused a Rockland CPA firm of accounting malpractice for allegedly enabling a hacker to divert $1.3 million from the entertainment company.
WB Studio Enterprises Inc. of Burbank, California, sued Dan Schwartz CPA PC, of Nanuet, Feb. 25 in federal court in White Plains.
“Schwartz failed to ensure that its network or email systems were sufficiently secure or protected against unauthorized access and hacking,” the complaint states, “which left Schwartz’s emails – and therefore Warner Bros.’ confidential business and financial information – vulnerable to unauthorized access and manipulation by a hacker.”
Schwartz did not respond to an email request for its side of the story.
Schwartz worked for Warner Bros. briefly in early 2019, after the Burbank company acquired Entertainment Merchandise NY.
Schwartz had been EMNY’s longtime accountant, according to the complaint, so Warner Bros. paid him $2,000 to continue handling the accounting temporarily.
In February 2019, a hacker infiltrated Schwartz’s network or email system, the complaint states, using an IP address from outside of the U.S. The hacker was able to monitor Schwartz’s emails and confidential client information.
EMNY had a savings account with $1.3 million that had become Warner Bros. property. Schwartz was authorized to transfer funds from EMNY’s bank account to a Warner Bros.’ account at Bank of America.
But the hacker intercepted the message and replaced it with a request to transfer the funds to a Wells Fargo account.
The Schwartz firm did not notice that the hacker misspelled the email address of the Warner Bros.’ employee who authorized the transfer, according to the complaint, and the CPA firm did not verify that the funds were supposed to be transferred to Wells Fargo instead of Bank of America.
Schwartz wired the money to Wells Fargo.
In another alleged incident, the hacker altered an invoice from an EMNY vendor, and directed funds to be wired to Lloyds Bank instead of the vendor’s account at Barclay’s Bank.
The two transactions totaled about $1.3 million, the complaint states, and Warner Bros. has been unable to identify the hacker or recover the funds.
Besides accounting malpractice, Warner Bros. accused Schwartz of breach of contract for allegedly not safeguarding its funds.
Warner Bros. is represented by White Plains attorneys Russell M. Yankwitt and Alicia A. Tallbe.