Live

Watch CBSN Live

9/11: N.Y. Credit Union Looted

Prosecutors said that as many as 4,000 people used ATMs to steal $15 million from a New York City municipal employees' credit union whose computer security system was damaged in the Sept. 11 attack.

When the computers at the Municipal Credit Union crashed along with the Twin Towers, a decision was made to keep the ATM operation going, so that its members could continue to withdraw money, reports WCBS-AM reporter Irene Cornell, but thousands of people, many with zero- or low-credit balances, jumped to take advantage of the situation.

Police said they had arrested 66 people and were seeking 35 others. But thousands more are under investigation in what already is one of the largest fraud cases to come out of the terrorist attack.

District Attorney Robert Morgenthau said the suspects found a way to repeatedly withdraw up to $500 a day from ATMs — even if their accounts at the Municipal Credit Union couldn't cover it. Some people made as many as 80 or 90 withdrawals in the month after Sept. 11.

The problem stems from Sept. 11, when the attack on the World Trade Center damaged a nearby building housing the credit union's computer system. The system was also affected by subsequent telephone system and power outages.

Credit union officials soon realized they could not properly monitor the computer network that handles automated teller transactions. But they decided to allow withdrawals without the normal banking safeguards so they would not offend members affected by the tragedy.

"This is a prime example of no good deed goes unpunished," Morgenthau said. "People took advantage."

He said as many as 4,000 people manipulated the system to overdraw their bank accounts by at least $1,000. Of that group, more than 540 credit union members exceeded their balances by more than $5,000.

According to authorities, a 54-year-old nurse made 54 cash withdrawals from Sept. 18 to the end of October, leaving her with a negative balance of $18,111.

A Housing Authority employee allegedly made dozens of withdrawals, using his credit union card to make purchases at a barbecue restaurant, a liquor store and a motel. A school safety officer allegedly made 80 ATM withdrawals in a five-week span, leaving her account more than $11,000 in debt.

The computer problem was fixed in November, and investigators began tracing the illicit withdrawals. Authorities said a handful of people, when confronted about the transactions, agreed to take out loans to pay the money back.

Those who "took the least amount" will be able to pay back the credit union, Morgenthau said.

Since Sept. 11, local and federal prosecutors have already charged more than 90 people on a variety of fraud counts, many involving false claims for assistance. No case has involved as many people as the one announced Monday.

View CBS News In