Wire-Transfer Provider Xoom Hit by $31 Million International Fraud Scam

Online wire-transfer provider Xoom Inc. reported Monday that it will take a $30.8 million one-time charge as a result of a scam in which the same amount of its cash was transferred abroad. Xoom also said that its chief financial officer had resigned.

San Francisco-based Xoom declared in a regulatory filing that “it had been the victim of a criminal fraud.” Xoom said it determined Dec. 30 that the incident was fraudulent and notified federal authorities, triggering what the company calls a “multi-agency criminal investigation.”

“The incident involved employee impersonation and fraudulent requests targeting the company's finance department, resulting in the transfer of $30.8 million in corporate cash to overseas accounts,” the filing says. The report goes on to say that the company “believes that no customer data was involved, nor was any customer’s money involved in this matter and the company’s systems were not impacted. While this matter will result in some additional near-term expenses, the company does not expect this incident to otherwise have a material impact on its business.”

In an emailed statement, a Xoom spokesperson said “we have no evidence to believe that the fraud was perpetrated by one of our employees. In fact, the criminals targeted our finance department in order to carry out their fraudulent scheme.” Xoom chief executive John Kunze added in a statment that “unfortunately, Xoom was the target of an international criminal fraud that was sophisticated enough to overcome numerous internal protections.”

The audit committee of Xoom’s board of directors, which met Friday and over the weekend to review the incident, authorized an independent investigation assisted by outside advisors. “While the company has internal controls in place and has implemented additional internal procedures, its audit committee and advisors are reviewing these controls and processes as part of the investigation,” the filing says.

The filing also reported that chief financial officer Matt Hibbard has resigned, effective immediately. The report gave no explanation for the resignation other than to say that it was “not the result of any disagreement or dispute with the company.” Xoom named Ryno Blignaut, its former CFO and chief risk officer, as acting CFO and chief risk officer.

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