Cyberattack hits shoe retailer Zappos.com

Posted Jan. 16, 2012, at 9:35 p.m.

LOS ANGELES — Zappos.com, the popular shoe website, was the victim of a cyber attack that exposed customer information on the company’s internal network and systems, Chief Executive Tony Hsieh said in an email to employees.

In a separate email to account holders, the company said the potentially exposed information included names, email addresses, billing and shipping addresses, phone numbers and the last four digits of credit card numbers.

Zappos said the database that stores full credit card numbers and other payment data was not affected or accessed.

Hsieh said the Henderson, Nev., company was cooperating with law enforcement in “an exhaustive investigation.”

“We’ve spent over 12 years building our reputation, brand, and trust with our customers,” Hsieh said in the email to customers. “It’s painful to see us take so many steps back due to a single incident.”

To employees, he said, “Over the next day or so, we will be training everyone on the specifics of how to best help our customers through their password change process now that their passwords have been reset and expired. We need all hands on deck to help get through this.”

Zappos said it has more than 24 million customer accounts in its database.

For the time being, the company will not be answering customer inquiries by phone.

Nortel fraud trial begins

TORONTO — A fraud case against three former Nortel Networks executives who are accused of falsifying financial reports began Monday, eight years after they were fired.

Former chief executive Frank Dunn, chief financial officer Douglas Beatty and corporate controller Michael Gollogly were dismissed from the company in 2004. Nortel has been winding down as a company since seeking bankruptcy protection in 2009 after a 127-year history in Canada.

Prosecutor Robert Hubbard alleged the three men worked together to falsify Nortel’s records and statements to make the company look more profitable than it was. Hubbard said Nortel’s financial statements were incorrect by “over half a billion Canadian dollars” in the first and second quarters of 2003.

Each of the three pleaded not guilty.

During the 1990s telecom and Internet boom, Nortel had more than 95,000 employees.

Vt. woman sentenced for $1.4M health care fraud

BURLINGTON, Vt. — A Vermont woman has been sentenced to a little over three years in prison for participating in a $1.4 million health insurance scheme.

Sixty-three-year-old Sharon Johnson of West Dover was sentenced Thursday for conspiracy to commit health care fraud.

Johnson pleaded guilty, admitting that she had obtained the money fraudulently from Mutual of Omaha.

Mutual discovered the fraud during a 2006 audit of its claims processing system. An investigation showed Rachel Lenagh, a then-employee of the company, paid the amount to Johnson in fraudulent claims from 2001 to 2006. Lenagh received over $95,000 from Johnson.

The two were indicted in 2007. Lenagh pleaded guilty in Nebraska to conspiracy to commit health care fraud and was sentenced in 2009 to two years in prison.

Both have to pay the money back.

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