Suffolk hacking fallout: County owes $140 million to contractors

Suffolk County owes outside contractors nearly $140 million after missing payments for more than a month, causing financial strain for “vendors at every level” as the county grapples with a malware attack on its computer systems, county Comptroller John M. Kennedy Jr. said.

At a meet-the-candidates forum in Holbrook Wednesday night, Kennedy said he has been handwriting checks since the Sept. 8 cyberattack and subsequent shutdown of county systems, including the financial management apparatus.

Kennedy, who estimated the county has spent $1 million investigating the hack, said Suffolk makes $15 million to $20 million in vendor payments every Monday during what it calls operating runs.

The county has missed payments for five such weekly cycles since the shutdown.

“Vendors at every level are starting to call because they can't make payroll,” Kennedy said.

David Mahler says he has been a county vendor for 35 years, holding contracts for services ranging from technology equipment to marine products.

Mahler said he long considered county funds “money in the bank.”

He said he is awaiting $85,000 in payments, including about $50,000 for PVC piping for a county Department of Public Works dredging project in Riverhead for which Mahler's company provided materials in June.

Mahler told Newsday he has sold stocks to raise cash for the business and is putting expenses on a credit card.

“It’s been a couple of weeks of sleepless nights,” Mahler said. “Not only is it the worry of paying bills. It’s everything that’s owed to me [for products] I’ve already paid for.”

An unidentified group has taken responsibility for the cyberattack in a posting on the "dark web," an anonymized portion of the internet where criminal activity can occur.

The group has released copies of some county documents, saying it was seeking a “small reward” for revealing vulnerabilities in Suffolk's computer systems.

County officials have not said if the group has demanded a specific ransom.

Suffolk County officials say they have begun restoring some services such as 911 and property title searches, but have not offered a timeline when all county systems will be operational.

County spokeswoman Nicole Russo said the comptroller's office has processed more than $40 million in payments to county vendors since the hack.

"We expect that he will continue to prioritize critical payments while the county works to strengthen our financial management systems to ensure the safe and secure transmission of funds,” Russo told Newsday in a statement.

Kennedy has said he would prioritize payments to social services nonprofits, which often operate on tight margins.

Some owners of for-profit companies noted they provide similar services.

Fahad Khan, whose family owns and operates The Learning Cottage Daycare in Huntington Station, said Suffolk County owes the business an estimated $33,000.

Khan said more than half the center’s 20 students receive subsidies through a county Department of Social Services program for low-income families that reimburses Learning Cottage for child care it provides.

Khan said the company has not received payment for August or September, causing a cash crunch.

The business opened only 10 months ago, and Khan expressed concern that without county reimbursement, the business will not be able to obtain a line of credit to keep going.

“We're continuing our service, but I honestly don't know for how much longer,” Khan told Newsday. “If I don't get paid for these kids, then I might just have to literally remove them from the program.”

Edward Attard, who owns three locations of The Learning Experience child care center in Ronkonkoma, Plainview and Massapequa, is facing the same problem.

Attard, who also accepts Nassau County DSS students, said county funds typically are deposited like “clockwork.”

But he estimates Suffolk owes him about $135,000 for August alone.

“We rely on the income from the counties to pay our employees,” Attard told Newsday. “If this continues, I guess there's something else that I'm going to have to figure out.”

Kennedy, a Republican seeking reelection in November, said the county is "taking care of our most immediate needs."

But he added, "I would be lying to you if I didn't tell you that we have a crisis that magnifies each day" that the county does not pay what it owes.

By Vera Chinese

vera.chinese@newsday.com@VeraChinese

Vera Chinese covers Suffolk County government and politics. She joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.