Federal authorities on Wednesday shed some light on how they believe cyberthieves were able to steal millions of dollars that led to the eventual collapse of Dwelling House Savings & Loan.

A federal grand jury has indicted a former customer of the Hill District institution on charges of defrauding the bank out of $1.1 million two years ago by exploiting a glitch in Dwelling House's accounting system.

Jammie E. Harris, also known as Jammie E. Williams, was accused of diverting the money from the now-defunct bank in 272 transactions from February 2008 to December 2008 and depositing the funds in a PayPal account. The indictment was issued Aug. 24 and unsealed Wednesday.

On or about Feb. 7, 2008, the indictment says, Ms. Harris became aware that electronic disbursements from Dwelling House would be paid to her PayPal account regardless of whether she had any funds in the bank and she began making fraudulent withdrawals far in excess of her Dwelling House account balance.

The indictment says Ms. Harris, a 45-year-old Hazelwood resident, used the money to repay loans she had received from various pay-day loan companies. The total amount stolen was $1,101,264.60, according to the charges.

Ms. Harris, who is in the Allegheny County Jail awaiting trial on drug-related charges stemming from an April arrest in Homestead, is scheduled to make an initial appearance in the Dwelling House case in federal court on Sept. 21.

The federal Office of Thrift Supervision shut down Dwelling House in August 2009 after determining that the bank, an institution in the Hill District for generations, was insolvent and had no hope of recovering. The Federal Deposit Insurance Corp. transferred the bank's deposits to a PNC branch in the Hill.

Investigators have spent the past year piecing together how cyberthieves stole $3 million to $4 million from among the last remaining African-American thrifts in this country.

According to the indictment, Dwelling House had a so-called operating account at PNC and used Fiserv financial accounting services to administer the account and make electronic deposits and withdrawals.

Electronic withdrawal and payment transactions that were processed through the PNC operating account were flagged if the transactions had an incorrect account number or if an account was overdrawn. Dwelling House had an opportunity to reject and reverse those withdrawals.

However, Dwelling House failed to either halt or reverse those electronic withdrawals in a timely fashion and the funds were dispersed even though the customer had insufficient funds or the withdrawals were not tied to legitimate account, according to the indictment.

The indictment notes that Dwelling House did not properly reconcile its PNC account in a timely manner and did not properly report to the federal regulatory agencies the dwindling of its cash reserves.

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