When Mike Morford looks back on the downfall of Altrec, the Redmond outdoor-gear retailer, he focuses on an event in December 2011 he said started the company’s 2-year-long crash.

“The cyberattack, that part of the story is worthy of a book,” he said Feb. 21, days before a federal bankruptcy judge approved the sale of his company to a rival firm. “We were told that we hit the highest rail of cyberwarfare. … Clearly, what they were trying to do was weaken our systems and steal our customer information.”

The attack on the online retailer’s systems took advantage of a vulnerability that exposed customers’ credit card numbers.

Altrec had grown, but not large enough to spend the amount of money on security necessary to cover all the bases, said Morford, its founder.

“We made mistakes for sure,” he said. “Had we built up security to the level needed, that (attack) may or may not have happened.”

Altrec, purveyor of familiar brands of outdoor gear and clothing like North Face and Mountain Hardware, fell from top revenues of $59 million in 2011 to at least $24 million in debt when it filed for Chapter 11 protection in January, according to bankruptcy filings.

U.S. Bankruptcy Judge Randall Dunn, of Portland, has yet to sign the final order, but as of Monday Altrec became the property of a rival online retailer, Active Boarder Corp., a Minnesota firm that caters primarily to winter sports enthusiasts. Altrec will remain a going concern, said Active Boarder President Steve Poindexter.

“You’re going to see a much wider selection than they had recently,” he said.

Altrec sold for $3.25 million, a fraction of its earnings in its best days. The sale concluded a 17-year run by Morford, who as CEO brought the operation to Redmond with 18 employees, he said.

“When I started the business in ’97, I had always had this dream of living in Bend, Oregon,” Morford said. “We knew growth was right around the corner, so we moved down here. We just took off on a run. I think the reality is that this growth put us in a vulnerable space and we had not installed the infrastructure to absorb that.”

Founded in Seattle, Altrec moved in 2006 to the Redmond enterprise zone. In exchange for tax and other financial incentives, the company was obligated to pay a minimum hourly wage of $21.63, 150 percent of Deschutes County’s average wage at the time, the first company in Redmond required to do so.

Altrec grew to 108 employees in March 2013, according to Economic Development for Central Oregon, and stood in the top 20 largest employers in Redmond. In addition to the warehouse, which expanded from 31,990 square feet to 48,910 in 2008, the company continued to operate GreatOutdoors.com, a companion website that chronicled adventures such as a cycling trip in India, skiing across the Alps and hiking in the Canadian Rockies.

It also opened a retail store, Great Outdoors, its sole brick-and-mortar operation, in Bend. The store closed in November.

That same month, Altrec creditors brought suit in Deschutes County Circuit Court, forcing the company into receivership and, eventually, into federal bankruptcy court.

Altrec combined two staples of the Central Oregon economy: outdoor recreation and technology in the form of online sales.

But technology proved the Altrec soft spot. First, hackers, in a denial-of-service attack, blocked Altrec’s website from Google searches for nearly a week and caused further loss of search engine traffic through the December 2011 holiday sales period, Morford stated in bankruptcy filings.

At about the same time, a credit card company reported evidence of fraud among Altrec customers. Morford said Altrec never discovered evidence of actual loss, but alerted 100,000 customers, about 4 percent of its clientele, anyway. In 2012, the company poured money into heightened security that it had planned to pump into its inventory management system, he said.

Jon Dalton, resident agent in charge for the U.S. Secret Service office in Portland, said hackers exploited a vulnerability in the credit card processing system provided to Altrec by a third party. Altrec employed a firm to investigate the breach; the Secret Service received no updates and did not pursue the case further, Dalton said.

Morford said the attack originated outside the U.S., but the perpetrators were not identified.

“We survived that,” Morford said. “People really dug in and tried to do the right thing for the customers. We came out in 2013 with the idea that we just survived a very difficult process.”

And then a bank for three months held back on a $7.5 million loan, which Morford said the company had counted on to improve the inventory system. Without it, Altrec was unable to quickly replenish the stock most in demand, he said.

“It hit us in a kind of perfect storm,” Morford said. “We would have made it had (the bank) stuck with us or had told us faster. The next best thing to a yes is a quick no.”

When the inventory system came online in spring 2013, the moment had passed, he said. The business fell further behind and never caught up. Altrec ended up $24 million in debt; its creditors stand to collect a fraction, if anything, of what they’re owed, according to bankruptcy filings.

Its new owner plans few immediate changes at Altrec and GreatOutdoors.com. Active Boarder also plans to keep part of the Altrec operation in Redmond “for the foreseeable future,” Poindexter said Wednesday. That includes employees in administration, customer support, marketing and sales, he said.

“Altrec, I think its clientele is probably more outdoor oriented than board sports or ski oriented,” he said. “We’re going to try and maintain that flavor and product assortment that caters to that clientele.”

But the Altrec warehouse operation on Southwest Umatilla Avenue, west of Redmond Airport, has a murkier future. Active Boarder has not decided whether to fill orders from Redmond in the long run, he said. The company operates online as TruSnow.com and fills orders from the same St. Paul, Minn., warehouse complex as its affiliates, The-House.com and ProBoardshop.com.

In October 2010 Active Boarder bought SierraSnowboard.com, also in bankruptcy, for $8 million and changed its name to TruSnow.com, a site that specializes in snow-sports gear.

Morford said he plans to remain in Central Oregon, do some soul searching and eventually get back to business. The Altrec experience, he said, represented more than profit and loss.

“It was exceptionally stressful,” he said. “But I had a strong belief that it’s not just business. You bring all of who you are to the table.”

— Reporter: 541-617-7815, jditzler@bendbulletin.com