TN school transferred $3 million to fake account

A Tennessee school district temporarily lost more than $3 million after a district employee was tricked into sending funds to a fake vendor.

The chief financial officer of the Johnson County Board of Education in northeast Tennessee transferred $3.36 million in March to an account believed to be associated with Pearson, one of the nation’s largest education companies, which also offers online licensing exams for insurance agent applicants. in several states.

The CFO had been contacted by email by someone believed to be with Pearson. The sender turned out to be using an online address “pearson.quest,” rather than the legitimate pearson.com address, according to news reports and court records.

The fraudulent address was not noticed early because it was hidden in an email behind the sender’s name, as emails often are. The sender’s name was the same as someone known to work with Pearson, according to an affidavit in support of the federal complaint.

Two weeks later, the school district’s bank contacted Superintendent of Schools Mischelle Simcox about the alleged fraud.

The school district’s superintendent told Insurance Journal on Tuesday that the district had a cybersecurity insurance policy through Tennessee Risk Management Trust, “and they worked diligently for us on this incident.”

The September 5 complaint in the United States District Court for Eastern Tennessee shows that the US Secret Service took steps to seize the bank accounts where much of the money ended up.

“We have been informed that most of the money has been recovered,” Simcox said in an email.

The scheme used third-party “mules” who may not have been aware of the actual fraud, court documents show. The Secret Service traced some of the funds to a 76-year-old Texan. The man said he developed a relationship with a woman in Turkey who claimed she could not open US bank accounts because of “a tax issue” and needed someone to open the accounts to receive a large inheritance.

A remarkably detailed diagram of how the alleged scheme worked can be seen here.

Similar schemes using online relationships and unsuspecting mules have become all too common across the country, according to news and first-hand accounts.

TOPICS
K-12 Tennessee