Flagler County Sheriff Rick Staly says it is unlikely that the Flagler County School District will recover over $700,000 that was stolen from the district through a fraudulent electronic money transfer.
The school district discovered the theft after the contractor for the Matanzas High School expansion project told district staff on Oct. 2 that it had not received a scheduled payment. The contractor for the project is H.A. Contracting Corp., out of Miami-Dade County.
The district likely transferred $719,583.20 to a fraudulent account, Staly said in a news conference on Oct. 4 outside of the Flagler County Sheriff’s Office Operations Center.
“The contractor was looking for payment. The school district said they sent it. (The contractor) never received it,” Staly said.
The FCSO is conducting the investigation into the cybertheft. The FBI and the Secret Service, which investigates financial crimes, have been consulted, Staly said.
“In my opinion, at least at this stage, it is unlikely that we will recover the money that has been taken because of the time delay when it occurred and when the school district and the correct contractor found out they were the victim of a fraud.” — RICK STALY, Flagler County Sheriff
According to a heavily redacted FCSO case report, the school district informed the Sheriff’s Office of the theft on Oct. 3. The district received several communications beginning on July 19 that attempted to set up an Automated Clearing House network. On Sept. 22, purchasing records show “a check” of $719,583.20 was paid to what is believed to be a fraudulent account.
The FCSO has seized a computer from the district and will perform a forensic autopsy that will hopefully show when and how the fraud occurred. The department also hopes to get a computer from the contractor. If the contractor does not provide the computer, the department will seek a subpoena to access it, Staly said.
“In my opinion, at least at this stage, it is unlikely that we will recover the money that has been taken because of the time delay when it occurred and when the school district and the correct contractor found out they were the victim of a fraud,” Staly said. “These cases take time and sometimes they are not found right away, and that’s what makes these cases so difficult.”
Staly has had personal experience investigating cybercrimes. Typically, the crimes are perpetrated by a foreign operator as part of a ring that operates out of foreign countries, he said.
Staly said cybercriminals usually target a “mule” by placing a virus on a computer.
“Eventually, they get someone to do an ACH transfer or they do it themselves,” Staly said. “It appears that this was an ACH transfer. We’ll know more when the forensic autopsy is done on (the district) computer.”
Staly speculated that there was a breach in which an employee with the district or the contractor unwittingly provided information that led to the fraud.
Flagler School Superintendent LaShakia Moore said she is confident that if there is a way to recover the funds, the Sheriff’s Office will find a way to do that.
“We are not concerned that any of our finances or any any of our other data is at jeopardy,” Moore said. “But again, it is early in the investigation, and we will continue to work with the sheriff’s department.”
When asked if the district was insured for the loss of funds, Moore said, “We are looking at all of our options.”