Flagler sheriff: $719,583 stolen from Flagler Schools through electronic fund transfer

A thief stole $719,583 from the Flagler County School District through an electronic funds transfer via a computer, Flagler County Sheriff Rick Staly said at a press conference Wednesday.

The money was intended to pay for an ongoing expansion at Matanzas High School in Palm Coast.

Staly also said it was unlikely the money would be recovered due to the time delay in discovering the fraud.

The missing money was discovered when the contractor contacted the school to say the expected payment had not been received, Staly said.

That prompted the school district to review its accounts and that's when it discovered the missing funds, Staly said.

Staly said the sheriff's office has seized one computer from the school district as part of the investigation and is seeking another computer from the contractor.

Staly said there was limited information he could release, such as how much time elapsed between when the money was taken and when it was discovered to be missing.

But he did say that due to the time lapse it was unlikely the money would be recovered.

"It's not an error by the school district or the contractor. These things take time and sometimes they are not found right away. And that's what makes these cases so difficult and this is very typical of what occurs in these cases," Staly said.

Staly did say the school district contacted the sheriff's office on Tuesday.

A redacted report provided by the sheriff's office stated that there had been several communications with Flagler Schools starting on July 19 in an attempt to set up an ACH, or automated clearing house network, to fund the Matanzas High School project. The network allows the electronic transfer of funds.

The report stated that on Sept. 20 an email was received requesting information for electronic transfer forms. The recipient's name was redacted as was the bank name and apparently the name of the responder, who replied Sept. 21.

The report also stated that on Sept. 22, purchasing records show a check for the amount of $719,583 was paid to someone, who was also redacted. The district then received a call on Oct. 2 from someone or a company whose name was redacted saying they had not received payment.

Flagler County Schools Superintendent LaShakia Moore said she appreciated the fast reaction from the sheriff's office.

"We are not concerned that any of our finances or any of our other data is in jeopardy, but again it is early in the investigation and we will continue to work with the sheriff's department and I'm confident in the men and women that serve here and if there's an opportunity to recover I know they will."

When asked if the district had any insurance to cover the theft, Moore said "we are looking at all of our options."

Staly said the sheriff's office has the ability to investigate the case and that the FBI and the Secret Service have offered help if needed.

Flagler Sheriff Rick Staly has experience investigating such cases

Staly said he has personally investigated such crimes in the past.

He said it was too early to tell whether a single person or a group was behind the theft. But he said that typically in such cases, the culprits are part of a ring operating in a foreign country with “almost immunity.” Staly said in an unrelated case he investigated, he tracked $500,000 from the victim’s account to New York and then to Latvia.

“I’m not saying that’s where this money went in this case because it’s too early, but that is the new Cayman Islands,” Staly said. “They have super secret banking laws and they don’t cooperate with Interpol.”

He said in the Latvia case, the money either went to the Russian mafia or to terrorists.

In another case Staly investigated, he recovered half of the money which went to St. Thomas in the Virgin Islands. No arrests were made in either case.

Staly said usually in such cases someone puts a virus in the computer and they eventually try to get someone to do an electronic fund transfer or they do it themselves.

He said sometimes the criminals ask someone to use their bank account in exchange for 5% of whatever money is deposited before the funds are transferred to another account.

He said money is usually moved within a day or two to a foreign company. They don’t want it sitting in a bank, particularly in the United States where the money can be frozen.

“In these kinds of cases, they want to move the money as fast as they can without drawing too much attention to the fraudulent activity,” Staly said.

He said sometimes the perpetrators will hack someone’s computer. Sometimes he said employees open an email or send an email requesting payment and were unaware that their computer had a virus collecting data. The people that placed the virus may then make a fraudulent request.

Staly said he was not saying that the school district was hacked because investigators don’t know that.

“Whoever did this, how did they know to send a request that looked legit?” Staly asked.

This article originally appeared on The Daytona Beach News-Journal: Flagler County Schools loses more than $719K in fraudulent transfer