Scott County Schools were scammed out of $3.7 million. Bank helped recover ‘every nickel.’

Scott County Schools has recovered the $3.7 million stolen from the school district in a cyber scam last week, Superintendent Kevin Hub announced Tuesday.

“Scott County Schools is pleased to announce the full and complete recovery of all funds feared lost last week due to wire fraud,” Hub said in a statement. “The full amount of $3,704,338.76 has been returned to Scott County Schools. With the recovery of the money, we will not need to make an insurance claim.”

Hub told the Herald-Leader that he had spoken to FBI officials twice on Tuesday and as of 2 p.m., he was not aware of any action taken by law enforcement against a perpetrator. “FBI special agents and forensic accountants continue to conduct a thorough investigation of the wire fraud. The details of this ongoing investigation remain confidential,” he said.

He said the perpetrator was located in the United States, but he did not know specifically where.

“The money remained here domestically, that’s why our partners at Kentucky Bank were able to effectively return every nickel to us,” he said.

On April 24, Scott school officials announced that the district received notification from a vendor that they did not receive payment of a recent invoice.

“Upon further investigation, we determined a fraudulent email led to the creation of an automated payment account,” a statement said.

Hub said he received a call about 8:30 a.m. Tuesday morning from one of the senior vice-presidents at Kentucky Bank telling him that the money had been returned and was in the school district’s account.

He said that the Kentucky Bank leadership team “and their dedicated professionals .... worked with diligence to make sure Scott County Schools was made whole again. “

Hub said Scott County Schools had a healthy contingency fund so that the loss was not having an impact on the district’s day-to-day financial operations and no employee layoffs would have been necessary.

The school district’s internal investigation into the theft confirmed that district staff “did everything right,” following procedures consistent with Kentucky law and school board policy, Hub said. “Our internal investigation found no wrongdoing on any of our staff members, but yet we were a victim of this wire fraud.”

Scott County Schools will take additional precautionary measures to prevent the possibility of future wire fraud, he said.

Hub said he was questioning whether state laws or state education policies could be tightened as a result of the scam.

Hub said school district officials want to be transparent and share information about how they spend taxpayer’s dollars. “But when we’re so transparent, it also makes us an easy target,” said Hub. He said the perpetrator was able to find the vendor that the school district spends the most money with every year “and that’s who they targeted, that’s who they perpetrated the fraud on.”

He said he could not identify the vendor.

This story was originally published April 30, 2019 at 3:08 PM.