Email scam costs Juneau School District nearly $270,000

A scammer stole nearly $270,000 from the Juneau School District this fall — and it’s unlikely the district will recover the money.

In a memo shared with the City and Borough of Juneau Finance Committee at its March 1 meeting, Finance Director Jeff Rogers provided details of the fraud and information shared with him in early December by the school district.

A person posing as a vendor for the district asked staff for a change to the company’s direct-deposit information using a spoofed email address made to look as though it belonged to the vendor. At the time, district staff did not detect the fraud and two payments were sent to the scammer, one in early October totaling more than $93,000 and the other in early November totaling nearly $176,000.

According to Schools Superintendent Bridget Weiss, the fraud was an outside attack and wasn’t from someone within the district.

“It’s sad and unfortunate circumstances,” Rogers said during the meeting.

Rogers said city finance staff immediately contacted the Juneau Police Department, the Law Department, First National Bank of Alaska and the FBI. Though the case remains open with the FBI, Rogers noted frauds such as this are frequent and difficult to investigate.

In his memo, Rogers shared that since December he had been in regular contact with school district staff about the importance of disclosing this financial crime to the public. However as of March 1, the district had not disclosed it.

Rogers said the FBI gave clearance in December to the district and city to share the information with the public, adding that disclosure would not hinder the investigation.

“It’s an ongoing investigation — this just happened in December,” the schools superintendent said the day after the city meeting. “We’re still getting some pieces of the puzzle as to what happened.”

Weiss said the district does annual mandatory cybersecurity attack training as a preventative measure for all district employees. In addition, the district sends out “spot checks” to test employees’ ability to identify suspicious emails throughout the year.

She said the district is currently reviewing its protocol to better prepare staff for cyber fraud.

In his memo, Roger said the city is able to financially help the district with the loss of funds. He explained the city has a risk fund for criminal events such as this and would be able to cover the money lost to the scam. The city itself recently used the fund in a similar situation that happened in 2019 when a scammer stole nearly $330,000 from the city.

Rogers said if the district files a claim, the first $250,000 would be paid from the city’s risk fund and the remaining $19,000 could be paid by insurance.

Weiss said the school board plans to discuss the next steps at its meeting this week.

“I think we’re happy to have caught it when we did,” she said. “I think the fact that we caught it quickly and that we do preventative training to minimize the risk, in the scheme of potential hazards, given our $94 million budget, we feel fortunate that it wasn’t worse and that the financial impact wasn’t worse.”