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(The Henderson News)

Financial scammers stole more than $600,000 from Henderson ISD through a sophisticated, yet common, fraud scheme.

According to HISD’s financial records, on Sept. 26, the district initiated a $609,615.24 direct electronic bank payment (known as an Automated Clearing House or ACH) to RPR Construction Company Inc. The firm is overseeing the construction at Lions Stadium and renovation work at the former Chamberlain Elementary School.

However, on Oct. 1, the district’s business department staff discovered the funds were mistakenly transferred to a fraudulent account instead of RPR’s bank account. Administrators soon realized HISD was the target of a Business Email Compromise (BEC) scheme.

HISD Superintendent Keith Boles said the district immediately began an internal review and contacted the Henderson Police Department. The investigation was handed over to the United States Secret Service, which investigates crimes involving financial payment systems.

According to information provided by the Federal Bureau of Investigation and the Secret Service, BEC incidents often involve the compromise of a vendor’s or supplier’s email account with the intention of modifying the bank account numbers associated with that vendor. 

While the Secret Service cannot comment on ongoing investigations, Special Agent Bill Mack said BEC schemes are very sophisticated and generally involve a global network of organized crime.

“We’ve seen an uptick in the number of cases here in East Texas,” said Mack, explaining that the scam usually involves more than just a single email. “Contact is often made long before the request for money. Criminals will use a compromised network to gather information about the target. Then, appearing to be a legitimate representative of the vendor, they will often request a simple change in account numbers.”

Unfortunately, BEC scams are surprisingly common. In November 2016, someone posing as a fake vendor email account stole $3.3 million from the city of El Paso. In April 2017, scammers stole nearly $50,000 from the school district in Wall. And last year, several other Texas school districts, including Belton ISD, Odessa ISD and Tyler ISD, emailed thousands of employee W-2 forms to identity thieves posing as superintendents or district administrators. 

The FBI estimates nearly $13 billion has been stolen from businesses and governmental entities over the past five years. While many of the payments have been partially recovered, the process can take months or years. 

Mack advises organizations to safeguard themselves and  “verify, verify, verify.”

Boles said the district remains financially strong and is already working to prevent future fraud schemes. 

“We have suspended all ACH payments to vendors and will simply reimburse them through checks,” explained Boles. “We have reviewed our systems and protocols to make sure this doesn’t happen again.”

Boles said the BEC scam is not simply stealing from HISD.

“These criminals have stolen valuable resources from our kids and our community," he said. "HISD will pursue every avenue to recoup the funds and help bring the criminals to justice. As an educational entity, we will learn from this experience and help other school districts avoid this type of criminal act.”

Trish Hall, who has been with the district business office since August 2016, is no longer listed on the district’s website. She replaced Bill Stanley as director of finance when he retired in January. Stanley is currently listed as interim director of finance. 

When asked about Hall’s employment status, Boles said she resigned on Wednesday and the district has begun the search for a replacement.

“Our staff and administrators work hard every day to educate our kids and manage the tax dollars in their care,” said School Board President Jamie Holmes. “They are honest people acting in good faith with our employees and vendors. This theft is an unfortunate reminder of how hard some dishonest people will work to take advantage of good people.”

The Henderson News attempted to contact RPR Construction but the company has not yet commented on the incident.