SOU Loses $1.9 Million in Email Fraud, FBI Investigation Launched

Hannah Jones, Editor in Chief

On Wednesday a group of Southern Oregon University student leaders sat in a room as President Linda Schott informed them that the school fell victim to email fraud in late April when a $1.9 million payment to Anderson Construction was transferred to a bank account which the company has no control over. After it was discovered within three days that the money was not received by the company in charge of construction of SOU’s McNeal Pavilion, local, state, and federal law enforcement were contacted, launching an FBI investigation.

Despite multiple policies and procedures the university has in place to prevent such crimes, an unknown person was able to pose as an Anderson official presenting new bank account information in which the money should be transferred to. At this time the FBI is working to recover the stolen money, but have not released any further information.

“Right now they’re working to recover the money, and we’re working with our insurance companies to determine what our coverage is and determine how much of the unrecovered loss may be insured,” said Joe Mosley, Director of Community and Media Relations.

According to Mosley capital construction funds were used to pay the contractor after the fraud was discovered. “Our hope is to reimburse our capital construction account relatively quickly with funds recouped from the fraudulent bank account,” he said hoping that a criminal investigation would recover the funds.

Although university officials have been aware of the theft for over a month, students were just informed at Wednesday’s meeting which was announced 40 minutes prior to its start time. Around 30 student leaders were actually able to attend the meeting which only lasted 30 minutes.

“I think it was so fast because they didn’t have a lot of answers,” said Shayla Clement, a member of SOU’s Event Planning Involvement Committee. “We all thought it was about tuition, but then they filed in very dramatically,” she said referring to President Schott, Mosley, Provost Susan Walsh, and Chief Information Officer Brad Christ.

“We do not know the culprits,” said President Linda Schott to students in attendance. She insisted that the loss of such a large sum of money is completely unrelated to the recent tuition increase.

“That was in process long before this happened and it doesn’t have any bearing on it at all,” said Mosley. He added that it will not affect construction on McNeal, nor will it affect any university programs or operations. If needed the school will dip into the reserve account consisting of 11 percent of the overall operating budget. “There is sufficient money in that to cover whatever losses we may have,” he said.

Within hours of the meeting a press release was sent out to all students informing them that the crime had taken place and that university officials were doing everything they could to recover the money.

“From what I understand I think the school is handling it really well,” said Daryl Maplethorpe, Student Body President for the 2017-2018 school year. “Working in IT I know that stuff like this happens all the time and it’s really hard to avoid.”

On May 5, shortly after SOU became aware the money was missing, the FBI released a PSA warning universities against this exact type of fraud.

“Many universities are frequently engaged in large construction projects which require regular electronic payments of at least several hundred thousand dollars,” the letter read. “It is relatively easy for a criminal to identify the construction companies involved in these projects and use social engineering and e-mail spoofing to commit this type of fraud. As a result of the nature and large size of these payments to a construction company, losses are significant.”

“There are lessons here for anyone operating in today’s electronic business environment,” said SOU General Counsel Jason Catz in an email sent out to the campus today. “SOU is serious about the threats posed by cyber criminals, and encourages awareness among faculty, staff and students.”

“We are also carefully reviewing our own policies and procedures to determine how we can prevent any similar incidents of fraud in the future,” he continued.

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