School District of Philadelphia paid nearly $700,000 to bad actors in cyber fraud scheme
The School District of Philadelphia appears to have been hit with a cyber fraud scheme that resulted in nearly $700,000 being diverted, authorities said.
City Controller Christy Brady made a joint announcement on Thursday with Councilmember Isaiah Thomas and District Superintendent Tony Watlington.
According to the release from the Office of the City Controller of Philadelphia, one of the payments totaled more than $560,000 for services involving flood damage repair work, and three other payments were made for compensatory services.
Brady said during fiscal year 2024, malicious actors apparently posed as two legitimate vendors and were sent money electronically using an automated clearing house.
"Based on the information provided to our office, it appears the bad actors gained unauthorized access to the school district's banking data or manipulated existing payment systems to send unauthorized funds to their own accounts," Brady said.
The real vendors didn't get the funds. So far, those payments have not been recovered.
"We want to ensure taxpayer dollars are dedicated to meeting educational needs and enriching students' experiences," Thomas said in the release. "We are committed to full transparency in the spending and management of tax dollars. The public has a right to know how their money is being used."
The fraud was limited to specific vendor payment processes and did not put student data or the school system's financial data system at risk, a news release from the school district said. Neither incident involved the school district paying more than it owed to the vendors, according to the district.
Brady said she has asked the Pennsylvania attorney general to investigate.
A spokesperson for the School District of Philadelphia said the district implemented several measures to combat cyber fraud, such as revising bank confirmation processes, improving the process to validate payment changes with vendors, and strengthening internal controls.
"I strongly value collaboration and grateful for the continued support of the school district and governing officials," Brady said. "By working together, we will assist the school district in recovering any available funds and implementing safeguards to prevent future fraud."
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