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Teton school trustees continue fraud investigation

The Teton School District wants to know more about a “phishing” fraud incident that victimized the district in 2017.

$784,000 was stolen when the district electronically paid a construction contractor in December. Since then, $484,332.66 has been recovered. Idaho Counties Risk Management Program (ICRMP) claims adjuster Jeff Boice said there would be a $500,000 cap if investigators ultimately determine the fraud was a criminal matter.

During a special school board meeting Monday, the board asked its legal counsel to file a Freedom of Information Act request with the FBI and local law enforcement. The district wants more information about a $20,000 fraud incident that happened in March, 2017.

According to the district, that incident was immediately reported to its insurance carrier, ICRMP, which paid the claim in full. But the district said it has never received a report on the case.

Independent auditor Scott Bond of Rudd and Company, told the school board the amount “did not meet the test for materiality.” He said he district took appropriate steps, so the 2017 audit report did not mention the incident.

Bank of Commerce Chief Operating Officer Carlan McDaniel said he was working with the school system to tighten protocols to prevent future, fraudulent transfers.

The school district’s former business manager has been removed. Madison School District Business Manager Var Snedecker is providing emergency services for the district until a replacement is named. Among other things, Snedecker will help provide W-2’s and 1099 tax forms to vendors and teachers.

Headwaters Construction told trustees its e-mail system was not hacked as part of the fraud.

In the meantime, construction of new elementary school buildings is proceeding on schedule. Schools in Driggs and Victor should be complete by January 2020. Renovations to the Rendezvous Upper Elementary and Tetonia Elementary are expected to be complete prior to school beginning next fall. The updates to Teton Middle School and Teton High School are projected to be done by spring 2020.

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