Portland Public Schools nearly scammed out of $2.9 million

Portland Public Schools was bilked for $2.9 million when a fraudster posing as one of the district’s construction contractors hoodwinked employees into green-lighting the payment, district officials say.

The swindle was caught while the millions were still in the fraudster’s bank account, and the money should be returned to the district’s Wells Fargo account in the next few days, according to Deputy Superintendent for Business Operations Claire Hertz.

“We’ve received confirmation from the bank and FBI that everything is in place to make that happen,” she said.

Two employees who approved the payment were put on paid administrative leave, according to a letter to district parents from Superintendent Guadalupe Guerrero.

The fraudulent transfer was discovered Friday, and Hertz said the district’s money managers must now attend a mandatory training on fraud prevention scheduled for Tuesday. She also said no one at the district will be allowed to authorize payments until after the training.

“When we were made aware of this transaction on Friday, we immediately called the FBI — an internet crimes process we follow — and notified our board of education and we began an investigation to understand the origin of the transaction and how and why the transaction was processed by Portland Public Schools,” Hertz said.

District officials did not release the name of the employees who green-lit the fraudulent transaction and would not reveal how it was discovered. District spokesman David Roy said the faulty payment was “a case of somebody making their account look like that vendor’s account.”

“A preliminary investigation tells us the fraud was perpetrated from outside sources and at this point we don’t see any district employee engaged in criminal activity,” Hertz said.

Roy and Hertz said the district plans to hire investigators who specialize in online security and workplace fraud to audit the transaction and suggest reforms.

Roy said Portland Public Schools was keen to avoid a situation like one that unfolded in Ashland in 2017. Back then, Southern Oregon University was bilked for $1.9 million when an employee fell for a similar scam.

The university recovered less than one-third of the money.