The School District of Philadelphia was the victim of a cyber fraud scheme, according to the city controller.
Scammers posing as legitimate vendors who had completed flood damage repair work and other compensatory services hacked the district's banking information or manipulated its payment systems to divert nearly $700,000 to themselves, City Controller Christy Brady said. They sent payments to themselves through electronic bank transfers on at least four occasions.
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As a result of the scam, the school district's actual vendors did not receive payment.
Brady, who uncovered the scheme during her office's annual audit of the school district's finances, referred the information to Pennsylvania Attorney General Dave Sunday for further review. In a letter to Sunday, she warned there could be additional incidents of fraud.
"It is unknown if the fraudulent actors employed tactics that would allow them to embed themselves into financial workflow or systems, resulting in (Automated Clearing House) fraud incidents in addition to what we have been provided to date," Brady wrote.
The school district said two contractors were affected by the scam. In one incident, which occurred in March 2024, a hacker gained access to a vendor's email and requested $563,000 from the school district for an outstanding balance owed. Around the same time, the school district received an email from another contractor requesting a change in payment method and $126,000 for services. After the payment had processed, the contractor reported they had not received the money.
The school district said it reported both incidents to the FBI and implemented additional security measures to its vendor payment system.
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