First Appalachian State got played. Then it got paid.
According to newly released federal documents, the Boone-based university was fleeced for almost $2 million last year by fraudsters posing as a Charlotte construction company doing work on campus.
On Wednesday, the U.S. Attorney’s Office in Charlotte announced that it has recovered about 80 percent of the original amount. According to U.S. Attorney Andrew Murray and court documents, FBI agents successfully tracked down the missing money to accounts in Bank of America and other financial institutions within a month of its disappearance.
The school initially lost almost $2 million. The feds will return more than $1.54 million, Murray says. That’s a net loss of more than $400,000, but only a fifth of what university officials originally faced.
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Here’s what happened:
In 2016, Appalachian State hired Charlotte-based Rodgers Construction to build its new health science college facility. That October, the company filed a form with the school to establish wire transfers and direct deposits.
Two months later, a staff member in the App State’s controller’s office received an email purported to be from Doug McDowell, the controller for Rodgers Construction.
The email included a new direct deposit form along with instructions that the school should reroute company payments to a bank account at JPMorgan Chase. About a week later, some $1.96 million was sent to the new location.
On Dec. 20, the real Doug McDowell contacted App State to ask why the company had not received its money.
The school had been victimized by what is known as a BEC (business email compromise) scam, which targets suppliers or businesses that regularly perform wire transfer payments.
The university staffer had not noticed that the ersatz McDowell had used a slightly different email than what the company sent in its authentic communications, documents say.
The conspirators are not identified. They operated under the name of Royce Hub Trading, which opened a JP Morgan account in late November 2016 with a $100 deposit. That modest balance grew by nearly $2 million on Dec. 12.
Three weeks later, the FBI had located the account and seized the remaining balance of more than $961,000. By mid-January 2017, agents had tracked down another $600,000 through a money-laundering maze of multiple bank accounts and disbursements to an array of companies.
A spokeswoman for Murray’s office refused to comment when asked about the status of any criminal investigation. In court documents, prosecutors accused the conspirators of wire fraud, money laundering and other crimes.
The recovered portion of the university money is part of more than $23.5 million seized by the Justice Department during the 2017 budget year from criminal and civil matters in Western North Carolina.