Scam at EBR schools highlights need for choice

This should make Louisiana taxpayers hopping mad and does nothing to build trust in traditional public school systems, if not encourage educational choice.

Turns out the East Baton Rouge Parish School System got hooked by a phishing scam. A senior executive not once but twice inexplicably sent $46,500 to two suspicious bank accounts in a span of two days, and may have done it a third time except another administrator figured it out. The rules called for his countersignature on all of them, but in the first two instances he was out of town so she went ahead and violated the rules to do it anyway.

More specifically, the notes purported to come from Superintendent Warren Drake, who the recipient was led to believe could not be disturbed in his office – next door to hers. The sender address clearly did not come from EBRPSS personnel. It directed to send an amount of $22,500, and then $24,000 the next day, to the New York City area to names associated with people from Nigeria, giving their banking information.

Let’s say you’re this administrator. You get a note allegedly from the top man, apparently only meters away from you, even though it’s from an e-mail address you’ve never seen before. Several notes go back and forth, culminating in those from the faker giving out personal banking information, unencrypted, and no explanation for wiring such large amounts immediately to someplace halfway across the country. The notes themselves would not appear to mimic somebody with Drake’s advanced degree and communication skills, and the content evades certain questions such as where to expense the amount. And then, without knocking on a door or making a call, you go ahead and violate procedures by not having a countersignature and send it – twice.

This isn’t the first rodeo for the official, whose name I don’t mention to spare her the embarrassment. She’s been in that job for a number of years. One might see where somebody relatively unsophisticated in the ways of the world could fall for something like this. It’s almost inconceivable that a veteran in the world of finance would.

So, one must wonder about the corporate culture at EBRPSS that could create an atmosphere where a high-ranking but apparently gullible employee could get taken in. Is it because not much in the way of market forces exist to encourage care in procedures when oceans of money for operating expenses – in the neighborhood of $600 million a year in local and federal tax dollars and revenue-sharing from the state – pour into the organization regardless of its performance? And that being a performance graded by the state as mediocre?

Accidents do happen and in the end, through clawback and insurance, the thieves got “only” $10,000. Still, it’s taxpayer dollars wasted, and a subsequent audit of the event showed this entity with thousands of employees and hundreds of millions of dollars flowing through it annually needed better procedures to obviate this vulnerability.

Perhaps something else unlikely to have appeared in the report could help – more competition encouraged by laws creating incentives for private schools and charter schools. That might divert education dollars from an untrustworthy system towards others subject to market discipline that makes them less likely to commit such follies, and put pressure on that system to reduce the chances of something like this again.