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SOU still out $1.3 million in email fraud

Southern Oregon University has recovered less than a third of the $1.9 million it was bilked out of in an email fraud earlier this year.

In April, the university wired $1.9 million to fraudsters posing as the construction contractor for the McNeal Pavilion and Student Recreation Center project. Of that amount, $609,000 was recovered earlier this summer, according to SOU spokesman Joe Mosley.

"It's money that remained in the frozen bank account," Mosley said.

FBI Portland Bureau spokeswoman Beth Anne Steele said she wasn't aware of any suspects charged in the fraud scheme, known as a Business Email Compromise scam, but wasn't able to verify that Tuesday afternoon from the road.

It's not yet known whether the university has an insurance policy that would cover the loss or even how exactly the university fell prey to the scam, in which unknown suspects posed as Andersen Construction in sophisticated "spoofed" emails and phone calls. Mosley said a detailed report answering those questions will be issued prior to the university's October board of trustees meeting, currently scheduled for Friday, Oct. 20.

The scam occurred after the university was contacted by email, prompting officials to send their spring payment to a bank account the contractor did not control.  About three business days after the funds were sent, the construction company reported it never received payment.

The university did not publicly announce the loss for more than a month, saying it wanted to keep the investigation under wraps to allow the FBI to better learn who the suspects were, how the fraud happened and to maximize the amount of money recovered. At the time, university officials said they believed most of the funds remained in the frozen account, but that proved not to be the case.

Business Email Compromise scam cases are spreading to small and medium-size businesses, as well as universities, according to FBI releases issued earlier this year. More than $5 billion in losses or attempted frauds were reported worldwide between October 2013 and December 2016.

In June, the university assured students and staff that the loss wouldn't affect university operations or cause tuition increases because budgets and accounts for construction and operations are kept separate.

It remains to be seen whether anyone will be reprimanded in the loss. Mosley has stated previously that finance and administration staff followed the university's policies and procedures.

Policies and procedures remain "under review," according to Mosley. Most vendor businesses have procedures for changing wire accounts with the university.

Job postings for a new vice president of finance and administration to replace Craig Morris are unrelated to the fraud, according to Mosley.

"Our current vice president is retiring at the end of the year, and had planned that long before," Mosley said.

— Reach reporter Nick Morgan at 541-776-4471 or nmorgan@mailtribune.com. Follow him on Twitter at @MTCrimeBeat.