Authorities were able to recover $1,296,935 of the more than $2 million defrauded from the district, and received an additional $100,000 payout from social engineering — otherwise known as phishing — insurance, Baumbach shared at Monday's School Board meeting.
That leaves the district with a net loss of $842,730, taken from the district's building fund — meaning the loss has not impacted funding for day-to-day operations.
Baumbach also shared that the fraudulent wire transfer took place on Aug. 16, and was discovered during the following billing cycle. A police report was first filed by the district on Sept. 13.
In the aftermath of the discovery, Baumbach said, the district froze all external transfers, and contacted its bank, the Grand Forks Police Department and the Internet Crime Complaint Center, run by the FBI.
He reiterated the fraud is an isolated incident, and that there is no reason to suspect internal fraud or embezzlement. He said staff followed internal protocols, but this had not prevented the fraud.
"It is important to highlight the district personnel in the business office were victims of a crime," Baumbach said.
While the district's IT system was not breached, Baumbach said administrators were providing new cybersecurity training and implementing multifactor authentication across the district.
In response to a question from board member Amber Flynn, Baumbach said the district had looked into increasing its phishing coverage but found most insurers were unwilling to increase their coverage past $200,000.
Grand Forks Police Department Lt. Andrew Stein told the Herald the fraud investigation remains active and ongoing.
Police provided no new documents relating to the investigation in response to an open records request filed by the Herald.
"It is true the investigation is not quite done, and it's my understanding it might not be for a long, long time. We thought an update to the community was deserved," Baumbach said.
In other news from Monday's board meeting:
- Board members decided redrawing school boundaries needs more time and resident input.
- IT specialist Logan Corneliusen was honored as the classified employee of the quarter, while Lisa Vojacek, a Valley Middle School instructional coach, was the certified employee of the quarter.
- Board members signed off on a Head Start Quality Improvement Plan.
- Finance committee members are considering a request for proposal for new busing software capable of electronically tracking students and sharing bus route updates with families, among other improvements.
- School Board members signed off on a bid with a guaranteed maximum price of $690,556 for safety and security upgrades to Lake Agassiz Elementary, coming in $85,571 under projected expenses.
- The board also signed off on a plan to replace the district's aging Apple laptops by leasing new Macbook Airs. IT Manager Darin King said the district is pursuing resale options for its current laptops, which were purchased outright using federal coronavirus relief dollars.
- The 2025-26 school year will begin on Wednesday, Aug. 26, for kindergarten through ninth-grade students and Thursday, Aug. 27 for 10th- through 12th-graders, and end for all on Thursday, May 28, 2026. Board members also tentatively OK'd start dates of Aug. 26 and 27, 2026, and an end date of May 27, 2027, for the following school year.
- Board members approved establishing a virtual high school for district students, effective for the 2025-26 school year.
- School Board members again found Terry Brenner's performance as superintendent to be satisfactory in his latest evaluation, though some board members dinged Brenner for not communicating proactively with them and again complained about the breadth of the evaluation.
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