$1.5 Million In Fraud Scam Funds Returned To Appalachian State

Jan 26, 2018

Federal prosecutors announced this week that most of the nearly $2 million that Appalachian State University was scammed out of in 2016 has been returned to the Boone-based college. School officials were victims of a fraudulent billing scheme that also involved a Charlotte-based construction company.

Sanford Mall at Appalachian State University
Credit Clayhefner [CC0], via Wikimedia Commons

When Appalachian State officials discovered the billing scam they immediately alerted the FBI. According to Corey Ellis in the U.S. Attorney’s Western District Office, the funds were located quickly by the FBI.

“The bad guys had not hidden the funds away or spent them quickly enough so that when the FBI located the funds, they were able to restrain them,” Ellis said.

More than $1.5 million was returned to the university. School officials had paid out nearly $2 million to someone posing as an employee of Charlotte-based Rodgers Builders, the company the school hired in 2016 to build an academic facility. According to U. S. Justice Department officials, the school received emails, asking that payments to Rodgers Builders be rerouted to a different bank account. The funds were transferred. A few weeks later, an executive of the real Rodgers Builders informed school officials that the company had not received any payments. The money had been laundered into multiple bank accounts under different company names. Ellis says the money was then seized. He says the law allows them to take possession of assets that they have established were gained through illegal activities.

“Civil asset forfeiture is perhaps the only way we could have protected the victim. I estimate if we did not have civil asset forfeiture as a tool it would have been a 100 percent lost,” Ellis said.

Appalachian State officials say they will implement more stringent financial policies to prevent incidents like this in the future. They say they will also work to recover the remainder of the funds. No one has been charged but Ellis says the investigation is by no means closed.