A phishing scam targeting the North Carolina Department of Public Instruction led to $165,431 being sent to a fraudulent bank account, according to a new state auditor’s investigative report.

The department initially sent that sum to a fraudulent bank account but was able to recover $164,317 after learning of the mistake, the report said.

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In August 2021, an email account impersonating someone at Liberty Christian Academy sent a message to DPI claiming to be the head of the academy and requesting a change to the school’s bank account information. The school was set to receive stimulus funds from the federal Emergency Assistance to Non-Public Schools (EANS) program, which DPI was administering.

A DPI official changed the bank account information without going through the proper process to make a bank account change. That would include a Vendor Electronic Payment Form and a copy of a voided check, a bank statement or a bank authorization letter.

“The protocols were there,” Auditor Beth Wood told WRAL News. “Had they just been followed this would not have happened.”

The department also sent $16,569 more than the e-mail had requested, according to the audit.

The department learned of the fraudulent disbursement a month later and was able to recover most of the funds by December. The department must reimburse the federal government for every federal dollar it sends to a fraudster.

"As you can see from the response, DPI took immediate action to remedy the situation," DPI spokeswoman Blair Rhoades said in a statement to WRAL News. "This issue was fully resolved, controls were strengthened, and federal funds were repaid by December 2021, which was prior to initiation of this audit by OSA."

The department has added a requirement that staff have a phone call with any organization seeking to change bank account information, in addition to requiring the other documentation.

The state auditor has found multiple issues with how the department has handled federal stimulus funds, which the department has said are the result of an unprecedented release of funds and limited personnel to manage them.