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Indiana superintendent who resigned over $1.2 million in fraud payments gets special role

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The former superintendent of Manchester Community Schools in Manchester, Indiana mistakenly paid over $1 million to fraudsters posing as a legitimate construction company resigned yesterday and accepted a new position as Director of PR and Communications for the district.

The school board voted Tuesday to create the position specifically for former superintendent Kyle Wieland immediately after approving his resignation. The position was created to satisfy the demands of a community that still supports Wieland.

Wieland allegedly ignored recommendations from state auditors when he sent the money to fraudsters and downplayed his role in the phishing scheme, according to Jeff Stephens, who was hired to help the district located about 35 miles west of Fort Wayne.

“Given the gravity of the loss, the financial condition of the school district and the continuing scrutiny of the district by various state agencies, this is a very gracious offer by the board,” Stephens said Tuesday.

“I know of no other organization that would make such an offer to someone who was solely responsible for ignoring directives from the State Board of Accounts, resulting in a loss of this magnitude,” Stephens said.

The school’s press release from June says the fraudulent payments total almost $1.2 million. The Indiana State Police confirmed to Chalkboard that it is not investigating the incident.

The district said it will have to cover the loss of funds.

“We will be able to cover this loss without interruption of our students’ educational services, but it will make our budget even tighter,” Mike Hensley, school board president, said in a June statement. “We will work hard to get through this difficult circumstance.

Stephens said during Tuesday’s meeting that the Indiana State Board of Accounts told Wieland the school district must implement stronger internal financial controls to prevent fraud after an audit concluded in February this year.

The agency, which audits the Indiana’s public institutions, recommended implementing procedures to stop fraud, including having multiple people review the legitimacy of payments and verify a vendor’s details.

Wieland was present at the exit interview with the Board of Accounts where such recommendations were made.

But in March, Wieland responded to an email requesting money for a construction company for a school project via electronic payment, outside the usual practice of paying by check, according to Stephens. The district had not implemented the State Board of Account’s requirements to prevent fraud, he said.

“Without consulting with other administrators or staff members, Superintendent Wieland personally and solely directed electronic payment,” Stephens said.

Wieland paid the fraudsters posing as the construction company on two separate occasions in March and April without talking to anyone else about it. In May, the real construction company asked Wieland about the money owed them, which was when he realized the mistake, Stephens said.

Stephens said that while Wieland did notify authorities and those involved in the transaction about the fraud, he did not tell anyone at the school about the error until the following week.

Because of these events, Wieland was made aware that there were “legitimate grounds for the school board to pursue dismissal for cause,” but Stephens said Wieland asked if he would be allowed to resign instead. Included in the request was an ability to make a public statement announcing his resignation.

The board agreed to the terms, but Stephens said that Wieland’s resignation announcement led to a “social media campaign.” Stephens said Wieland’s statements did not paint a complete picture of what had happened.

“The omission of ownership has caused division and distrust in this community,” Stephens said.

In his letter published in the North Manchester News Journal on June 28, Wieland used the passive voice to describe his role in the phishing scheme.

“I am genuinely excited by the direction of the culture and climate throughout our district and was looking forward to a summer of reflection and getting us ready for next year,” Wieland wrote. “Unfortunately those plans for the future were altered when I realized our district was a victim of fraud.”

“It was at this point that I tried to do everything I could to stop what was occurring and contacted the proper authorities for assistance,” Wieland wrote. “We had fallen victim to a too common occurrence, and I knew that I had responsibility in that. For that I am truly sorry. I have worked hard to prevent negative influences from impacting our schools and the corporation, but this fraud affects us all.”

In Tuesday’s board meeting, Wieland took a somewhat more apologetic tone.

“I’m sorry for the position that my mistake has put everyone in,” Wieland said in a YouTube video of the meeting. “This isn’t fair to anyone sitting in this room…While we were the target of fraud, my processing of the paperwork is what allowed it to happen. I will carry that guilt forever.”

Wieland thanked the community for their “overwhelming” support for him and his family. He also said he was excited to continue to serve the district in the new role.

“But I also want to make it clear that given an opportunity in the future, I would absolutely return as the superintendent, if I was given that option,” Wieland said.

Wieland’s public comments were followed by hugs and handshakes from members of the board.

The Indiana State Board of Accounts is investigating the incident, but could not give specifics.

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