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County emails mention account problems years before hack

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Emails obtained Monday by Eyewitness News show that Kern Community College District officials were alerted that something may be wrong with account reconciliation procedures several years prior to a hack that resulted in the theft of more than $16 million.

An email chain on Sept. 27, 2010, shows a correspondence between the district's director of accounting services and a senior accountant in the auditor-controller's office.

It begins with a request from the auditor-controller's office to review some Wells Fargo bank records, as well as a question about who at the school district was reconciling the Wells Fargo account.

The response from the district accountant was as follows:

"We do not receive any bank statements from Wells Fargo. Last time we requested monthly statements, we were told we do not need to have them since the county reconciles our account."

In response, the auditor-controller's accountant says the following:

"... the Auditor's Office has not balanced your bank account (s) since March 2005. All of these bank statements were transferred to KCCD for future reconciling."

The district accountant goes on to apologize for the confusion and say, "The ladies in our payroll department must receive this statement, as we do not have them in accounting."

Three and a half years later, someone began stealing millions of dollars from district checking accounts. Should this back and forth in 2010 have clued the district in to something amiss?

"Well I think based on the emails, it was identified as a problem," said Joe Grubbs, the executive director or risk management for the district.

But were steps taken to make sure that all accounts were indeed being balanced properly after this conversation?

"I have no idea," Grubbs said. "That's why we have gone to an outside auditing firm to review what had taken place during those years and during the interim years and that's what we want to find out as well."

The county auditor-controller's office has said before that they made it clear to the schools in 2005 that they were transferring the responsibility of balancing the checking accounts to them. The schools have long maintained that whatever communication there may have been wasn't clear.

At last check, county officials have been able to recover about $13.3 million of the $16.4 million that was taken from the college district. They are cautiously optimistic that number will continue to rise.

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