WCSD files suit over loss of millions in 16th section funds

WAYNESBORO, Miss. (WDAM) - The Wayne County School District announced Tuesday it has filed a lawsuit over the loss of more than $6 million in 16th Section funds.

The district announced in early October that the Federal Bureau of Investigation was investigating a “cyberattack” that targeted the 16th Section funds, which are made up of royalty revenue from oil produced on property owned by the state and administered by the school district.

On Tuesday, Branch said the district was the victim of “substantial fraud,” which resulted in the theft of $9,852,561.54. The district has since recovered more than $3.4 million, according to Branch, leaving current losses at $6,337,361.54.

Branch said the district filed suit in Wayne County Circuit Court against GIO Fixed Income Strategies LLC of Birmingham, George I. O’Rear and First State Corporation of Waynesboro over the incident.

According to the school district, the alleged fraud was discovered around July 3 and reported to the FBI and the Mississippi State Auditor’s office. Branch said the FBI’s work led to the recovery of a “substantial amount” of the funds.

“The allegations of the Complaint speak for themselves,” Branch said in the statement. “Given this pending litigation, the District is unable to answer any questions or provide additional information about this incident at this time.”