The City of New York’s Department of Education distributes federal funding for supplemental education services to benefit students attending under-performing public schools. This means that approved providers can collect more funding from the government if they increase the number of students receiving their tutoring services. (Now that’s an opportunity for fraud if I ever saw one!) The New York Post reports on one company, which took advantage of taxpayers and collected approximately $14 million for tutoring services that were never provided.

The story states that the bi-coastal tutoring center, located in Manhattan and Los Angeles, boasted endorsements on its website from a former governor, as well as the former chief of schools for both New York and Los Angeles. The company was supposed to provide after-school tutoring services to students attending under-performing public schools within New York City. In reality, the company was forging student signatures on attendance sheets and billing for services that were never received. (This company was supposed to give students an educational advantage, not steal funds and put our students’ futures at an even greater disadvantage.)

The Judge in this case approved a $2 million settlement and two separate civil claims against two of the company’s staff members. Both staffers pleaded guilty to criminal fraud charges and agreed to pay restitution to the government of $61,819 and $101,758 respectively. (What about the other $12 million the bogus tutoring center got away with?)

This educational funding program was originally intended to provide disadvantaged youth with a chance to excel academically. Instead, it was used to line the pockets of lazy staff members, who were taking advantage of benefits they did not deserve. Let’s hope school systems learn a few lessons from this case about this type of fraud and work to prevent it. Our kids deserve better.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Tutor Center Scammed $2M in Federal Funds,” written by Rich Calder and published in the New York Post on April 15, 2014.

NEW YORK – A bicoastal tutoring center — whose website boasts endorsements from actor/former Calif. Gov. Arnold Schwarzenegger and former New York and LA schools chief Ramon Cortines — has agreed to shell out a $2 million settlement to the feds after confessing it falsified documents to solicit public funding for services never provided.

Under a settlement deal with the government announced Tuesday, The Academic Advantage, based in Manhattan, admitted bilking taxpayers out of federal funds by forging students signatures on attendance sheets for years to make it seem as if more were attending tutoring classes.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.