fraud alert

Suit: Princeton Review charged city for tutoring it didn't provide

This chart from the Justice Department's lawsuit against Princeton Review shows how many times the company billed the city for tutoring students who were absent or when school was closed — and how much it was paid. (Click to enlarge)

A company hired to provide tutoring services in New York City bilked the city out of millions of dollars in federal funding for poor students, according to the U.S. Justice Department.

The department today filed a civil fraud lawsuit against The Princeton Review, Inc., alleging that the company had gotten the city to reimburse it for tutoring it had not provided. According to the suit, the company’s fraudulent claims continued even after a city investigation — never made public — turned up misconduct in 2006.

The tutoring program, known as “supplemental education services” and mandated for low-performing students in high-needs under the No Child Left Behind law, reimbursed providers based on the number of students they served. Princeton Review documented how many students it had tutored by turning in signed attendance sheets; it also gave bonuses to supervisors of tutoring sites where attendance was high. One of those supervisors, Ana Azocar, is also named in the lawsuit.

The bonus system incentivized fraud, according to the suit. Investigators found that many of the signatures showing student attendance were falsified — and sometimes names were even misspelled. The company sought reimbursement for tutoring students who were out of the country and holding sessions when schools were closed, according to the suit. At one school, the now-closed M.S. 399 in the Bronx, the company said it had tutored 74 students on New Year’s Day.

“The Princeton Review and its employees were supposed to tutor needy students, not cheat a federal program,” said Preet Bharara, U.S. Attorney for the Southern District, in a statement. “As alleged, the company and certain of its employees forged student signatures, falsified sign-in sheets, and provided false certifications in order to deceitfully profit from a well-meaning program.”

The complaint covers the years 2006 to 2010 but notes that the city’s own investigator, Special Commission of Investigation Richard Condon, had scrutinized the program’s records from before that in 2006. That year, Condon released two separate reports detailing improprieties by a number of tutoring providers — but neither named Princeton Review. Only a small fraction of SCI investigations are ever released.

A Department of Education spokesman said today that Condon’s office had referred the current allegations to Bharara’s office.

Princeton Review had a contract with the city to provide SES tutoring from 2002 until 2010, when it closed its SES division. The company is not currently a citywide vendor, but some schools have hired the company to provide preparation for standardized tests such as the SAT. More than 100 other companies are approved to offer SES tutoring to city students, and the number of eligible students grew this year as more schools failed to hit federal accountability benchmarks.

A spokesperson for Princeton Review did not deny the allegations but said that the alleged improprieties are part of the company’s past.

“The activity allegedly occurred within the company’s former Supplemental Educational Services division, which the company discontinued in 2010,” said the spokesperson. “No former SES employees or executives are with the company today, and current management — most of whom joined the company after the division was shuttered — had no involvement or role in the affairs of SES.  We are working closely with the U.S. Attorney’s office to resolve this matter expeditiously.”

The Justice Department’s press release about the suit is below, followed by the complaint filed today in Manhattan Federal Court.

JUSTICE DEPARTMENT SUES PRINCETON REVIEW

FOR CLAIMING REIMBURSEMENT FOR TUTORING SERVICES IT DID NOT PROVIDE

NEW YORK – The United States has filed a civil fraud lawsuit against The Princeton Review Inc., a leading provider of educational products and services, and Ana Azocar, a former employee at the company, for Princeton Review’s repeated submission of false claims for reimbursement in connection with a federally-funded program to provide tutoring services to underprivileged children in New York City, Preet Bharara, U.S. Attorney for the Southern District of New York, and Brian M. Hickey, Special Agent-in-Charge of the Northeastern Region of the U.S. Department of Education’s Office of Inspector General (ED-OIG), announced today.  As a result, Princeton Review received millions of dollars in federal funds for tutoring services that it did not provide.  The lawsuit seeks treble damages and civil penalties under the False Claims Act for the fraudulent reimbursement claims submitted by Princeton Review.

U.S. Attorney Bharara said, “The Princeton Review and its employees were supposed to tutor needy students, not cheat a federal program.  As alleged, the company and certain of its employees forged student signatures, falsified sign-in sheets, and provided false certifications in order to deceitfully profit from a well-meaning program.  As today’s suit demonstrates, this type of fraud will not be tolerated.”

ED-OIG Special Agent-in-Charge Hickey said, “The Supplemental Education Services program provides critical resources for deserving students who seek to improve their academic performance.  Today’s actions allege that Princeton Review billed and retained SES payments for students it did not tutor.  That is unacceptable.  Tracking down those who would cheat this important program is a priority of our office.”

As alleged in the complaint filed today in Manhattan Federal Court:

From 2002 to 2010, Princeton Review participated in a federally-funded program under which it provided Supplemental Educational Services (SES) – specifically, after-school tutoring – to underprivileged students attending underperforming schools in New York City.  Under the program, Princeton Review was paid a fixed amount of money per hour for each student it tutored by the New York City Department of Education (NYC DOE), with funds provided to New York state by the federal government.  The allegations in the complaint relate exclusively to Princeton Review’s provision of SES tutoring in New York City from 2006 to 2010.  Princeton Review exited the SES business in 2010.

At each of its tutoring classes, Princeton Review had students sign in and out on an attendance form.  The company was required to keep a daily attendance record as a condition of getting paid.  However, many of Princeton Review’s site managers — employees who oversaw the day-to-day operations of its New York City SES program — routinely falsified entries on the daily student attendance forms to make it appear as though more students had attended tutoring classes than had in fact attended.  Azocar and other supervisors (called “directors”) used threats of termination and pay cuts to pressure site managers to maintain high daily student attendance.  Azocar also instructed and/or encouraged some site managers to falsify entries on the attendance forms, including by signing in for absent students.

From 2006 to 2010, Princeton Review’s daily student attendance forms and invoices were replete with falsifications such as:

  • Entries were changed to indicate that students were present after the students were initially marked as absent.  In some of these instances, the students’ signatures were obvious forgeries because the students’ own names were misspelled.  On one attendance form, a student named Dontae was signed in as “Donate.”
  • Students were signed in as present on days when their parents later confirmed they were absent.  For example, one student was in Mexico on a family vacation on four days when the student’s purported signature appears on daily student attendance forms.  Another student was signed in as present on three days when in fact a note from the student’s doctor shows that the student was home from school recuperating from surgery.
  • Princeton Review was paid for tutoring students on days when records from the NYC DOE show that the students were absent from school or school was closed.  For example, Princeton Review billed the NYC DOE for tutoring 74 students at MS 399 in the Bronx on New Year’s Day in 2008, when there were no SES classes due to the holiday.

Furthermore, Princeton Review maintained an incentive compensation system that encouraged the falsification of attendance records.  Specifically, the company paid directors substantial bonuses if the site managers they supervised consistently reported high daily student attendance.  For example, Princeton Review paid Azocar bonuses of $9,600 and $6,600 in 2008 and 2009, respectively, because the site managers she supervised consistently reported high daily student attendance.

For each invoice that Princeton Review submitted to the NYC DOE for its purported tutoring, Princeton Review certified that the information on the invoice was “true and accurate.”  Despite these certifications, most, if not all, of the monthly invoices contained false information, and the invoices billed the NYC DOE for thousands of hours of tutoring services that Princeton Review never actually provided.  As a result of these false monthly invoices, the NYC DOE paid Princeton Review millions of dollars in federal funds for tutoring services that it never in fact provided.

The complaint further alleges that Princeton Review management had previously been made aware of similar misconduct in the company’s New York City SES program, but failed to take adequate corrective action.  Specifically, in 2006, the Special Commissioner of Investigation for the New York City School District investigated whether Princeton Review had overbilled the NYC DOE for SES tutoring during the 2005-2006 academic year (the academic year immediately preceding the years at issue in this suit).  Although the company hired an outside law firm to conduct an internal investigation and implemented certain compliance measures, the company failed to implement adequate corrective action, as evidenced by the fact that the company’s compliance officers routinely approved attendance forms with clear signs of fraud.  Moreover, in 2008, a Princeton Review manager was told that Azocar had instructed a site manager to forge student signatures, but the manager failed to investigate the matter adequately and allowed Azocar to keep her job.  As a result of Princeton Review’s failure to deter or detect fraud, the fraud continued.

By filing its complaint, the government joined a private whistleblower lawsuit that had previously been filed against Princeton Review under the False Claims Act.

U.S. Attorney Bharara thanked the ED-OIG for its extraordinary assistance in this case.

The case is being handled by Assistant U.S. Attorney Christopher B. Harwood from the U.S. Attorney’s Office for the Southern District of New York’s Civil Frauds Unit.

The Civil Frauds Unit works in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which U.S. Attorney Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Princeton Review Complaint

six months in

As Newark superintendent makes whirlwind changes, some residents seek ‘clarity’

PHOTO: Chalkbeat/Patrick Wall
Superintendent Roger León has made a flurry of policy changes since starting in July. But some observers still aren't clear about his overall vision.

A whirlwind of activity. A legion of initiatives. A blitz of meetings. Pick your metaphor — Superintendent Roger León has been busy.

In his first six months as Newark schools chief, León has overhauled the district’s central office; launched a wide-ranging assortment of programs involving high schools, testing, technology, and more; and offered a litany of wildly ambitious promises, including a vow to make Newark “the highest-performing school district in the country.”

León’s maximalist approach has thrilled many residents who find it invigorating to hear a Newark native present a vision of greatness for a school system that, until February, spent two decades under state control. In recent years, the 36,000-student district has attracted national notoriety mainly for its struggles and the pitched battles that erupted when outside reformers tried to reshape the city’s schools.

But León’s jam-packed agenda and sweeping promises have also raised concerns, even among those rooting for him to succeed — an unease that León may be hoping to address Wednesday evening at a community forum on the district’s future.

Observers have privately asked how the new leader’s disparate initiatives fit together, and whether he can pull them all off simultaneously. Occasionally, their frustration has bubbled to the surface, as when some board members refused to approve some of León’s requests until they knew more about his plans or when Mayor Ras Baraka urged León to make those plans public.

Even the name of León’s elaborate strategy — “NPS Clarity 2020” — has baffled some people, who are unsure when it starts and what it entails. They are hoping the forum will address some of those concerns.

As a former Newark Public Schools educator and administrator, León brings a wealth of experience and institutional knowledge to the job, said Antoinette Baskerville Richardson, the mayor’s chief education officer. While León obviously “has a big vision,” she added, it is imperative that he share detailed plans with the public — especially after 22 years of state control, when officials had license to make wholesale changes without locals’ consent.

“I think a lot of stakeholders are looking for more clarity — and it’s up to the superintendent to bring that,” she said. “Folks are looking for substantive plans.”

After a quarter-century working in the district, León started July 1 with strong convictions about what approaches work in schools — and which don’t. But as he’s rushed to reverse policies he considers ineffective and enact alternatives, schools and partner groups have often had to scramble to keep up.

In June, he tried to oust top district officials before informing the school board, which then rejected some of the staffing changes. In September, he axed a program that extended the hours of struggling schools — resulting in scheduling changes just days before classes began. Last month, he cast doubt on a program that brought extra services to several South Ward schools, leaving the schools and their partner organizations uncertain about its future.

At the same time, he has undertaken several efforts of his own. While most new superintendents are eager to start making their mark, León’s aggressive timeline and ambitious agenda have run up against roadblocks.

He is planning a redesign of the city’s high schools, including changes to the admissions process for magnet schools and new career-themed academies inside the traditional schools. However, the new magnet admissions test was recently postponed, and the district has not formally announced the themes and partners of the new academies. Meanwhile, the enrollment period for next school year is already underway.

León has also promised to tackle one of the district’s most dire and long-standing challenges — absenteeism. One in three Newark students missed the equivalent of a month or more of school days last year, qualifying them as “chronically absent.” The crux of León’s plan for getting students to school is to rehire attendance counselors who were laid off by his predecessor. However, labor rules have complicated the rehiring process, leaving many of the counselor positions unfilled five months into the school year.

Other new superintendents might be content with these already ambitious goals: revamping the district’s high schools and combating severe absenteeism. But León has not stopped there. He has personally reviewed student transcripts and conducted teacher trainings; negotiated changes to the city’s enrollment system with charter-school leaders; and ordered comprehensive audits of the district’s teaching materials and facilities.

León has described different parts of his agenda to different audiences at meetings large and small with parents, district employees, students, union leaders, and local philanthropies. However, members of the public who aren’t invited to all of these gatherings and can’t make the public school-board meetings may have a limited view of León’s entire agenda. His administration seldom holds press conferences or posts summaries of his initiatives on the district website, and reporters’ questions often go unanswered. (A spokeswoman did not respond to questions for this story.)

Deborah Smith-Gregory, president of the Newark NAACP and a former district teacher, said she is eager to learn how León will incorporate all of the feedback he has received into a clear plan with measurable goals.

“He’s doing a lot of outreach,” she said. “But after you get all of those opinions, how do you prioritize what you’re going to pay attention to and implement something that can be measured?”

León may begin to answer that question at the forum Wednesday evening at Central High School. A public notice for the event says it will include a discussion of “goals and timelines” for Clarity 2020, along with a 10-year district roadmap León is crafting and various policy reviews he is conducting.

The event will also kick off a series public meetings intended to gather input for a new three-year strategic plan for the district, according to the notice. León’s predecessor, Christopher Cerf, organized a similar planning process in 2016 to create the district’s current strategic plan.

Whether Wednesday’s forum will leave the public with a clearer sense of León’s overarching vision remains to be seen. But some of the superintendent’s most ardent supporters say they already know enough.

“He’s planning to turn this into the most successful district in the state,” said Newark Teachers Union President John Abeigon. “What’s obtuse about that?”

chalkbeat cheat sheet

All eyes are on Denver’s teacher pay negotiations as a strike looms. Here’s where things stand and how to tune in.

PHOTO: Michael Ciaglo/Special to the Denver Post
Eagleton Elementary School first grade teacher Valerie Lovato, left, and East High School French teacher Tiffany Choi hold up signs as the Denver teachers union negotiates with district officials.

Denver Public Schools and the Denver Classroom Teachers Association have been negotiating for more than a year against a backdrop of widespread protests over teacher pay.

Now, the union is inching toward a strike.

The issues at play are narrower than they are in Los Angeles, where teachers are striking over pay but also class sizes and school resources. In Denver, the union and district agreed on a general contract last year. Now, the sides are focused on the district’s complicated pay-for-performance system, with the union pushing for higher salaries and more opportunities for raises.

The union says it will call for a strike vote on Saturday if a new agreement can’t be reached.

In the meantime, negotiations in Denver are particularly interesting because state law requires bargaining to happen in public. If you’re just getting caught up, or want to tune in as the back-and-forth continues, here’s what you should know.

When are the union and district set to negotiate, and how can I watch?

There are two more sessions on the schedule:

  • Thursday, Jan. 17, 9 a.m.-9 p.m.
  • Friday, Jan. 18, 9 a.m.-9 p.m.

Both sessions will take place at the Acoma Campus, at 1617 S. Acoma St., and are open to the public.

You can also watch online. The district often livestreams the negotiations — here’s where you can find them. It doesn’t always, because doing so takes staff time.

If the district isn’t livestreaming, the union will set up a Facebook Live with a cell phone and a tripod, but it will be of lower quality. Here’s the union’s Facebook page.

If you don’t see anything in either place, it probably means the two sides are caucusing, or meeting in private. Those meetings aren’t streamed.

If you tune in, you’ll see members of both negotiating teams. The union’s team includes Pam Shamburg, Denver Classroom Teachers Association’s executive director; Corey Kern, DCTA’s deputy executive director; Henry Roman, DCTA’s president; Rob Gould, a Denver teacher; and several other teachers.

The district’s negotiation team includes Mark Ferrandino, chief financial officer; Susana Cordova, superintendent; and Michelle Berge, general counsel.

What are the union and district at odds over?

The two sides are negotiating the contract that governs the district’s complex pay-for-performance system, known as ProComp.

Denver teachers have long said the pay-for-performance system is too complicated and unpredictable. It pays teachers a base salary and allows them to earn bonuses and incentives for things like high student test scores or working in a hard-to-fill position.

But giving up the incentives altogether would mean giving up tax money raised specifically for teacher salaries. In 2005, Denver voters passed a tax increase to fund ProComp, and the ballot language was specific about how the tax revenue would be used, including to pay teachers for things like working in hard-to-fill positions, increasing their teaching skills, and earning positive evaluations. District officials project the tax will raise $33 million next year.

Where do things stand?

The timing: The current agreement is set to expire Friday, and union leaders have said they will call for a strike vote on Saturday if a new agreement cannot be reached.

The Denver Classroom Teachers Association informed the Colorado Department of Labor and Employment on Jan. 8 of its intent to strike. A union must give the state 20 days notice, which means the earliest a strike could start would be Jan. 28.

The basics: The biggest sticking point is money. Buoyed by widespread protests over teacher pay in Colorado and other states, the Denver union has asked the district to invest about $30 million more of its $1 billion budget into teacher compensation.

The district’s offer as of Jan. 11 would invest $23 million more into teacher pay. District officials have said some of that money will come from increased state funding, but $7 million would come from cuts to the district’s central office, where many administrators work.

The salary schedule: The union has proposed returning to a more traditional salary schedule. The maximum base salary would be $100,000, which a teacher with a doctorate could earn after  20 years of positive evaluations.

After offering less than that for months, the district’s Jan. 11 proposal matched that $100,000 maximum base salary. Earning it would require a teacher with a doctorate to have 30 years of positive evaluations.

The base salary for a first-year teacher with a bachelor’s degree on the district’s schedule as of Jan. 11 would be $45,500. The union’s schedule would start at $45,000.

The union’s salary schedule differs from the one the district has proposed in one major way: it has more “lanes,” which allow teachers to get raises more frequently.

The “lanes” represent a teacher’s education level. The salary schedule also has “steps,” which represent a teacher’s years of satisfactory evaluations.

The union’s proposed salary schedule has nine “lanes” and 20 “steps.” The district’s Jan. 11 offer has only six “lanes” but 30 “steps.” In the union’s view, the district’s offer doesn’t give teachers enough of a salary boost for furthering their own education.

The district’s proposal is an attempt to diversify the ways teachers can get a pay raise. Teachers could move a lane by getting an advanced license or serving for 10 consecutive years, in addition to earning a higher degree or National Board certification.

Contract talks hit a sticking point Tuesday, with the union insisting the district embrace a salary table with its preferred structure for steps and lanes. Negotiations that were scheduled for all day ended before lunch as district negotiators regrouped. District officials say they want a counterproposal from the union, while the union says the ball is still in the district’s court.

About those bonuses: The district and the union also disagree on the size of the bonuses and incentives. The union favors larger base salaries and smaller incentives, with some as small as $1,000.

The district has proposed three different incentives at $2,500 each. One would be for teachers who work in high-poverty schools, where more than 60 percent of students qualify for free or reduced-price lunch. Another would be for teachers who work in hard-to-fill positions, such as special education and secondary math, and teachers who teach in Spanish.

The third $2,500 incentive would be in the form of a retention bonus for teachers who return to work at a set of 30 schools the district and the union deem “highest priority.”

About 72 percent of Denver teachers would qualify for one of the two $2,500 incentives, district officials said on Jan. 11. About 37 of those same teachers would qualify for both incentives.

A first-year teacher with a bachelor’s degree who gets both incentives — say, a first-year special education teacher in a high-poverty school — could make $50,500 under the district’s proposal.

How did we get here?

Here is a timeline if you’re looking to dive even deeper.