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

To and Through

Newark’s post-grad paradox: More students are entering college, but few earn degrees

PHOTO: Patrick Wall/Chalkbeat
Newark Mayor Ras Baraka wants 25 percent of residents to have college degrees by 2025, up from 19 percent today.

When it comes to college, Newark faces a good news-bad news paradox.

More students than ever are graduating high school and enrolling in college, according to a new report. Yet fewer than one in four Newark students earns a college degree within six years of graduating high school — leaving many with limited job prospects in a city where an estimated one-third of jobs require a four-year college degree.

Now, city officials are promising to build on the report. They want to ramp up the rigor of high-school classes and create more early-college programs to increase the odds of students entering college and leaving with a degree.  

“How do we teach our children to perform — to graduate?” Mayor Ras Baraka asked at a press conference Wednesday to mark the official release of the report of Newark students’ college outcomes. “We got them in the door,” he said of students who attend college. “Now how do we make them stay?”

The city’s plans, to which Superintendent Roger León is lending his support, reflect a growing recognition that simply getting students into college is not sufficient — and can even backfire if they drop out before graduation, leaving them with college debt but no degree.

Until recently, the charge given to high schools in Newark and across the country was to foster “college-going cultures.” And these efforts showed promising results: On average, 51 percent of Newark Public School students who graduated high school between 2011 and 2016 immediately enrolled in college, up from 39 percent who did so between 2004 and 2010, according to the report by the Newark City of Learning Collaborative, or NCLC, and Rutgers University-Newark’s School of Public Affairs and Administration.

But entering college didn’t guarantee its completion. Of those students who started college straight after high school, only 39 percent earned a degree within six years, the report found.

As a result, educators and policymakers have begun to think harder about how to help students “to and through” college — to ensure they actually earn degrees. Toward that end, Baraka and the NCLC — which includes roughly 40 colleges, schools, nonprofits, and corporations — has set a goal of 25 percent of Newark residents earning college degrees or comparable credentials by 2025.

Today, just 19 percent of Newark adults have associate degrees or higher — compared to 45 percent of adults across New Jersey and 40 percent nationally.

Superintendent León, who began overseeing the city’s schools on July 1, said his main strategy for supporting these efforts will be to expose students to challenging work early on.

“If we don’t do something dramatically in classrooms to improve instruction and make it rigorous,” León said after Wednesday’s event, then students are “getting into college but they’re not completing it.”

Source: “Post-Secondary Outcomes of Newark High School Graduates (2011-2016)” report. Note: The four-year rate is an average of the classes of 2011 to 2013. The six-year rate is from the class of 2011. Graphic: Sam Park/Chalkbeat

For starters, León said he wants high schools to offer more college-level classes. In the 2016-17 school year, just 21 percent of Newark students were enrolled in one or more Advanced Placement or International Baccalaureate classes — compared to 42 percent of students statewide.

He also vowed to raise the quality of instruction in the district’s traditional high schools. Only 14 percent of their graduates earn college degrees within six years, compared to 42 percent of graduates from the city’s selective magnet schools, the report found.

To do that, León said he will create specialized academies within the traditional schools modeled on the magnets, which have specialized themes such as science, technology, or the arts. The academies, which will partner with colleges, will most likely feature admissions criteria similar to those of magnet schools, which select students based on their academic and attendance records, León added.

And, for the first time, all ninth-grade students this academic year will take the Preliminary SAT, or PSAT, León said Wednesday. An additional 1,100 eighth-graders who passed at least one of their seventh-grade PARCC exams will also take the PSAT when it’s administered on Oct. 10.

Since 2016, the district has provided the PSAT to all 10th and 11th-grade students. But León said that giving the test to younger students will focus their attention on college and help identity those who are ready for advanced classes. The PSAT is designed to help students prepare for the SAT, which is used in college admissions, and to qualify for National Merit Scholarships.

The district, which was under state control for 22 years until February, is getting some assistance in its effort to improve students’ college outcomes.

For instance, KIPP, the national charter-school network with eight schools in Newark, is sharing its strategies for helping students choose the right college with guidance counselors at three district high schools.

And the higher-education institutions in the Newark City of Learning Collaborative, including Essex County College and Rutgers University-Newark, plan to create more “dual-enrollment” programs that allow high-school students to earn college credits, said NCLC Executive Director Reginald Lewis.

“We’re all going to do a better job,” Lewis said, “of making sure that once Newark residents get in our doors, that we help them persist.”

Time crunch

In victory for teachers union, Newark superintendent scraps longer hours for low-performing schools

PHOTO: Patrick Wall/Chalkbeat
Superintendent Roger León at Hawkins Street School, one of the schools that will lose its extended hours.

Newark’s new superintendent is eliminating a program that extended the hours of struggling schools, which the teachers union has long attacked as ineffective and unfair to educators.

Teachers at roughly 30 schools will no longer receive $3,000 annual stipends for the extra hours, a provision written into the current teachers contract, which extends to 2019. Instead, all 64 district schools will get extra funding for before and after-school programs, Superintendent Roger León said in an email to employees on Tuesday.

The changes will go into effect Monday, Sept. 10, resulting in new hours for the affected schools just days after the new school year began. The district is still working to adjust pickup times for students who are bused to school, according to León’s email. A few of the schools will phase out their extended hours later in the year, the email said.

“We will not continue to do the same things as before and be surprised when the results do not change,” León wrote, adding that cutting the extra hours would save the district $5 million.

In an interview with Chalkbeat Thursday, León said the move is intended to create more uniformity among schools and the services they provide. Now, all schools will get additional money to pay for programs outside of the regular school day, which schools can tailor to their individual needs, though students who are struggling academically will continue to receive “intensive” support, he said.

“Ultimately, the idea would be by October having completely different after-school and before-school programming that meets the needs of each respective school,” León said.

The extended time was first included in the teachers contract in 2012 as part of a larger improvement plan for the targeted schools, which was developed by Cami Anderson, Newark’s former state-appointed superintendent. The plan also designated some low-performing schools as “renew” schools, where teachers had to reapply for their positions and work longer hours.

Anderson also closed some schools and gave principals new hiring authority. Both actions left dozens of tenured teachers without positions, so Anderson created a fund to pay those teachers to perform support duties in schools. In 2014, that fund for “employees without placement” cost the district $35 million out of its nearly $1 billion budget, though by last year the fund had shrunk to $8 million for about 100 unassigned teachers, according to officials.

León said in Tuesday’s email that he was also eliminating the fund, which he said would save the district another $6 million. The teachers union president said he believed all the unassigned teachers now have placements, but the district did not respond to a request to confirm that.

León is also removing the “renew” and “turnaround” labels from low-performing schools, citing their “progress and student achievement,” according to the email.

“I applaud everyone’s efforts at renew or turnaround schools and acknowledge what has been accomplished,” he wrote.

Now that León has abolished his predecessors’ school-improvement program, he will be expected to create his own. Many schools remain mired in poor performance, even as the district overall has made strides in recent years.

When the teachers union agreed to the extended hours in its 2012 contract with the district, it was hailed nationally as a major breakthrough in efforts to revamp troubled schools. But even as the union agreed last year to keep the provision in its current contract, union officials have assailed the turnaround effort as a failure.

NTU President John Abeigon told Chalkbeat on Thursday that the program had been a “scam” and “nothing more than extended childcare.” He added that the stipend teachers received amounted to about $7 per hour for the extra time they worked.

In 2016, a district-commissioned survey of 787 teachers at schools with extended hours found that two-thirds of teachers at schools where the extra time was spent on student instruction said the time was valuable. But in a survey the union conducted in April, the 278 teachers who responded gave the extended hours low ratings for effectiveness in boosting student achievement.

Some teachers in the union survey praised the longer hours, saying their schools used them effectively to lengthen class periods, run after-school clubs, or allow teachers to plan lessons or review student data. But others said the extra time was squandered, leaving staff and students exhausted with little evidence of improved student outcomes to show for it. (Students’ pass rates on state tests stayed flat or declined at most “renew” schools in the first years of the program.)

The union also has complained that many teachers felt compelled to work the extra hours because those who refused to could be transferred to different schools. Under the terms of the original extended-day agreement, teachers were required to work an extra hour per day and attend trainings during the summer and some weekends.

In León’s email to employees, he said every extended-day school had set different work requirements and “none are consistent with the original design.” The longer days may also be contributing to high teacher turnover in those schools, he wrote, adding that principals of schools with regular hours told him they did not want to extend their hours.

Abeigon, the union president, applauded León’s decision to scrap the extra work hours.

“He came to the conclusion that we expected any true educator to reach: that the program was not working and was never going to work,” he said.

León said Thursday that he is now working on a new turnaround program. Once it’s ready, he promised to share the details with affected families before publicly announcing which schools are part of it — an effort to avoid the student protests that erupted when Anderson identified her “turnaround” schools.

He also said he was still considering whether he would ever close schools that fail to improve or to reverse their declining enrollments. Anderson’s decision to shutter nearly a dozen long-struggling schools continues to fuel resentment among her critics even years later.

“I think the whole idea of how much time does a school get to correct itself is a very important one and I’m going to need to be really reflective on it,” León said. “I’ve seen what closing schools does with people who do not feel that they were aware of it or a part of fixing it.”