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

state of the union

New York City teachers union braces for Supreme Court ruling that could drain money and members

PHOTO: Patrick Wall
UFT President Michael Mulgrew (standing) met with teachers during a school visit in 2014.

A few dozen labor leaders gathered recently at the the headquarters of New York City’s 187,000-member teachers union to hear a cautionary tale.

In a glass-walled conference room overlooking downtown Manhattan, United Federation of Teachers President Michael Mulgrew settled into a chair facing a colleague from Wisconsin. He asked the state teachers union president, Kim Kohlhaas, how her members have fared after an aggressive rollback of labor’s bargaining power there.

She described rampant teacher turnover, fewer job protections, and ballooning insurance and pension costs. In short, a union’s worst nightmare.

For the UFT, Wisconsin is a harbinger of what could result from a Supreme Court case known as Janus, which revolves around the ability of public unions to collect mandatory fees. Oral arguments begin on Feb. 26, and the decision, which is expected in a matter of months, could dramatically alter the landscape for unions across the country.

The impact will be felt especially by the UFT, the largest union local in the country. If the court rules that teachers are not required to pay for its services, the union is likely to shed members and money — a war chest that has allowed the UFT to be a major player in New York politics and to secure robust benefits for its members.

“This is dangerous stuff we’re getting into now,” Mulgrew told Chalkbeat. “They’re trying to take away people’s ability to come together, to stand up and have a voice.”

While the case deals with different issues than Wisconsin’s anti-union policies did, New York City labor leaders say the limits on their membership and funding would weaken their ability to fight against further restrictions on their organizing and bargaining power.

In anticipation of the ruling, union leaders have reportedly already considered downsizing their operations. And they have undertaken a preemptive information and recruitment campaign to hold onto members — who, soon, may be free to choose whether to keep supporting the union financially.

“Much as I oppose Janus, it’s kind of a wake up call for entrenched union leadership,” New York City teacher Arthur Goldstein blogged recently. “People need reasons to pay, and it’s on leadership to provide them.”

At issue is whether public unions can continue to charge “agency fees,” which are payments collected from people who are not members. Sometimes called a “fair share” fee, it is meant to help unions cover the cost of bargaining contracts that cover all workers, regardless of whether they are union members. Only a fraction of New York City teachers currently opt out of the union and pay the agency fees rather than dues — but experts expect many more teachers could leave the union if the Supreme Court bans the fees.

Mark Janus, a government employee in Illinois, is challenging the fee on the grounds that it violates his right to free speech. The Supreme Court deadlocked on a similar case in 2016 after the sudden death of Justice Antonin Scalia. With Neil Gorsuch now on the bench, observers expect a conservative-leaning court will side with Janus. If that happens, workers covered by unions — including the UFT — will be able to opt out of paying the fees that help keep the unions in operation.

“What that means is there will be a lot of teachers — potentially a lot of teachers in New York — who do not invest in the union,” said Evan Stone, co-founder of the teacher advocacy group Educators for Excellence. “There will be potential growth in free riders who are benefiting from the work of the union without contributing to it.”

That’s why the UFT is kicking into action. The union has trained scores of members to knock on doors and talk to fellow teachers about the case. In about two months, the union estimates its members have knocked on 11,000 doors, sharing stories about how the union has helped them and hoping to convince teachers to keep financially supporting the work, even if the courts decide they’re no longer required to.

Union leaders are also launching “membership teams” in every school. Tasked with “building a sense of unity,” the union is asking the teams to engage in personal conversations with members, and plan shows of support for the union. Stone said his organization is organizing focus groups across the city to inform members about the case.

New York City teachers automatically become union members. They pay about $117 a month in dues, while social workers, paraprofessionals, and members in other school roles pay different amounts. Members can also choose to contribute to a separate political fund, which the union uses to lobby lawmakers and support union-friendly candidates.

About 2,000 educators opt-out of the union and pay agency fees instead — which are the same amount as regular dues, according to a UFT spokesman.

Ken Girardin, who has studied the potential fallout of Janus for New York’s unions as an analyst for the right-leaning Empire Center for Public Policy, said the number of agency-fee payers is low compared to other unions. But the Janus case could change that.

Girardin looked at what happened after Michigan enacted a “right to work” law, which forbid mandatory agency fees. The result: The Michigan Education Association, among the state’s largest unions, saw a 20 percent drop in dues and fees. Among full-time teachers, membership declined by 18 percent.

Girardin estimates an equivalent decrease in New York would mean the state’s teachers unions would take a $49 million hit annually. The UFT relies on dues and agency fees for about 85 percent of its $185 million budget, according to federal documents.

“It means they’d have to make up a course change,” Girardin told Chalkbeat, referring to the potential impact of the Janus decision. “They would have to treat their members like customers instead of people who are going to pay them regardless.”

Behind the scenes, the union is reportedly making contingency plans to deal with the potential budgetary fall-out. The New York Post recently cited unnamed sources who said union leadership is considering reducing the staff at some of its borough offices and cutting back on discretionary spending.

Girardin said public-sector unions in New York have already begun to fight for state legislation that would make it harder for members to drop out — a potential work-around in case the court sides with Janus.

Some UFT members say the threat of Janus is already being felt. The union recently voted down a resolution to support Black Lives Matter after leadership said it was a divisive issue at a time when the union can’t afford to lose members, according to an NY1 report.

Rosie Frascella, a Brooklyn high school teacher who helped organized Black Lives Matter at School events across the city, said she was disappointed in the leadership’s decision. But despite those internal disagreements, she said the threat posed by Janus should compel all teachers to speak out in support of their unions.

“You need to be in a union because it protects your right to teach,” she said. “And it stands up for our students and it creates the schools our children deserve.”

after parkland

As Trump doubles down on call to give teachers guns, the growing #ArmMeWith movement offers an alternative

Counselors, time, diverse classroom libraries, money — these are some of many things American teachers say they need in their schools instead of guns.

The pleas are coming via a social media hashtag, #ArmMeWith, that has spread quickly this week as teachers grapple with the aftermath of last week’s school shooting in Parkland, Florida.

Some lawmakers and advocates — including President Donald Trump — have responded to the shooting by arguing that teachers should be armed. That idea has drawn scorn from educators who argue that more guns in schools would make students less safe and do little to address the underlying issues that contribute to violence in schools.

Now thousands of those educators are offering an alternative, using a template that two teachers shared on Instagram on Tuesday. Olivia Bertels and Brittany Wheaton already had substantial social media followings when they asked others to join them in starting a movement.

“My friend @thesuperheroteacher and I think that we should find more practical solutions than giving teachers guns,” Bertels wrote on her post with the template, where she asked to be armed with school supplies. “I hope you’ll take the same stance.”

More than 5,000 people so far have done exactly that on Instagram, and the hashtag is also trending on Twitter, bringing educators together in a cross-country conversation.

“I wish we didn’t have to do this,” wrote one Texas teacher, HowsonHistory, in a comment on a Rhode Island teacher’s post. “But am so glad that so many teachers are. Maybe soon we will be listened to.”

Here are some of the posts that have caught our eye.

“We, the teachers, have a few ideas.”

“#armmewith not guns, but counselors who do not double as test administrators and more than one overbooked, crowded therapist option for families with Medicaid and social workers without overloaded caseloads.”

“#armmewith the liberation of our students, a microphone to speak out against the policies you make from people who aren’t teachers, resources to empower our children, and love to keep our babies safe. We refuse to be armed with guns. #teachingwhilemuslim”

“Because there are so many other things to be arming ourselves with that will do more good than harm. I choose to #armMeWith kindness not violence and teach my students to do the same #jointhemovement”

“I took my first teaching job the year Sandy Hook happened. And the thing is, in that year and in all the years I have been a teacher since, I have stood in my classroom too many times and wondered where I would put my children if someone came into my classroom with a gun. I have stood on playgrounds and in hallways with dozens of students and wondered what would be the best action to take. I have sat through too many of my lunch breaks with my colleagues hashing over the best strategy for protecting our students. There has to be change. Teachers and students deserve to work and learn in peace. #armmewith #thingsteachersshouldnothavetosay”