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

study says...

In new study of school-district effectiveness, New York City falls just below national average

PHOTO: Stephanie Snyder

Each year, state test scores offer a snapshot of how much New York City students have learned. But they say little about how the city’s schools stack up against other districts’, in part because the raw scores largely reflect student demographics — wealthier districts tend to have higher scores.

Now, a major new analysis of several years of test scores from across the country provides a better way to judge and compare districts: Instead of looking at a single moment, it shows how well school systems help students grow their skills over time.

Based on that measure, New York City falls just below the middle of the pack: In the five years from third to eighth grade, its students collectively make about 4.6 grade levels of progress — landing New York in the 35th percentile of districts nationally. By contrast, Chicago students advance the equivalent of six grades within those five years, giving the district one of the highest growth rates in the country.

Still, New York is slightly above average when compared to other large districts with many students from low-income families. And it trounces the state’s other urban districts — including Yonkers, Syracuse, and Rochester, which have some of the nation’s worst growth rates.

“Among big poor districts, it’s better than average,” said Sean Reardon, the Stanford University researcher who conducted the analysis. “In the grand scheme, it’s pretty middle-of-the-road.”

Reardon’s analysis — based on 300 million standardized tests taken by students across more than 11,000 school districts from 2009 to 2015 — is the largest of its kind. It looks both at student proficiency on third-grade math and English tests (that is, what share of students earned a score deemed “proficient”) and student growth between grades three and eight (how much their scores improved over time). Reardon’s research was supported by several foundations, including the Bill and Melinda Gates Foundation, which also provides funding to Chalkbeat.

The analysis controls for the differences in tests across states and over time by converting scores into a common scale that measures growth in grade levels, making it possible to compare nearly every district in the country to one another. (It excludes New York’s scores from 2015 and some grades in 2014 because of the high number of students who boycotted the state tests those years. However, each district’s five-year growth rates is actually an average of its year-over-year growth, so Reardon was still able to calculate a five-year rate for New York.)

Experts generally prefer growth rates over proficiency as a way to evaluate school quality, since growth measures the progress students make in school rather than where they started. Even if a district enrolls many poor students who are less likely than their affluent peers to hit the “proficiency” benchmark, its schools can still help them advance at a rate comparable to or even better than schools filled with wealthier students.

“Growth is way better than achievement,” said Douglas Ready, an education and public policy professor at Teachers College, Columbia University. “We know low-income students start school behind — the question is what do school districts do with the kids they get?”

New York’s growth rate falls just below the national median of 4.8 grade levels. Among big districts, its students made gains similar to those in Dallas and Detroit, and greater than students in Los Angeles, Miami, and Indianapolis.

By contrast, Rochester ranks rock-bottom nationally. In that high-poverty district, where the median income among families with children in the public schools is $26,000, students advanced about three grade levels in five years. Yonkers’ $48,000 median income is much higher, yet its schools barely do better, with students moving just 3.5 grade levels. (Among New York City public-school parents, the median income is $42,000.)

Reardon emphasized that test scores provide an important but incomplete picture of student learning, and growth rates are an imperfect measure of school effectiveness since factors outside of the classroom also influence how much students learn over time.

Still, he argued that officials who rate schools and parents who choose them would do much better to look at a school’s growth rate over its average test scores. In fact, he said, a focus on growth rates could theoretically drive down socioeconomic segregation since higher-income parents might be willing to enroll their children in schools with many poor students and low overall test scores if the schools nonetheless had outstanding growth rates.

Ready, however, pointed out that even when schools and districts are highly effective at helping students make progress, they are still unlikely to close the yawning achievement gaps that separate most poor and wealthier students from the time they start school. Reardon came to the same conclusion.

“The large gaps in students’ academic skills between low- and higher-[socioeconomic status] districts are so large,” Reardon’s analysis says, “that even the highest growth rate in the country would be insufficient to close even half of the gap by eighth grade.”

In response to the analysis, New York City education department officials pointed to the National Assessment of Educational Progress, a standardized test taken by a representative sample of students in each state and certain districts, including New York. Only one other district among the country’s 10 largest cities performed better in reading and math than New York, which had the highest share of low-income students reach the proficient level on the reading test.

“Our schools are the strongest they’ve ever been, with record-high graduation and college enrollment rates, and improving state test scores,” said the district’s spokesman, Will Mantell.

change up

Just as Lower East Side integration plan takes off, superintendent who helped craft it steps down

PHOTO: Christina Veiga
Carry Chan, left, will become acting superintendent in District 1 when Daniella Phillips, right, leaves this month to join the central education department.

The longtime superintendent of the Manhattan community district where parents pushed for a plan to desegregate the local schools is stepping down just as the plan gets underway.

After a decade at the helm of District 1, which includes the Lower East Side and East Village, Superintendent Daniella Phillips is leaving to join the central education department, Chalkbeat has learned. During the yearslong campaign for an integration plan, Phillips acted as a liaison between parents and the education department, which finally approved a new admissions system for the district’s elementary schools this fall.

She will be replaced by Carry Chan, who has also played a role in the district’s diversity efforts as the interim head of a new Family Resource Center, an information hub to help district parents sort through their school options. Chan takes over as acting superintendent on Dec. 18.

The leadership change comes at a crucial time for the district, which also includes a portion of Chinatown. Parents are currently applying to elementary schools, marking the first admissions cycle under the new enrollment system. Under the system, schools give certain students admissions priority based on their economic status and other factors, with the goal of every elementary school enrolling share of disadvantaged students similar to the district average.

It will be up to the new superintendent to help schools recruit and welcome a greater mix of families, and to help steer parents towards a wider range of schools. Advocates hope the district can become a model for the city.

“There is a torch that needs to be carried in order to really, fully execute,” said Naomi Peña, president of the district’s parent council. “The next superintendent has to be a champion for the mission and the cause.”

During heated public meetings, Phillips tried to keep the peace while serving as a go-between for frustrated integration advocates and reluctant education department officials. The tensions sometimes boiled over, with advocates directing their anger at Phillips — though they were eventually won-over and endorsed the final integration plan.

In her new role, she will oversee school consolidations as part of the education department’s Office of School Design and Charter Partnerships. In District 1, Phillips helped steer three such mergers, which often involve combining small, low-performing schools with ones that are higher achieving.

“It has been such a joy and privilege to be District 1 superintendent for over 10 years, and I’m excited for this next chapter in the district and my career,” Phillips said in an emailed statement.

Chan is a former principal who launched the School for Global Leaders, a middle school that focuses on community service projects and offers Mandarin classes. Last year, she joined the education department’s Manhattan support center, where she helped schools form partnerships in order to learn from one another.

Since October, Chan has served as the interim director of District 1’s Family Resource Center, which is seen as an integral part of making the new diversity plan work. Families must apply for seats in the district’s elementary schools, which do not have attendance zones like other districts. The family center aims to arm families with more information about their options, in the hopes that they will consider schools they may not have previously.

“I think we’re all really passionate about this plan and we really want this to work,” Chan said. “Communication is the key, and being transparent with how we’re progressing with this work.”