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

Superintendent search

Former principal Roger Leon chosen as Newark’s new superintendent

Former principal and veteran administrator Roger Leon has been chosen as Newark’s new schools chief — its first since the city regained control of its schools.

In a unanimous vote Tuesday night, the school board chose Leon — a Newark native backed by local elected officials — over two candidates with extensive experience in other large urban districts, but whose outsider status put them at a disadvantage. The son of Cuban immigrants, Leon takes the reins of a system whose population has become increasingly Hispanic: At 46 percent of the Newark Public Schools enrollment, Hispanic students now outnumber black students, who make up 44 percent of the enrollment.

In opting for Leon, the board also passed over A. Robert Gregory, another former Newark principal and the district’s interim superintendent, who rose through the ranks under the previous state-appointed superintendent, Christopher Cerf — which some critics saw as a blemish on his record. The board actually picked Leon as superintendent once before, in 2015. But the state education commissioner, who still controlled the district at that time, ignored the board’s choice and appointed Cerf.

The board’s decision to again tap Leon seemed to signal a definitive break from the era of sweeping, controversial changes enacted by outsiders — namely, Cerf and his predecessor, Cami Anderson. Instead, after the state ended its decades-long takeover of the district in February and put the board back in charge of the schools, the board’s choice for superintendent suggests that it will rely on local talent and ideas to guide New Jersey’s largest school system in the new era of local control.

“After 22 years of being under state control, this is a new day,” said School Board Chair Josephine Garcia after Tuesday’s vote. “We look forward to working with the new superintendent.”

Leon grew up in Newark’s Ironbound neighborhood, where he attended the Hawkins Street School. He graduated from Science Park High School, the highly competitive magnet school, where he returned as a substitute math teacher while still a student at Rutgers University. He later coached the school’s renowned debate team.

He went on to teach middle-school algebra, then became principal of Dr. William H. Horton School and later University High School of the Humanities. For the past decade, he has been an assistant superintendent in the district.

As deputy chief academic officer under former superintendent Clifford Janey, he helped oversee several major policy changes, including new graduation requirements and district-wide grading standards. During that process, he recruited hundreds of parents, experts, and community members to join advisory committees to help craft the new policies.

More recently, he has played less of a policymaking role, instead helping to organize district-wide initiatives like a book-giveaway program for students. He also often authors the proclamations that the district awards to distinguished students and educators.

At a forum on Friday where the four superintendent finalists introduced themselves to the public, Leon said the district needs “a clear direction” for the future. He said his vision includes an “advanced technological curriculum” in schools, a focus on social-emotional learning, teacher training, and public-private partnerships to bring additional resources into schools.

“I will inherently be a proficient and influential agent of change,” he said, “because anything short of that is unacceptable.”

Leon arrives in his new position with a strong base of support, which was evident after Tuesday’s vote, when the audience erupted into cheers. In addition to the many parents and educators he has crossed paths with during his 25 years working in the district, he is also said to have close ties with State Sen. Teresa Ruiz, an influential lawmaker based in the politically powerful North Ward.

While Leon served under both Anderson and Cerf, he was far enough removed from the decision-making to escape the wrath of critics who opposed their policies, which included closing some district schools and overseeing the expansion of the charter-school sector. On Tuesday, John Abeigon, the head of the Newark Teachers Union, which clashed bitterly with Anderson and Cerf, said he looked forward to working with Leon.

“Once the new superintendent is sworn in,” he said, “we can begin rebuilding some of the more positive aspects of our district that were destroyed under the corporate control of Cerf.”

While the board has now officially offered Leon the position, it must still negotiate the terms of his contract. He will then start his new role on July 1.

Leon was one of four finalists selected by a search committee after a national search. A state plan had called for the board to choose from just three finalists. But someone on the search committee was unhappy with the three who were chosen and asked the state commissioner to allow a fourth finalist — despite the objections of some other committee members.

While the audience at Tuesday’s board meeting loudly cheered the board’s final decision, many people still criticized the search process. The board kept the names of the finalists secret until shortly before Friday’s forum, where audience members were not permitted to ask the candidates questions.

Still, even critics of the process said they were eager to work with the superintendent.

“The board made their decision,” said Wilhelmina Holder, a longtime parent activist. “So now we’re going to have to respect that decision and work on behalf of the children.”

Superintendent search

On eve of historic vote in Newark, questions arise about superintendent selection process

PHOTO: Newark Press Information Office

When the Newark school board votes on a new superintendent Tuesday evening, as is expected, it will choose from four finalists — a notable departure from the state’s guidelines for the search, which called for a maximum of three finalists.

The change, the result of a behind-the-scenes dispute, is likely to raise questions about the integrity of the superintendent search process at a critical juncture, as the local school board takes control for the first time in over two decades.

The fourth finalist was added after a search committee had already agreed on its shortlist, and despite the objections of some committee members who wanted to stick with the initial three finalists, according to Kim Gaddy, a committee member and school board member, and Marques-Aquil Lewis, the former school board chair, who were both involved in the process.

The addition came at the insistence of other search committee members who were upset that a “strong” candidate had been left off the shortlist, according to Lewis. The additional name was added after the state education commissioner, who is overseeing the handover to local control, agreed to revise the state-authored playbook governing the transition.  

The identities of the four finalist candidates are public, but search committee members would not confirm which of the four was added to the list late.

The dispute over the superintendent selection process comes as the elected school board is choosing a schools chief for the first time since 1995, when the state seized control of the district. In February, the state provisionally returned control of the district to board, whose first major task is to choose a new superintendent.

Gaddy, the school board member who was on the seven-person search committee, said she did not even learn about the request for a fourth candidate until after it was sent. (Lewis, the board chairman who sent the request, disputes that.) Either way, Gaddy says the committee should have honored the process as it was written in the guidelines, which the district must adhere to in order to maintain control of its schools.

“When we finished with three members, that’s it. There should not have been any other discussion with the search committee,” said Gaddy, who declined to say who was the fourth finalist added to the list.

In order to fully return to local control, the district must follow a two-year state plan that spells out every detail of the transition. The plan stipulated that the board must conduct a national search for superintendent candidates, who would then be narrowed down to three finalists by the search committee.

During their deliberations, the committee members discussed the possibility of naming four finalists, but there was “no real consensus” on whether to ask for an additional finalist, according to Gaddy. So at its final meeting on April 21, the group decided to adhere to the plan and name three finalists.

However, immediately after that meeting, one or more members approached Lewis, who was then the chair of the school board, and asked him to send a request to the state asking for permission to name a fourth finalist, Lewis said. Lewis, who was not on the search committee, would not say who asked him to request the change. But he said they were unhappy with the shortlist of finalists.

“When the request was made, they felt there was a fourth candidate that was strong, that should have made the finals,” he said, adding that the person or persons did not tell him who the candidates were.

Lewis said he reached out to all seven committee members before making the request, but could not reach one member. (Lewis said he did speak with Gaddy, which she says she does not recall.)

Two members objected to the request, Lewis said. But he said that four agreed to it, so he sent a letter to the commissioner asking for a change to the transition plan.

Just after Lewis sent the request, he was replaced as board chair by Josephine Garcia. (Lewis did not run for re-election.) After becoming chair, Garcia re-sent the request to the state.

Once again, Gaddy said she was not informed in advance: “I found out after the fact. I was not asked to support it.” Instead, she said that Garcia said she would discuss the request at a board meeting — after it had already been sent. (Garcia did not respond to an email seeking comment.)

On April 27, Acting State Education Commissioner Lamont Repollet sent Garcia a letter saying her request had been granted.

“I am in receipt of your request to amend the Transition Plan to allow the Superintendent Search Committee to submit four finalists to the full Board of Education for consideration,” Lamont wrote in the letter, which the state education department provided to Chalkbeat.

“In order to provider greater assistance to the district in finding the best candidate for the Superintendent position and to allow for consideration of all potentially qualified candidates,” Lamont continued, he agreed to amend the transition plan to allow for four finalists.

After the request was granted, four finalists were presented to the school board — including the one who did not make the original list of three. The four introduced themselves to the public on Friday, and were interviewed by the board in private on Saturday. The full board is expected to vote on which finalist to extend the offer to at its meeting Tuesday evening.

The finalists are former Baltimore city schools chief Andres Alonso; Newark Interim Superintendent A. Robert Gregory; Newark Assistant Superintendent Roger Leon; and Sito Narcisse, chief of schools for Metro Nashville Public Schools in Tennessee.

The search committee includes three board members: Gaddy, Garcia, and Leah Owens. Three other members were jointly chosen by the mayor and the state education commissioner: Former Newark superintendent Marion Bolden, Rutgers University-Newark Chancellor Nancy Cantor, and Irene Cooper-Basch, executive officer of the Victoria Foundation. A seventh person, attorney Jennifer Carrillo-Perez, was appointed by the commissioner.

Only Gaddy would agree to speak on the record for this story; the other committee members did not respond to messages or declined to comment on the record.

Gaddy said she kept the names of the candidates confidential throughout the process, as required. However, she said she felt the entire process has been tainted by the decision to change the rules of the search without the agreement of the full search committee.

The transition plan “was a roadmap,” Gaddy said, that provided clear instructions: “‘You have two years to do A, B, C, and D.’”

“Now every time you don’t agree with A or you don’t agree with B, you’re going to write a letter to the commissioner?” she asked. “How is that following the plan and inspiring confidence in the ability to run this district?”