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.



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

after douglas

Betsy DeVos avoids questions on discrimination as school safety debates reach Congress

Education Secretary Betsy DeVos prepares to testify at a House Appropriations subcommittee hearing on the department's FY2019 budget. (Photo By Tom Williams/CQ Roll Call)

U.S. Education Secretary Betsy DeVos fielded some hostile questions on school safety and racial discrimination as she defended the Trump administration’s budget proposal in a House committee hearing on Tuesday.

The tone for the hearing was set early by ranking Democrat Rep. Rosa DeLauro, who called aspects DeVos’s prepared remarks “misleading and cynical” before the secretary had spoken. Even the Republican subcommittee chair, Rep. Tom Cole, expressed some skepticism, saying he was “concerned about the administration continuing to request cuts that Congress has rejected.”

During nearly two hours of questioning, DeVos stuck to familiar talking points and largely side-stepped the tougher queries from Democrats, even as many interrupted her.

For instance, when Rep. Barbara Lee, a Democrat from Texas, complained about proposed spending cuts and asked, “Isn’t it your job to ensure that schools aren’t executing harsher punishments for the same behavior because [students] are black or brown?” DeVos responded by saying that students of color would benefit from expanded school choice programs.

Lee responded: “You still haven’t talked about the issue in public schools as it relates to black and brown students and the high disparity rates as it relates to suspensions and expulsions. Is race a factor? Do you believe that or not?” (Recent research in Louisiana found that black students receive longer suspensions than white students involved in the same fights, though the difference was very small.)

Again, DeVos did not reply directly.

“There is no place for discrimination and there is no tolerance for discrimination, and we will continue to uphold that,” she said. “I’m very proud of the record of the Office of Civil Rights in continuing to address issues that arise to that level.”

Lee responded that the administration has proposed cuts to that office; DeVos said the reduction was modest — less than 1 percent — and that “they are able to do more with less.”

The specific policy decision that DeVos faces is the future of a directive issued in 2014 by the Obama administration designed to push school districts to reduce racial disparities in suspensions and expulsions. Conservatives and some teachers have pushed DeVos to rescind this guidance, while civil rights groups have said it is crucial for ensuring black and Hispanic students are not discriminated against.

That was a focus of another hearing in the House on Tuesday precipitated by the shooting last month at Marjory Stoneman Douglas High School in Parkland, Florida.

Rep. Jim Sensenbrenner, a Wisconsin Republican, falsely claimed in his opening statement that Broward County Public Schools rewrote its discipline policy based on the federal guidance — an idea that has percolated through conservative media for weeks and been promoted by other lawmakers, including Florida Sen. Marco Rubio and Utah Sen. Mike Lee. In fact, the Broward County rules were put into place in 2013, before the Obama administration guidance was issued.

The Manhattan Institute’s Max Eden, a leading critic of Obama administration’s guidance, acknowledged in his own testimony that the Broward policy predated these rules. But he suggested that policies like Broward’s and the Obama administration’s guidance have made schools less safe.

“Faced with pressure to get the numbers down, the easiest path is to simply not address, or to not record, troubling, even violent, behavior,” he said.

Kristen Harper, a director with research group Child Trends and a former Obama administration official, disagreed. “To put it simply, neither the purpose nor the letter of the federal school discipline guidance restrict the authority of school personnel to remove a child who is threatening student safety,” she said.

There is little, if any, specific evidence linking Broward County’s policies to how Stoneman Douglas shooter Nicholas Cruz was dealt with. There’s also limited evidence about whether reducing suspensions makes schools less safe.

Eden pointed to a study in Philadelphia showing that the city’s ban on suspensions coincided with a drop in test scores and attendance in some schools. But those results are difficult to interpret because the prohibition was not fully implemented in many schools. He also cited surveys of teachers expressing concerns about safety in the classroom including in Oklahoma CityFresno, California; and Buffalo, New York.

On the other hand, a recent study found that after Chicago modestly reduced suspensions for the most severe behaviors, student test scores and attendance jumped without any decline in how safe students felt.

DeVos is now set to consider the repeal of those policies on the Trump administration’s school safety committee, which she will chair.

On Tuesday, DeVos said the committee’s first meeting would take place “within the next few weeks.” Its members will be four Cabinet secretaries: DeVos herself, Attorney General Jeff Sessions, Secretary of Health and Human Services Alex Azar, and Secretary of Homeland Security Kirstjen Nielsen.

on the run

‘Sex and the City’ star and public schools advocate Cynthia Nixon launches bid for N.Y. governor

Cynthia Nixon on Monday announced her long-anticipated run for New York governor.

Actress and public schools advocate Cynthia Nixon announced Monday that she’s running for governor of New York, ending months of speculation and launching a campaign that will likely spotlight education.

Nixon, who starred as Miranda in the TV series “Sex and the City,” will face New York Gov. Andrew Cuomo in September’s Democratic primary.

Nixon has been active in New York education circles for more than a decade. She served as a  longtime spokeswoman for the Alliance for Quality Education, a union-backed advocacy organization. Though Nixon will step down from that role, according to a campaign spokeswoman, education promises to be a centerpiece of her campaign.

In a campaign kickoff video posted to Twitter, Nixon calls herself “a proud public school graduate, and a prouder public school parent.” Nixon has three children.

“I was given chances I just don’t see for most of New York’s kids today,” she says.

Nixon’s advocacy began when her oldest child started school, which was around the same time the recession wreaked havoc on education budgets. She has slammed Gov. Cuomo for his spending on education during his two terms in office, and she has campaigned for New York City Mayor Bill de Blasio.

In 2008, she stepped into an emotional fight on the Upper West Side over a plan to deal with overcrowding and segregation that would have impacted her daughter’s school. In a video of brief remarks during a public meeting where the plan was discussed, Nixon is shouted down as she claims the proposal would lead to a “de facto segregated” school building.

Nixon faces steep competition in her first run for office. She is up against an incumbent governor who has amassed a $30 million war chest, according to the New York Times. If elected, she would be the first woman and the first openly gay governor in the state.