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

money matters

Report: Trump education budget would create a Race to the Top for school choice

PHOTO: Official White House Photo by Shealah Craighead
President Donald Trump and U.S. Secretary of Education Betsy DeVos participate in a tour of Saint Andrews Catholic in Orlando, Florida.

The Trump administration appears to be going ahead with a $1 billion effort to push districts to allow school choice, according to a report in the Washington Post.

The newspaper obtained what appears to be an advance version of the administration’s education budget, set for release May 23. The budget documents reflect more than $10 billion in cuts, many of which were included in the budget proposal that came out in March, according to the Post’s report. They include cuts to after-school programs for poor students, teacher training, and more:

… a $15 million program that provides child care for low-income parents in college; a $27 million arts education program; two programs targeting Alaska Native and Native Hawaiian students, totaling $65 million; two international education and foreign language programs, $72 million; a $12 million program for gifted students; and $12 million for Special Olympics education programs.

Other programs would not be eliminated entirely, but would be cut significantly. Those include grants to states for career and technical education, which would lose $168 million, down 15 percent compared to current funding; adult basic literacy instruction, which would lose $96 million (down 16 percent); and Promise Neighborhoods, an Obama-era initiative meant to build networks of support for children in needy communities, which would lose $13 million (down 18 percent).

The documents also shed some light on how the administration plans to encourage school choice. The March proposal said the administration would spend $1 billion to encourage districts to switch to “student-based budgeting,” or letting funds flow to students rather than schools.

The approach is considered essential for school choice to thrive. Yet the mechanics of the Trump administration making it happen are far from obvious, as we reported in March:

There’s a hitch in the budget proposal: Federal law spells out exactly how Title I funds must be distributed, through funding formulas that sends money to schools with many poor students.

“I do not see a legal way to spend a billion dollars on an incentive for weighted student funding through Title I,” said Nora Gordon, an associate professor of public policy at Georgetown University. “I think that would have to be a new competitive program.”

There are good reasons for the Trump administration not to rush into creating a program in which states compete for new federal funds, though. … Creating a new program would open the administration to criticism of overreach — which the Obama administration faced when it used the Race to the Top competition to get states to adopt its priorities.

It’s unclear from the Post’s report how the Trump administration is handling Gordon’s concerns. But the Post reports that the administration wants to use a competitive grant program — which it’s calling Furthering Options for Children to Unlock Success, or FOCUS — to redistribute $1 billion in Title I funds for poor students. That means the administration decided that an Obama-style incentive program is worth the potential risks.

The administration’s budget request would have to be fulfilled by Congress, so whether any of the cuts or new programs come to pass is anyone’s guess. Things are not proceeding normally in Washington, D.C., right now.

By the numbers

After reshaping itself to combat declining interest, Teach For America reports a rise in applications

PHOTO: Kayleigh Skinner
Memphis corps members of Teach For America participate in a leadership summit in last August.

Teach for America says its application numbers jumped by a significant number this year, reversing a three-year trend of declining interest in the program.

The organization’s CEO said in a blog post this week that nearly 49,000 people applied for the 2017 program, which places college graduates in low-income schools across the country after summer training — up from just 37,000 applicants last year.

“After three years of declining recruitment, our application numbers spiked this year, and we’re in a good position to meet our goals for corps size, maintaining the same high bar for admission that we always have,” Elisa Villanueva Beard wrote. The post was reported by Politico on Wednesday.

The news comes after significant shake-ups at the organization. One of TFA’s leaders left in late 2015, and the organization slashed its national staff by 15 percent last year. As applications fell over the last several years, it downsized in places like New York City and Memphis, decentralized its operations, and shifted its focus to attracting a more diverse corps with deeper ties to the locations where the program places new teachers. 

This year’s application numbers are still down from 2013, when 57,000 people applied for a position. But Villanueva Beard said the changes were working, and that “slightly more than half of 2017 applicants identify as a person of color.”