no one saw any signs

Fake special ed vendors stole $1.5 million from city, probe finds

Two men used shell companies and forged signatures to charge the Department of Education for sign language services that students didn’t need, an investigation found. The fraud ran for more than two school years and cost the city at least $1.5 million.

The brazen scheme involved claiming payment for services to students who were not enrolled in city schools and, in some cases, offered as proof that services had been provided the forged signatures of people who were retired or even deceased. In one instance, the city paid more than $100,000 over an eight-month period for a student who had left the school system a decade earlier. In another, the city handed out $187,200 in payments that were authorized by someone who had died “several years ago.”

Today, authorities arrested one of the men involved, Nelson Ruiz, while his collaborator, William Cruz, remains at large, said a spokeswoman for the Special Commissioner of Investigation, which conducted the probe.

Special education costs have skyrocketed in recent years and though the sign language fraud doesn’t begin to explain the amount of money that pays for special education servies, it suggests that the ways outside providers  are paid is highly-vulnerable to fraud.

Last summer, the education department created a unit specifically to root out fraud in special education spending and officials said today that it was the work of this unit that eventually prompted the investigation.

Investigators opened the case in February after a department official questioned the authenticity of billing documents that had been submitted by a sign language company called Bilingual Words in Motion.

Eventually, investigators found that a total of five companies, all owned by either Ruiz or Cruz, were swindling the department of payments for sign language services. The companies used the names of 10 students and listed them on forged disability forms to secure payments for services that not only weren’t being provided, but weren’t even needed by the students.

The fraud was apparently able to take place because of shortcomings in the office of Non-Public Schools Payables, which pays independent vendors to provide services to students with disabilities that the department can’t otherwise offer.

Before it authorizes payments, the office first reviews a document — called a ‘related service authorization form — that gives permission to parents to obtain services from an approved independent vendor. These forms included signatures from both parents and education department employees, which Ruiz and Cruz were forging.

Investigators found many of these forms were also outdated, contained wrong addresses, and were issued out of the wrong school district. But when office employees reviewed them, they didn’t pick up on the discrepancies. And  the office also doesn’t have access to a student’s individualized education plan, so they were unable to verify if the student should have been receiving the outside services.

If they had been able to, they would have found some stark discrepancies. Of the ten students detailed in the investigation, most of them didn’t need sign language instruction from an outside vendor. Some didn’t have hearing disabilities at all and three of them were no longer part of the city school system.

Cruz and Ruiz were paid a total of $1,524,160 during the 2010-2011 and 2011-2012 school years, and while the scope of the investigation only went back to 2010, the pair’s theft could have been closer to $4 million. The investigators’ report says that some of the same companies were paid an additional $2.3 million by the Department of Education prior to the 2010-2011 school year.

Ruiz and Cruz technically owned all five of the companies between them, but when investigators began checking up on the companies, there was little evidence that any business was being conducted. None of the companies had offices and their addresses usually linked back to standalone mailboxes. An address for one of the companies, Related Services Solutions, matched Ruiz’s residence in Pennsylvania.

Investigators also looked into the companies’ bank records and found none of them did any business outside of the combined $1.5 million that the city was paying to them.

City officials downplayed the findings from the investigation and said that the education department had already put in place controls to improve how vendors are vetted and how its invoice system is monitors. In a statement, Chancellor Dennis Walcott lauded education department employees who worked to uncover the fraud.

“I want to thank the employees who have been working so diligently over the last year to root out fraud and ensure our neediest students get the services they deserve,” Walcott said. “We will not  allow corrupt businesses to defraud our system and prey on our children.”

The investigation is ongoing and there are still many unanswered questions about how Ruiz and Cruz could had carried out their fraud.

For instance, Cruz apparently used an alias — Bill Chacon — to serve as a special education advocate in impartial hearings. Cruz attended hearings for five of the students who are listed in the report, but it’s unclear how they found the students to claim payments for. It’s even  some of those students did not have any disability. Principals of some of the students who had hearing disabilities told investigators that their services were provided in the school.

The investigation has been handed over to Preet Bharara, U.S. Attorney for the Southern District of New York.

Ruiz and Cruz- SCI Report 8 17 12 (1)

Summer remix

Ten stories you may have missed this summer (and should read now as the new school year kicks in)

PHOTO: Caroline Bauman
Gabrielle Colburn, 7, adds her artistic flair to a mural in downtown Memphis in conjunction with the XQ Super Schools bus tour in June.

Labor Day used to signal the end of summer break and the return to school. That’s no longer the case in Tennessee, but the long holiday is a good time to catch up on all that happened over the summer. Here are 10 stories to get you up to speed on K-12 education in Tennessee and its largest school district.

TNReady is back — with a new test maker.

Last school year ended on a cliffhanger, with the State Department of Education canceling its end-of-year tests for grades 3-8 in the spring and firing testmaker Measurement Inc. after a series of missteps. In July, Commissioner Candice McQueen announced that Minnesota-based Questar will pick up where Measurement Inc. left off. She also outlined the state’s game plan for standardized tests in the coming year.

But fallout over the state’s failed TNReady test in 2015-16 will be felt for years.

The one-year void in standardized test scores has hit Tennessee at the heart of its accountability system, leaving the state digging for other ways to assess whether all of its students are improving.

Speaking of accountability, Tennessee also is updating that plan under a new federal education law.

The state Department of Education has been working with educators, policymakers and community members on new ways to evaluate schools in answer to the federal Every Student Succeeds Act, or ESSA, which requires states to judge schools by non-academic measures as well as test scores.

Meanwhile, issues of race and policing have educators talking about how to foster conversations about social justice in school.

In the wake of police-related killings that rocked the nation, five Memphis teachers talked about how they tackle difficult conversations about race all year long.

School closures made headlines again in Memphis — with more closings likely.

Closing schools has become an annual event as Tennessee’s largest district loses students and funding, and this year was no exception. The shuttering of Carver and Northside high schools brought the total number of district-run school closures to at least 21 since 2012. And more are likely. This month, Shelby County Schools is scheduled to release a facilities analysis that should set the stage for future closures. Superintendent Dorsey Hopson has said the district needs to shed as many as two dozen schools — and 27,000 seats — over the next four years. A Chalkbeat analysis identifies 25 schools at risk.

Exacerbating the challenges of shifting enrollment, families in Foote Homes scrambled to register their children for school as Memphis’ last public housing project prepared to close this month amid a delay in delivering housing vouchers to move elsewhere.

The new school year has officially begun, with the budget approved not a moment too soon for Shelby County Schools.

District leaders that began the budget season facing an $86 million shortfall eventually convinced county commissioners to significantly increase local funding, while also pulling some money from the school system’s reserve funds. The result is a $959 million budget that gives most of the district’s teachers a 3 percent raise and restores funding for positions deemed critical for continued academic progress.

The district also unveiled its first annual report on its growing sector of charter schools.

With charter schools now firmly entrenched in Memphis’ educational landscape, a Shelby County Schools analysis shows a mixed bag of performance, while calling on traditional and charter schools to learn from each other and promising better ways to track quality.

summer mix tape

Ten stories you might have missed over the summer (and should read now as a new school year begins)

PHOTO: Nicholas Garcia
Stand for Children received funding to support parent education.

There is no such thing as time off from covering education. While school doors were shuttered, plenty happened this summer on the Colorado education beat. Here, we’ve compiled stories that we hope prove useful as you ease back into your fall routines.

We’ve got your immunization data right here … 

For the second year, Chalkbeat tracked down immunization data for more than 1,200 schools in Colorado’s largest school districts. Our database revealed that Boulder remains a hotspot for the anti-vaccination movement, students in districts with racial and income diversity are more likely to get their shots and nearly half of schools in the database did a better job this year tracking students’ immunization records. Read our news story about the findings, check out these six charts that dig into the numbers and search for school-level data here.

Denver Superintendent Tom Boasberg reflects on his sabbatical (a break not everyone appreciated)

In June, Denver Public Schools’ longtime schools chief returned from a six-month unpaid sabbatical in South America with his family. “It made us appreciate the extraordinary resources we have here,” he said in an interview about his experience.

A milestone for Colorado charter schools on diversity, but not so much on integration

For the first time, Colorado’s charter schools educated a larger proportion of racial and ethnic minorities than district-run schools, a state report showed. We took a closer look and found that does not mean charter schools are more integrated.

Race, policing and education during a summer on edge

This summer sadly provided no shortage of violence and heartache over issues that sometimes feel like they’re tearing America apart at the seams. We sought to bring some local perspective (and wisdom) to the debate by talking to an ambitious Manual High School student who took up a bullhorn at Denver street protests and to Aurora Public Schools Superintendent Rico Munn.

A middle school’s last-ditch effort to save itself 

An Adams County middle school running out of time to improve has placed its bet on more challenging, more personal teaching — and zero test preparation. Watch Chalkbeat later this week for a report on whether these efforts paid off in the form of improved state test scores. (Hopefully … the data are set to be made public Thursday).

Guess which Colorado school district had a high proportion of teachers designated to lose tenure …

Compared with other large Colorado school districts, Denver Public Schools had a higher proportion of teachers set to lose tenure under a sweeping educator effectiveness law passed six years ago. We surveyed big districts about one of the consequences of Senate Bill 191.

Too darn hot to teach and learn 

As part of its big bond request of voters this fall, Denver Public Schools wants to try to cool off some of its hottest schools. We took a look at where the mercury soars the highest and found that in 12 of the 18 hottest buildings — some of which house more than one school — the number of students who qualify for free or reduced price lunch exceeds the district average.

But the University Club has a lovely lunch menu (and squash courts, too)…  

What if the State Board of Education held a not-so-public meeting with the education commissioner at a private club downtown to prioritize goals, but didn’t get much of anything accomplished? That happened.

What we know — and don’t know — about Colorado remediation rates

Colorado’s college remediation rates inched upward after years of steady decline, a disheartening development. On top of that, we’re not getting the full picture, either, because of incomplete school-level numbers and non-existent district-level data.

Diet Coke: Coming soon to a high school vending machine near you? 

Despite opposition from advocacy groups, Colorado appears headed toward lifting a seven-year ban on diet soda in high schools. The rule change would clear the way for diet soda to be sold in high school vending machines and school stores, though districts could decide not to stock the drinks. We covered the issue before and after the State Board of Education’s initial vote.