Six years after an investigative series by The Jewish Week exposed that people in Rockland County’s chasidic community were stealing millions of dollars from a federal program designed to help schools access technology, seven have pleaded guilty to stealing a total of $14 million in E-rate funds for equipment yeshivas either never got or didn’t use.
In the 2013 Jewish Week investigation, reporters Julie Wiener and Hella Winston found that charedi yeshivas, especially non-Chabad chasidic ones, disproportionally benefit from the E-rate program — in 2011, for example, Jewish schools had only 4 percent of New York State’s students but received 22 percent of its E-rate funds – despite limiting or banning students’ access to the internet.
Each of the seven defendants pled guilty to one count of a conspiracy to commit wire fraud. The charge carries a maximum sentence of five years in prison and a $250,000 fine, but the sentences could be much lower and will be set by United States District Judge Kenneth M. Karas, in separate court dates during the months of May and June.
“Each of these defendants has now admitted his or her role in a massive scheme that stole millions of dollars from the E-rate program,” Manhattan U.S. Attorney Geoffrey S. Berman said in a news release from the U.S. Attorney’s Office for the Southern District of New York. “That money should have been spent to help educate underprivileged children. Instead, it went to line the defendants’ pockets. Now they will answer for their crimes.”
According to Berman, the E-rate program paid out millions of dollars for sophisticated equipment and IT services that schools never received. In one case, a day care center for toddlers secured nearly $500,000 for equipment for such activities as video conferencing and distance learning as well as a telecommunications system supporting 23 lines and high-speed internet from companies controlled by some of the defendants. In other instances, the schools received the equipment and services but overbilled the E-rate program and kept the difference.
Several of the defendants pretended to be independent consultants and received fees from the E-rate program for consulting services they did not provide. In exchange for helping the consultants defraud the E-rate program, defendants who worked as school officials got such paybacks as a percentage of the money stolen from the E-rate program, free equipment such as cell phones for personal use, and security equipment for the schools that the E-rate program paid for but never authorized because they don’t qualify for E-rate funding.
Peretz Klein, 66, and Susan Klein, 59, of Spring Valley, have agreed to give back $1.14 million in stolen funds. Ben Klein, 41, of Monsey, has agreed to return $412,586 and Sholem Steinberg, 41, of Monsey, agreed to return $191,424. All four were vendors participating in the E-rate program. Their corporations received over $14 million in E-rate funds between 2010 and 2016 for equipment, much of which they never provided.
Simon Goldbrener, 57, of Monsey, has agreed to give back $479,357. Moshe Schwartz, 46, of Monsey, will return $275,160. Both acted as consultants. While they were supposed to help the schools hold an open bidding process to choose vendors, “they were in fact paid hundreds of thousands of dollars by the vendors to complete and file false E-rate documents that circumvented the bidding process and resulted in the payment of millions of dollars to the vendors,” according to the release.
Aron Melber, 44, of Monsey, was a yeshiva official who “admitted that he filed false certifications with the E-rate program, falsely claiming to have obtained authorized E-rate-funded equipment and services from vendors selected through a fair and open bidding process,” according to the release. He has agreed to return $127,654.
Created under President Bill Clinton as part of the sweeping Telecommunications Act of 1996, the E-rate program distributes funds to schools and libraries serving low-income children to allow them to access telecommunication services, internet access and related equipment. The FCC receives more than 30,000 applications to its $4.15 billion annual fund; and every year there’s not enough funding to go around, according to the release.
Read The Jewish Week’s 3-part, investigation here:
Part 1: Haredi Schools Reap Millions In Federal Tech Funds
Part 2: How Do Haredi Schools Get All That Money?
Part 3: E-Rate Program Dogged By Concerns