“Nearly four years after hundreds of FBI agents and law enforcement officers raided Ramapo businesses and private schools, seven Rockland residents have pleaded guilty to conspiring to steal million of dollars from a federal program designed to provide computer technology to schools.
Prosecutors got guilty pleas to conspiracy from Peretz Klein and his wife Susan Klein, both of Spring Valley; and five Monsey residents, Simon Goldbrenner, Moshe Schwartz, Ben Klein, Sholem Steinberg and Aron Melber.
Each person pleaded guilty to one count of a conspiracy to commit wire fraud. They face a statutory maximum sentence of five years in prison, paying restitution and a potential $250,000 fine. U.S. Judge Kenneth M. Karas will decided their final sentence, based on the defendant’s history and sentencing guidelines.
Instead of providing education advancement to low-income students through the E-Rate program, they lined their own pockets with federal dollars, U.S. Attorney Geoffrey Berman said in a news release from the Manhattan office of the southern district of New York.
“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,” Berman said. “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.”
The seven defendants admitted ripping off a federal program designed to fund schools and libraries mostly serving economically disadvantaged children with money to provide telecommunication services, internet access, and related equipment. More than 30,000 applicants seek funding annually, with requests outdistancing the funds available, Berman said.
The schools in this case never received millions of dollars in computer items that the seven people billed the federal program. Berman said that in other cases, the schools and the defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population.
Berman said, for example, from 2009 through 2015 one day care center that served toddlers from the ages of 2 through 4 requested over $700,000 – nearly $500,000 of which was ultimately funded – for equipment and services. The equipment included video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet – from companies controlled by certain defendants, he said.
No schools were charged with crimes in connection with the investigation.
The defendants also “perverted” the fair and open bidding process required by the E-Rate program, Berman said.
Those who held themselves out as “independent consultants working for the schools in truth worked for and were paid by other defendants who controlled vendor companies,” he said.
As a result of false and misleading filings, they received millions of dollars in E-Rate funds for equipment and services that they did not provide and which the schools did not use. And those defendants purporting to act as consultants accepted payments totaling hundreds of thousands of dollars from the vendors, despite falsely presenting themselves as independent of the vendors, he said.
The investigation burst into public view in March 2016 when hundreds of FBI agents, Rockland District Attorney’s Office detectives and local police descended on ultra-Orthodox private schools and companies, seizing payment records, equipment and other documents.
The FBI-led raids were part of an investigation into whether local yeshivas properly spent money obtained through the E-Rate program, overseen by the Universal Service Administration Co. for the Federal Communications Commission. The program came into existence in 1998 and now allocates more than $4 billion annually for computer and Internet access across the nation.
Investigators went through boxes of documents to match orders received with the distribution of equipment. In August 2018, the seven people who pleaded guilty were arrested on various federal counts of conspiracy to commit wire fraud.”
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