Financial Fraud: Five Defendants Stole Money From The E‑rate Program, Billing The E-rate Program For Equipment And Services

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<h2>Vendors&comma; Consultants&comma; And School Administrator Charged In Wide-Ranging Scheme To Defraud Federal &OpenCurlyDoubleQuote;E Rate” Subsidy Program<&sol;h2>&NewLine;<p>Geoffrey S&period; Berman&comma; the United States Attorney for the Southern District of New York&comma; William F&period; Sweeney&comma; Assistant Director in Charge&comma; Federal Bureau of Investigation &lpar;the &OpenCurlyDoubleQuote;FBI”&rpar;&comma; David L&period; Hunt&comma; Inspector General of the Federal Communications Commission &lpar;the &OpenCurlyDoubleQuote;FCC-OIG”&rpar;&comma; and Thomas P&period; Zugibe&comma; the District Attorney for Rockland County&comma; <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;announcement-on-tax-charges-committed-in-this-year-2018-by-fbi&sol;">announced today the return of an Indictment charging<&sol;a> SIMON GOLDBRENER&comma; a&sol;k&sol;a &OpenCurlyDoubleQuote;Simon Goldbrenner&comma;” a&sol;k&sol;a &OpenCurlyDoubleQuote;Shimon Goldbrenner&comma;” PERETZ KLEIN&comma; SUSAN KLEIN&comma; a&sol;k&sol;a &OpenCurlyDoubleQuote;Suri Klein&comma;” BEN KLEIN&comma; a&sol;k&sol;a &OpenCurlyDoubleQuote;Benzion Klein&comma;” a&sol;k&sol;a &OpenCurlyDoubleQuote;Benzi Klein&comma;” MOSHE SCHWARTZ&comma; SHOLEM STEINBERG&comma; and ARON MELBER&comma; a&sol;k&sol;a &OpenCurlyDoubleQuote;Aharon Melber&comma;” with conspiracy to commit wire fraud and wire fraud charges in connection with the federal program known as &OpenCurlyDoubleQuote;E‑rate&comma;” which provides subsidies for affordable telecommunications equipment and related services to qualified schools This case has been assigned to United States District Judge Kenneth M&period; Karas&period;<&sol;p>&NewLine;<p>Manhattan U&period;S&period; Attorney Geoffrey S&period; Berman said&colon;  &OpenCurlyDoubleQuote;For years&comma; these defendants stole money from the E‑rate program&comma; billing the E-rate program for equipment and services which were not in fact provided&period; In doing so&comma; the <a href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;how-to-defend-yourself-from-fraudulent-charitable-schemes&sol;">defendants fraudulently<&sol;a> obtained millions of dollars in E rate funds to which they were not entitled&comma; and which should lawfully have been spent to help provide access to technology to educate underprivileged children&period; This indictment is important not only because fraudsters should be held to account for their crimes&comma; but also because the next generation of students should have access to telecommunication services&comma; internet access&comma; and related equipment&comma; irrespective of their means and in spite of the fact that people like the defendants seek to line their own pockets at the expense of underprivileged children&period;”<&sol;p>&NewLine;<p>FBI Assistant Director in Charge William F&period; Sweeney said&colon;  &OpenCurlyDoubleQuote;Schools have to fight for every dollar these days to supply their students with the high-tech&comma; expensive equipment and technology they need in this day and age to succeed in life&period; The suspects in this investigation allegedly used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts&period;  To add insult to injury&comma; school officials&comma; who see the day-to-day struggle to even find money for pencils and paper&comma; were allegedly involved in the scheme&period;  The FBI and our law enforcement partners will hold these criminals accountable&comma; and stop others from defrauding not only the government and tax payers&comma; but students who depend on these programs to get a better education&period;”<&sol;p>&NewLine;<p>Rockland County District Attorney Thomas P&period; Zugibe said&colon;  &OpenCurlyDoubleQuote;These individuals concocted a scheme that not only defrauded taxpayers&comma; but also deprived local students of access to affordable technology equipment and Internet service&period; In short&comma; the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds&period; The Rockland County District Attorney&&num;8217&semi;s Office will continue to work collaboratively with the U&period;S&period; Attorney and FBI to root out fraud and abuse &&num;8211&semi; especially misconduct that impacts children&period; Offenders must be dealt with swiftly to prevent further fraud of this magnitude from occurring&period;”<&sol;p>&NewLine;<p>According to the allegations made in the Indictment&colon;<&sol;p>&NewLine;<p>The E‑rate distributes funds to schools and libraries mostly serving economically disadvantaged children&comma; so that those institutions can afford needed telecommunication services&comma; internet access&comma; and related equipment&period; Over 30&comma;000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period&semi; every year&comma; requests for E‑rate funds have exceeded funds available&period; In order to obtain those funds&comma; educational institutions certify that they are purchasing equipment and services from a private vendor&semi; if approved&comma; the program defrays the cost by up to 90&percnt;&period; The educational institution is supposed to enter into an open bidding process in order to select a vendor&comma; and the educational institution and vendor submit a series of certifications that they comply with a number of requirements of the E‑rate program&period; A school applying for E‑rate funds may employ a consultant&comma; but that consultant must be independent of the vendors competing to sell E‑rate funded equipment and services&period;<&sol;p>&NewLine;<p>PERETZ KLEIN&comma; SUSAN KLEIN&comma; BEN KLEIN&comma; and SHOLEM STEINBERG &lpar;collectively&comma; the &OpenCurlyDoubleQuote;Vendor Defendants”&rpar; held themselves out as vendors to schools participating in the E‑rate program&period; Corporations controlled by the Vendor Defendants requested over &dollar;35 million in E‑rate funds&comma; and received over &dollar;14 million in E‑rate funds&comma; from in or about 2010 to in or about 2016&period;<&sol;p>&NewLine;<p>SIMON GOLDBRENER and MOSHE SCHWARTZ &lpar;collectively&comma; the &OpenCurlyDoubleQuote;Consultant Defendants”&rpar; held themselves out as consultants who assisted educational institutions that desired to participate in the E rate program&period; The Consultant Defendants&comma; and individuals acting at their direction&comma; completed and filed E‑rate documents that resulted in the payment of millions of dollars in E‑rate funds to the Vendor Defendants&period;<&sol;p>&NewLine;<p>ARON MELBER is an official at a private religious school in Rockland County&comma; New York&period; MELBER and his school have participated in the E‑rate program with certain of the Vendor Defendants and Consultant Defendants&comma; and filed certifications purporting to have obtained authorized E‑rate funded equipment and services from Vendor Defendants selected through a fair and open bidding process&period; From in or about 2009 through in or about 2015&comma; MELBER’s school received over one million dollars in E‑rate funds&period;<&sol;p>&NewLine;<p>From at least 2009 up to and including 2016&comma; certain private religious schools&comma; including MELBER’s school&comma; sought and received E‑rate funds for the purpose of paying the Vendor Defendants for equipment and services that the schools&comma; the Vendor Defendants&comma; and the Consultant Defendants falsely claimed the Vendor Defendants had provided to the schools&period;<&sol;p>&NewLine;<p>However&comma; the schools never received millions of dollars’ worth of these items and services&period; In other cases&comma; the schools&comma; Vendor Defendants&comma; and Consultant Defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population&period; For example&comma; from 2009 through 2015&comma; one day care center that served toddlers from the ages of 2 through 4 requested over &dollar;700&comma;000—nearly &dollar;500&comma;000 of which was ultimately funded—for equipment and services—including video conferencing and distance learning&comma; a &OpenCurlyDoubleQuote;media master system&comma;” sophisticated telecommunications systems supporting at least 23 lines&comma; and high-speed internet—from companies controlled by PERETZ KLEIN and SUSAN KLEIN&comma; using the Consultant Defendants as their consultants&period; In still other instances the schools received equipment and services that fulfilled the functions for which the schools had requested E‑rate funds &lpar;such as providing the school with internet access&rpar;&comma; but the schools&comma; Vendor Defendants&comma; and Consultant Defendants materially overbilled the E‑rate program for the items provided&comma; in order to enrich themselves at the expense of the underprivileged children the program was designed to serve&period;<&sol;p>&NewLine;<p>As alleged&comma; the defendants also perverted the fair and open bidding process required by the E‑rate program&period; The Consultant Defendants—who held themselves out in filings as independent consultants working for the schools&comma; but&comma; in truth&comma; worked with and for the Vendor Defendants—and the Vendor Defendants presented the schools with forms to sign or certify&comma; awarding E‑rate funded contracts to the Vendor Defendants&period; As a result of false and misleading E‑rate filings&comma; the Vendor Defendants received millions of dollars in E‑rate funds for equipment and services that the Vendor Defendants did not in fact provide and which the schools did not use&comma; and the Consultant Defendants accepted payments totaling hundreds of thousands of dollars from the Vendor Defendants&comma; despite falsely presenting themselves as independent of the Vendor Defendants&period;<&sol;p>&NewLine;<p>In return for their participation in the scheme to defraud the E‑rate program&comma; certain schools and school officials received a variety of improper benefits from the Vendor Defendants&comma; including&colon; a percentage of the funds fraudulently obtained from E‑rate for equipment and services that were not in fact provided to the schools&semi; free items paid for with E‑rate funds but not authorized by the program&comma; such as cellphones for school employees’ personal use and alarm systems and security equipment &lpar;which the E‑rate program does not authorize&rpar; installed at the schools&semi; and free services for which the E‑rate program authorizes partial reimbursement &lpar;such as internet access&rpar; but for which the Schools did not—contrary to their statements in filings—make any payment at all&period;<&sol;p>&NewLine;<p>The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list&period;<&sol;p>&NewLine;<hr &sol;>&NewLine;<p>Mr&period; Berman thanked the FBI&comma; the FCC-OIG&comma; and the Rockland County District Attorney’s Office for their outstanding work on the investigation&period; This case is being handled by the Office’s White Plains Division&period; Assistant United States Attorneys Michael D&period; Maimin&comma; Hagan Scotten&comma; and Vladislav Vainberg are in charge of the prosecution&period;<&sol;p>&NewLine;<p>The charges contained in the Indictment are merely accusations&comma; and the defendants are presumed innocent unless and until proven guilty&period;<&sol;p>&NewLine;<p>18-296                                                                                                                                                                                                             &num;&num;&num;<&sol;p>&NewLine;<p><i>United States v&period; Simon Goldbrener&comma; et al&period;<&sol;i><&sol;p>&NewLine;<p>&nbsp&semi;<&sol;p>&NewLine;<table width&equals;"0">&NewLine;<tbody>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Defendant<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">Age<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Residence<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Charges and Maximum Penalties<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Simon Goldbrener<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">55<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Monsey&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;three counts&rpar;&colon; 20 years in prison per count<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Peretz Klein<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">64<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Spring Valley&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;one count&rpar;&colon; 20 years in prison<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Susan Klein<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">57<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Spring Valley&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;one count&rpar;&colon; 20 years in prison<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Ben Klein<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">39<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Monsey&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;one count&rpar;&colon; 20 years in prison<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Moshe Schwartz<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">45<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Monroe&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;one count&rpar;&colon; 20 years in prison<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Sholem Steinberg<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">39<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Monsey&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;two counts&rpar;&colon; 20 years in prison per count<&sol;td>&NewLine;<&sol;tr>&NewLine;<tr>&NewLine;<td valign&equals;"top" width&equals;"175">Aron Melber<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"48">42<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"160">Monsey&comma; New York<&sol;td>&NewLine;<td valign&equals;"top" width&equals;"290">Conspiracy to commit wire fraud&comma; in violation of 18 U&period;S&period;C&period; § 1349 &lpar;one count&rpar;&colon; 20 years in prison<&sol;p>&NewLine;<p>Wire fraud&comma; in violation of 18 U&period;S&period;C&period; §§ 1343 and 2 &lpar;one count&rpar;&colon; 20 years in prison<&sol;td>&NewLine;<&sol;tr>&NewLine;<&sol;tbody>&NewLine;<&sol;table>&NewLine;<p>&nbsp&semi;<&sol;p>&NewLine;

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