Manhattan U.S. Attorney Charges Two Men With Defrauding The New York City Department Of Education Out Of $1.5 Million In Funding For Schoolchildren With Special Needs
FOR IMMEDIATE RELEASE
Friday, August 17, 2012
Preet Bharara, the United States Attorney for the Southern District of New York, Rose Gill Hearn, the Commissioner of the New York City Department of Investigation (“DOI”), and Richard J. Condon, Special Commissioner of Investigation for the New York City School District (“SCI”), announced today the unsealing of federal charges against NELSON RUIZ and WILLIAM CRUZ, a/k/a “Bill Chacon,” for allegedly engaging in a scheme that used five companies they controlled (the “Companies”) to defraud the New York City Department of Education (“DOE”) out of at least $1.5 million. The Companies used forged signatures and fraudulent documents to bill DOE for sign language interpretation services they purportedly provided to ten New York City public schoolchildren with special needs (the “Ten Students”). However, they never provided sign language services, and the Ten Students did not need them.
RUIZ was arrested by federal authorities earlier this morning and is expected to be presented in Manhattan federal court later today. CRUZ is still at-large.
Manhattan U.S. Attorney Preet Bharara said: “The education of children is a vital and resource intensive mission of the New York City Department of Education. Some people, as is alleged here about the defendants, see the Department as a cash cow they can latch onto with their fraudulent schemes. The message should be loud and clear that this Office is going to do everything in its power to make sure that the money designated for students, goes to students, and not into the pockets of fraudsters.”
SCI Special Commissioner Richard J. Condon said: “This scheme diverted public funds meant to help special needs children.”
The following allegations are based on the Complaint unsealed today in Manhattan federal court:
During the 2010-2011 and 2011-2012 academic years, the Companies owned and controlled by RUIZ and CRUZ billed and received from DOE more than $1.5 million for sign language interpretation services. According to the DOE billing forms that the Companies submitted, the sign language interpretation services were provided to the Ten Students – all of whom had varying special needs, including cognitive, developmental, academic, and language delays – at their schools between July 2010 and July 2012.
None of the sign language interpretation services for which the DOE paid was ever provided to any of the students. In fact, none of the students actually needed the services that the Companies claimed to have provided. During the two academic years in question, three of the Ten Students were not even enrolled in a DOE school. For example, from July 2010 through May 2012, RUIZ falsely certified on 75 DOE billing forms that he had provided approximately $200,000 worth of sign language interpreting services to one of the Ten Students, even though that student never received any such services during that period and had not been a New York City public school student since 2009.
By using the Ten Students’ personal information, submitting fraudulent DOE applications and billing forms, and forging the signatures of at least two students’ parents and seven DOE officials – one of whom had died prior to the date of her forged signature and another who had retired six years prior to the date of her forged signature – RUIZ and CRUZ defrauded the DOE out of at least $1.5 million.
The Companies also billed and received more than $2.3 million from the DOE during the 2003-2004 through 2009-2010 academic years. The investigation of the defendants’ conduct during that time period is ongoing.
* * *
RUIZ, 35, and CRUZ, 41, are each charged with mail fraud, wire fraud, conspiracy to commit mail and wire fraud, and aggravated identity theft relating to their use of identifying information of at least one of the Ten Students to commit this fraud. If convicted, they face a maximum of 20 years in prison on each of the three fraud counts, and a mandatory term of two years in prison for the aggravated identity theft charge. For each of the three fraud counts, RUIZ and CRUZ face a maximum fine of $250,000 or twice the gross gain or loss from the offense.
Mr. Bharara praised the investigative work of the DOI and SCI.
This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorneys Paul Krieger and Alvin Bragg are in charge of the prosecution. Assistant United States Attorney Andrew Goldstein is in charge of the forfeiture aspects of the case.
The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.