FOR IMMEDIATE RELEASE                                                   CIV
TUESDAY, DECEMBER 27, 1994                                   (202) 616-6275
                                                         TDD (202) 514-1888


     WASHINGTON, D.C. -- The United States has received almost
$27 million from the State of New York, several New York State
colleges and five state employees to settle claims that they
knowingly overbilled, falsely billed and improperly billed the
federal government to collect funds disbursed for the training of
social service workers, the Department of Justice announced
     The federal government disburses funds to states under the
Social Security Act for the training of social service workers
who will implement such federal programs as Medicaid, adoption
and foster care, child support enforcement and Aid to Families
with Dependent Children.
     Assistant Attorney General Frank Hunger, in charge of the
Civil Division, said the conduct complained of occurred between
1983 and the present.
     Hunger said the parties executed the settlement agreement on
December 20 and today filed a stipulation with U.S. District
Court in Washington that dismissed the United States' claims
against the defendants.  The settling defendants are:
     The New York State Department of Social Services (NYSDSS);
the Office of Human Resource Development (OHRD) of NYSDSS; the
State Universities of New York at Albany and Brockport; SUNY
Central Administration; the Research Foundation of SUNY; the
State University College at Buffalo; the City University of New
York; and NYSDSS employees Robert Donahue, Robert Hagstrom, Carol
Polnak, Carol DeCosmo and Will Zwink.  
     The investigation by the United States arose from
allegations that were made in an action filed on November 14,
1992, under the qui tam provisions of the False Claims Act by a
former NYSDSS employee, George Denoncourt.  The United States
alleged in its negotiations with the State that the defendants
obtained the funds by filing false claims for the training funds
under the Social Security Act.     
     Among other things, the United States alleged that:
     --NYSDSS, over 12 years, required its private training
contractors to provide in-kind "contributions" of the state share
of training expenditures, in knowing violation of the Social
Security Act's requirement that states pay between 10 and 50
percent of these expenditures.
     --OHRD, over 12 years, and to assist its private training
contractors make in-kind "contributions" of the state share of
training expenditures without losing money on their training
contracts, knowingly submitted claims for federal funds based
upon unallowable, unsubstantiated and/or inflated training
contractor costs.  
     --OHRD, over five-and-one-half years, failed to credit fees
paid for training by private providers of social services against
training costs charged to the federal government, in knowing
violation of federal regulations.
     --OHRD, over 12 years, failed to credit administrative fees
paid by private training contractors against training costs
charged to the federal government, in knowing violation of
federal regulations.
     --NYSDSS, SUNY Albany, SUC Buffalo and the Research
Foundation of SUNY, over 12 years, knowingly violated federal law
by using federal training funds to finance the salaries and
related costs of personnel hired under training contracts who
performed non-training functions.
     --NYSDSS used federal training funds for a state summer camp
during the 1989-1990 state fiscal year, in knowing violation of
federal law.
     --SUC Buffalo, the Research Foundation of SUNY and CUNY
knowingly submitted inflated claims for federal funds under their
training contracts with NYSDSS, which OHRD knowingly passed on to
the federal government.
     Denoncourt's allegations were investigated by the
Department's Civil Division, the U.S. Attorney's office in
Washington, D.C., and the Office of Audit Services and Office of
Investigations of the Office of Inspector General of the
Department of Health and Human Resources.
     Before Denoncourt filed his suit, HHS's Division of Cost
Allocation and the Albany office of HHS's Office of Audit
Services had questioned a significant portion of the unallowable
costs attributable to the practices challenged by Denoncourt.  
     Denoncourt's complaint then led the United States to uncover
additional unallowable costs as well as evidence that the United
States alleged showed "knowing" false claims by the defendants. 
As part of the settlement, Denoncourt will receive 15 percent of
the United States' recovery, or $4.05 million.
     Under the qui tam provisions of the False Claims Act, a
private citizen can file a case on behalf of the federal
government and receive a portion of any settlement by the United