Former Tutoring Company Owners Admit Defrauding Dallas And Fort Worth Independent School Districts
Defendants Billed DISD And FWISD Approximately $3 Million For Tutoring Services Not Provided
DALLAS — Two individuals who ran a tutoring business from offices located in Hurst, Texas, appeared in federal court today, before U.S. Magistrate Judge Paul D. Stickney, and pleaded guilty to federal offenses stemming from their fraudulent operation of that business, announced U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.
Flori Mati, aka “Florine Shaw,” 42, and David Mbugua, 43, each pleaded guilty to one count of conspiracy to make false, fictitious or fraudulent claims. Each faces a statutory maximum penalty of five years in federal prison, a $250,000 fine and restitution. Following their arrests in March 2014, the Court determined they were flight risks and ordered them to remain in federal custody. Sentencing is set for February 20, 2015, before U.S. District Judge Barbara M. G. Lynn.
Under the No Child Left Behind Act of 2001, federal funds were distributed to state educational agencies, which in turn distributed them to school districts in the form of sub-grants. School districts used a portion of these federal dollars to fund a Supplemental Education Services (SES) program. That SES program provided extra academic assistance, such as tutoring, for eligible students at no cost. Tutoring providers billed the local school districts for the hours of tutoring provided and the school district paid for the tutoring with federal grant money.
For the 2011-2012 and 2012-2013 school years, the Dallas Independent School District (DISD) and the Fort Worth Independent School District (FWISD) each received sub-grants and offered an SES program to eligible students at eligible schools.
From 2011 through the beginning of August 2012, Mati, a former DISD teacher, and Mbugua formed four tutoring companies: Wise Links, LLC; Diverse Links, Inc.; Boost Academy and Avenue Academy. They operated all four entities as one business from offices located on West Bedford Euless Road in Hurst. Beginning in September 2011 and continuing through the end of May 2013, Mati and Mbugua contracted with DISD and FWISD, as well as other school districts in Texas, to provide tutoring services under the SES program.
Mati and Mbugua formed these four separate companies to hide their true ownership and mislead the Texas Education Agency into believing they were unrelated companies, and thus, obtain more SES business than a single company could obtain from the various school districts.
They also obtained as many student names as possible. Mati obtained student identifying information by using her online teacher access to the DISD network. Mati, Mbugua and their employees would also go door-to-door with gifts and prizes to induce students to sign up for their tutoring services, regardless of the students’ intent to attend. Mati, Mbugua and their empoyees would then use student information to mass enroll students, via the Internet, from their residence, their Hurst offices and even from Kenya. They falsified documentation supporting their fraudulent claims by inducing students to sign attendance logs for tutoring sessions they did not receive. They even recruited a friend and her children to complete false and forged attendance sheets.
During the course of their conspiracy, Mati, Mbugua and others submitted false claims to DISD, FWISD and other school districts in Texas, for tutoring services under the SES program that were not provided to students. They billed DISD $2,730,389, and they were paid $1,523,079. They billed FWISD $1,430,687, and they were paid $1,003,318. Approximately 75% of the total amounts billed – approximately $3,120,807 – was for services not provided. Mati and Mbugua wired some of the proceeds they received from these false claims to Kenya, beyond the reach of U.S. authorities.
The FBI and U.S. Department of Education – Office of Inspector General investigated. Assistant U.S. Attorneys Nancy Larson and Megan Fahey are prosecuting.