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Preet Bharara, the United States Attorney for the Southern District of New York, and Brian M. Hickey, the Special Agent-in-Charge of the Northeastern Region of the United States Department of Education’s Office of Inspector General (“ED-OIG”), today announced various civil and criminal actions relating to a scheme to submit false claims for reimbursement by TESTQUEST, INC. (“TESTQUEST”), an educational services company, in connection with a federally-funded program to provide tutoring services to public school children. Those actions include: (1) the settlement of civil fraud claims previously filed against TESTQUEST for $1,725,000, and admissions of wrongdoing by TESTQUEST; (2) the settlement of civil fraud claims previously filed against MICHAEL LOGAN, a former manager of TESTQUEST, admissions of wrongdoing by LOGAN, and the entry of a $2.3 million civil judgment against him; (3) the filing of a criminal Information against SANDRA ALLEN, a public school teacher, charging her with defrauding the Department of Education in connection with her participation in the billing scheme; and (4) the filing of an amended civil complaint asserting fraud claims against ALLEN and two additional public school teachers, SYLVIA BRATHWAITE and QUENTON GITTENS, for their alleged participation in the billing scheme. U.S. District Judge Louis L. Stanton approved the civil settlements with TESTQUEST and LOGAN yesterday. The criminal Information against ALLEN was filed on August 5, 2013.
LOGAN previously pled guilty to a felony fraud charge in connection with his role in the fraudulent billing scheme before U.S. District Judge John F. Keenan on June 5, 2013.
Manhattan U.S. Attorney Preet Bharara said: “TestQuest was an educational testing services company schooled in fraud and filled with employees who willingly exploited a federally funded program designed to aid students in need. As we’ve stated before, we will make companies and individuals answer for their fraudulent schemes. We are pleased that, with these settlements and the prior guilty plea, TestQuest and Michael Logan have accepted responsibility for their conduct and agreed to pay millions of dollars in damages and penalties.”
ED-OIG Special Agent-in-Charge Brian M. Hickey said: “The Office of Inspector General has a unique and special law enforcement mission – to protect public education funds for America’s eligible students. These settlements and related criminal charges are an example of our continued commitment to this mission. We will pursue all available criminal and civil remedies to safeguard these vital educational development funds.”
According to documents filed in Manhattan federal court and statements made in related court proceedings:
The Supplemental Educational Services Program
Between 2005 and 2012, the New York City Department of Education (“NYCDOE”) received funds from the federal government to pay for Supplemental Educational Services (“SES”), which included after-school tutoring for students attending underperforming public schools. NYCDOE entered into contracts with private entities to provide SES tutoring to students in New York City public schools. Students were eligible to receive SES tutoring if they met certain criteria, such as attending a school that had been identified as needing improvement or restructuring for at least two years. Private entities contracted by NYCDOE to provide SES tutoring were required to have each student who attended a tutoring class sign a daily attendance sheet. The tutor of each class was also required to sign the attendance sheet, certifying that he or she had provided SES tutoring to the students whose signatures appeared on the attendance sheet.
TESTQUEST and the Individual Defendants
From 2005 through 2012 (the “Covered Period”), TESTQUEST contracted with NYCDOE to provide SES tutoring to students in New York City. TESTQUEST provided tutoring at various New York City public schools, including the Monroe Academy of Business and Law/High School of World Cultures (“Monroe”) and the Global Enterprise Academy/Christopher Columbus High School (“GEA”). TESTQUEST received approximately $2.3 million for purportedly providing tutoring at Monroe and GEA during the Covered Period.
Throughout that time, TESTQUEST employed LOGAN to manage its SES program at Monroe and GEA. LOGAN, in turn, recruited teachers from Monroe and GEA to serve as tutors for TESTQUEST’s SES program at those schools, and recent graduates of Monroe and GEA to serve as “aides” and help him run the program. ALLEN, BRATHWAITE and GITTENS were public school teachers employed by TESTQUEST as tutors.
The Billing Scheme
During the Covered Period, TESTQUEST obtained Title I funds by falsely reporting that it had provided SES tutoring to students when, in fact, no SES tutoring had been provided. As part of the scheme, TESTQUEST repeatedly submitted to NYCDOE bills for students who had not actually received any tutoring.
As part of its civil settlements, TESTQUEST admitted that:
TESTQUEST further admitted that its daily attendance sheets from the Covered Period falsely reported that many more students had attended its SES tutoring classes than had actually attended. TESTQUEST also admitted that it used the falsified daily student attendance sheets to prepare invoices that it then submitted in connection with its SES tutoring program, and that the invoices ultimately resulted in TESTQUEST being paid federal funds for SES tutoring that it never provided.
LOGAN, who previously pled guilty to criminal charges, admitted as part of his civil settlement that he instructed tutors and aides to falsify entries on the daily attendance sheets. LOGAN further admitted that on multiple occasions throughout the Covered Period, he observed (1) tutors signing the instructor certifications on daily attendance sheets for tutoring that LOGAN knew had not been provided; (2) students signing daily attendance sheets for tutoring classes that LOGAN knew the students had not attended; and (3) aides forging student signatures on daily attendance sheets.
ALLEN, while working as an SES tutor for TESTQUEST, allegedly falsified daily attendance sheets to make it appear that more students had attended TESTQUEST’s SES classes than had actually attended and regularly signed the instructor certifications on daily attendance sheets for tutoring that she had not provided. In addition, in the 2008/2009 academic year, ALLEN allegedly enlisted four students at Monroe to participate in the billing scheme. Specifically, she allegedly directed the four students to find other students at Monroe to sign daily attendance sheets for SES classes that they had not attended. ALLEN is also alleged to have purchased food for the four student “helpers” to reward them for their assistance in the scheme.
BRATHWAITE and GITTENS, who similarly served as SES tutors for TESTQUEST, also allegedly signed the instructor certifications on daily attendance sheets for tutoring that they had not provided.
TESTQUEST agreed to pay the Government $1,725,000 in damages and penalties under the False Claims Act in connection with the fraudulent billing scheme. TESTQUEST also agreed not to participate in any federal procurement or non-procurement transactions for a period of three years.
LOGAN, 48 of White Plains, New York, settled civil claims filed against him, made admissions concerning his conduct, and agreed to the entry of a civil judgment against him in the amount of $2.3 million. In connection with his prior guilty plea, LOGAN faces a maximum sentence of five years, and is scheduled to be sentenced by Judge Keenan on October 9, 2013.
By filing its civil claims against TESTQUEST and LOGAN, the Government joined a private whistleblower lawsuit that had previously been filed against them under the False Claims Act.
ALLEN, 53, of New York, New York, is charged with one count of conspiracy to defraud the federal Government. She faces a maximum sentence of five years.
The civil charges against ALLEN, BRATHWAITE, and GITTENS remain pending.
Mr. Bharara thanked the Office of the ED-OIG for its extraordinary assistance in this case.
The criminal cases are being handled by the Complex Frauds Unit, and Assistant U.S. Attorneys Joseph P. Facciponti and Christopher B. Harwood are in charge of the prosecution. The civil cases are being handled by Christopher B. Harwood of the Office’s Civil Frauds Unit.
The charges contained in the Criminal Information against ALLEN are merely accusations, and she is presumed innocent unless and until proven guilty.
U.S. v. TestQuest Stipulation
U.S. v. Michael Logan Stipulation
U.S. v. Testquest, et al Amended Complaint