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US Justice Department Rips Open Massive Jew School Fraud in New York

Seven Jews, including a Rabbi, have been indicted by the US Department of Justice (DOJ), in Rockland, New York, for a fraud scheme which stole over $14 million from the taxpayers in the form of an elaborate scam involving Jewish schools, Jewish teachers, and Jewish IT contractors all working together to defraud the state.

According to a statement issued by the DOJ, Simon Goldbrener, a/k/a “Simon Goldbrenner,” a/k/a “Shimon Goldbrenner,” Peretz Klein, Susan Klein, a/k/a “Suri Klein,” Ben Klein, a/k/a “Benzion Klein,” a/k/a “Benzi Klein,” Moshe Schwartz, Sholem Steinberg, and Aron Melber, a/k/a “Aharon Melber,” have been charged with conspiracy to commit wire fraud and wire fraud charges in connection with the federal program known as “E?rate,” which provides subsidies for affordable telecommunications equipment and related services to qualified schools.

US Attorney's Office

FBI Assistant Director in Charge William F. Sweeney said in the DOJ statement that the suspects “used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts.

“To add insult to injury, school officials, who see the day-to-day struggle to even find money for pencils and paper, were allegedly involved in the scheme,” Sweeney said.

Rockland County District Attorney Thomas P. Zugibe was quoted as saying that “these individuals concocted a scheme that not only defrauded taxpayers, but also deprived local students of access to affordable technology equipment and Internet service. In short, the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds.”

According to the Indictment, the E?rate distributes funds to schools and libraries mostly serving economically disadvantaged children, so that those institutions can afford needed telecommunication services, internet access, and related equipment.

Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period; every year, requests for E?rate funds have exceeded funds available.

In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor; if approved, the program defrays the cost by up to 90%.

The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor submit a series of certifications that they comply with a number of requirements of the E?rate program.

A school applying for E?rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E?rate funded equipment and services.

Peretz Klein, Susan Klein, Ben Klein, and Sholem Steinberg (collectively, the “Vendor Defendants”) held themselves out as vendors to schools participating in the E?rate program.

Corporations controlled by the Vendor Defendants requested over $35 million in E?rate funds, and received over $14 million in E?rate funds, from in or about 2010 to in or about 2016.

Simon Goldbrener and Moshe Schwartz (collectively, the “Consultant Defendants”) held themselves out as consultants who assisted educational institutions that desired to participate in the E rate program.

The Consultant Defendants, and individuals acting at their direction, completed and filed E?rate documents that resulted in the payment of millions of dollars in E?rate funds to the Vendor Defendants.

Aron Melber is an official at a private Jewish school in Rockland County, New York. Melber and his school have participated in the E?rate program with certain of the Vendor Defendants and Consultant Defendants, 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.

From in or about 2009 through in or about 2015, Melber’s school received over one million dollars in E?rate funds.

From at least 2009 up to and including 2016, other private Jewish schools, including Melber’s school, sought and received E?rate funds for the purpose of paying the Vendor Defendants for equipment and services that the schools, the Vendor Defendants, and the Consultant Defendants falsely claimed the Vendor Defendants had provided to the schools.

However, the schools never received millions of dollars’ worth of these items and services.

In other cases, the schools, Vendor Defendants, and Consultant Defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population.

For example, from 2009 through 2015, one day care center that served toddlers from the ages of 2 through 4 requested over $700,000—nearly $500,000 of which was ultimately funded—for equipment and services—including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet—from companies controlled by Peretz Klein and Susan Klein, using the Consultant Defendants as their consultants.

In still other instances the schools received equipment and services that fulfilled the functions for which the schools had requested E?rate funds (such as providing the school with internet access), but the schools, Vendor Defendants, and Consultant Defendants materially overbilled the E?rate program for the items provided, in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.

The defendants also perverted the fair and open bidding process required by the E?rate program. The Consultant Defendants—who held themselves out in filings as independent consultants working for the schools, but, in truth, worked with and for the Vendor Defendants—and the Vendor Defendants presented the schools with forms to sign or certify, awarding E?rate funded contracts to the Vendor Defendants.

As a result of false and misleading E?rate filings, 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, and the Consultant Defendants accepted payments totaling hundreds of thousands of dollars from the Vendor Defendants, despite falsely presenting themselves as independent of the Vendor Defendants.

In return for their participation in the scheme to defraud the E?rate program, the Jewish school officials received a variety of improper benefits from the Vendor Defendants, including: a percentage of the funds fraudulently obtained from E?rate for equipment and services that were not in fact provided to the schools; free items paid for with E?rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E?rate program does not authorize) installed at the schools; and free services for which the E?rate program authorizes partial reimbursement (such as internet access) but for which the Schools did not—contrary to their statements in filings—make any payment at all.

* Criminal welfare fraud charges filed against 26 Orthodox Jews in Lakewood, New Jersey, in 2016 for a public-assistance fraud scheme which stole millions from the taxpayers, has yet to be finalized.

According to a July 30 report in the Asbury Park Press, the cases “have taken about three times longer than normal to be considered by a grand jury.”

Typically four months pass between an arrest and grand jury indictment in Ocean County, according to state court statistics, but for the fraud cases it’s been 13 months.

There were so many Jews from Lakewood stealing money from the scheme that the state comptroller, Philip Degnan, created an “amnesty program” through which those Jews who confessed—and paid back the money they had stolen would not be charged. At least 159 swindlers took up the offer and so far have repaid $2.2 million to the state.

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