A Queens-based special-education services provider illegally diverted millions of taxpayer dollars to a Far Rockaway Orthodox girls’ school and several other Jewish institutions, according to New York State auditors.
Bnos Bais Yaakov, a girls’ school with 812 students in pre-K through 12th grade, received nearly $2 million from Island Child Development Center, which was one of the city’s largest recipients of funding for services to preschool children with disabilities before it abruptly ceased operations in September.
Because Island Child closed before auditors could complete their investigation, State Comptroller Thomas DiNapoli’s office has referred the case to the State Education Department and Queens District Attorney.
However, according to a memo the office submitted to the education department and shared with The Jewish Week (the story was first reported in The New York Times), a review of just 1,549 out of 13,000 checks subpoenaed from Island Child’s bank, found approximately $5.8 million worth of payments that “appeared fraudulent as they were unrelated to any [State Education Department] programs for which Island Child was funded and appear to be noncompliant with SED’s [Reimbursable Cost Manual].”
In addition to the money paid to Bnos Bais Yaakov, whose owner and dean, Rabbi Shmuel Hiller, was also assistant executive director of Island Child, “suspect payments” include:
*Several Jewish summer camps, some of them owned by or with ties to Rabbi Hiller, collectively received $877,485 in unauthorized funds from Island Child.
*Rabbi Hiller received non-payroll checks for $332,032.
*The program also spent $344,000 in food, even though the government dollars are not allowed to be used for food; $73,000 of the food purchases came from Supersol, a kosher supermarket chain whose chief executive officer also served on Island Child’s and Bnos Bais Yaakov's boards.
*Auditors cited what they said were many other improper or fraudulent expenses, including $200,000 in construction, $12,000 to two jewelers, $235,000 to credit-card companies, $44,000 to “cash,” and nearly $200,000 to five fictitious workers.
*Island Child’s accountant “was derelict in certifying the entity’s financial statements,” ignoring “apparent conflicts of interest and unsupported, noncompliant and potentially fraudulent transactions.”
Rabbi Hiller did not return a voice mail message The Jewish Week left for him at Bnos Bais Yaakov.
In addition to the money it has received through Island Child, Bnos Bais Yaakov has requested almost $1.2 million from the E-rate program for 2013.
A recent Jewish Week investigation of E-rate, a federal program that reimburses schools for a portion of their telecommunications and technology expenses, found that fervently Orthodox Jewish schools in New York State disproportionately benefit from its funding, even though most do not allow their students access to the Internet.
Bnos Bais Yaakov’s 2013 E-rate application claims that at least 75 percent of its students are eligible for free or reduced lunches, qualifying it for a 90 percent discount on various tech purchases. E-rate funding decisions for 2013 have not yet been completed; so far, no funding has been approved yet for Bnos Bais Yaakov this year, although the school has received about $100,000 since the E-rate program launched in 1998.