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Plea Deals For Rockland Schemers In $14M Yeshiva #ERATE Fraud


The money that should have been spent to help educate underprivileged children instead went to line the conspirators' pockets.


Seven people who stole $14 million from the federal E-Rate program using Jewish religious schools in Rockland County pleaded guilty.


Feb 13, 2020 2:03 pm ET | Updated Feb 13, 2020 3:19 pm ET
 

ROCKLAND COUNTY, NY — Seven people accused of stealing $14 million from the federal E-Rate program using yeshivas in Rockland County pleaded guilty Thursday. Under a plea deal, they pleaded guilty each to one count of conspiring against the United States, prosecutors announced.


They must also make restitution totaling $3.3 million.


The Monsey and Spring Valley residents billed the government for telecommunications equipment and services that were not actually provided to Jewish religious schools and used the money for themselves.


Simon Goldbrener, Ben Klein, Peretz Klein, Susan Klein, Aron Melber, Moshe Schwartz and Sholem Steinberg were vendors, consultants and yeshiva school officials involved in the fraud. Prosecutors had alleged that between 2009 and 2016, the schemers applied for $35 million in E-rate funding and received $14 million.


"Each of these defendants has now admitted his or her role in a massive scheme that stole millions of dollars from the E-Rate program," said Geoffrey S. Berman, United States Attorney for the Southern District of New York. "That money should have been spent to help educate underprivileged children. Instead, it went to line the defendants' pockets. Now they will answer for their crimes."


In some cases, the ultra-Orthodox school listed on the application would not have allowed its students to use modern classroom technology. In other cases, the school did receive technology, but the program was over-billed and the conspirators pocketed the difference.


In one particularly egregious example, the school for which the application was made was a day care center serving 2-4-year-olds. The school received almost $500,000 for technology including video-conferencing, distance learning and high-speed internet.

In return for their participation in the scheme, prosecutors allege school officials took freebies including cellphones for staffers' personal use and security and alarm systems (which are not covered under the program).


The E-Rate program 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. More than 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 exceeded funds available.


The Rockland schools never received millions of dollars' worth of the items and services for which the conspirators billed the E-Rate program. The conspirators who held themselves out as independent consultants working for the schools actually worked for and were paid by others who controlled vendor companies.


Corporations controlled by the Kleins and Steinberg masqueraded as vendors and 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. Each has now admitted that the companies they controlled did not in fact provide much of the equipment for which they billed the federal government, prosecutors said.


Goldbrener and Schwartz held themselves out as consultants who worked for educational institutions, supposedly helping schools to participate in the E-Rate program by, among other things, holding a fair and open bidding process to select cost-effective vendors. They have now admitted that they were in fact paid hundreds of thousands of dollars by the vendors to complete and file false E-Rate documents that circumvented the bidding process and resulted in the payment of millions of dollars to the vendors.


Aron Melber was an official at a private religious school in Rockland County, New York, that participated in the E-Rate program with some of the other conspirators. Melber has now admitted that he filed false certifications with the E-Rate program, falsely claiming to have obtained authorized E‑Rate funded equipment and services from vendors selected through a fair and open bidding process.


One count of a conspiracy to commit wire fraud carries a maximum sentence of five years in prison and a $250,000 fine.


  • PERETZ KLEIN, 66, of Spring Valley, New York, pled guilty before United States Magistrate Judge Judith McCarthy. He was charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count), which carries a sentence of up to 20 years in prison, and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison. As part of his plea agreement, Peretz Klein also agreed to forfeit $1,144,288.37, and to pay restitution of the same amount. Peretz Klein is scheduled to be sentenced by Judge Karas on June 17.

  • SUSAN KLEIN, 59, of Spring Valley, New York. She was charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison. As part of her plea agreement, Susan Klein also agreed to forfeit $1,144,288.37, and to pay restitution of the same amount. Susan Klein is scheduled to be sentenced by Judge Karas on June 17.

  • SIMON GOLDBRENER, 57, of Monsey, New York, pled guilty on Feb. 3, before United States Magistrate Judge Paul E. Davison. He had been charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (three counts): 20 years in prison per count. As part of his plea agreement, Goldbrener also agreed to forfeit $479,357.18, and to pay restitution of the same amount. Goldbrener is scheduled to be sentenced by Judge Karas on June 8.

  • MOSHE SCHWARTZ, 46, of Monsey, New York, pled guilty on February 6, 2020, before Judge Davison. He was charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison. As part of his plea agreement, Schwartz also agreed to forfeit $275,160.00, and to pay restitution of the same amount. Schwartz is scheduled to be sentenced by Judge Karas on June 8, 2020.

  • BEN KLEIN, 41, of Monsey, New York, pled guilty on Jan. 24, before United States Magistrate Judge Lisa Margaret Smith. He was sentenced initially to Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and to Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison. As part of his plea agreement, Ben Klein also agreed to forfeit $412,586.37, and to pay restitution of the same amount. Ben Klein is scheduled to be sentenced by Judge Karas on May 22.

  • SHOLEM STEINBERG, 41, of Monsey, New York, pled guilty on Jan. 30, before Judge McCarthy. He was charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (two counts): 20 years in prison per count. As part of his plea agreement, Steinberg also agreed to forfeit $191,423.50, and to pay restitution of the same amount. Steinberg is scheduled to be sentenced by Judge Karas on May 12.

  • ARON MELBER, 44, of Monsey, New York, pled guilty on Jan. 30, before Judge McCarthy. He was charged initially with Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison; and Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison. As part of his plea agreement, Melber also agreed to forfeit $127,654.55, and to pay restitution of the same amount. Melber is scheduled to be sentenced by Judge Karas on May 8.


The Journal News, the Rockland County Times and Jewish news organizations had reported in 2013 on the amount of money from the E-rate program going to ultra-Orthodox Jewish communities, which usually forbid their students to access the internet.


Berman thanked the Federal Bureau of Investigation, the Federal Communications Commission - Office of the Inspector General, and the Rockland County District Attorney's Office for their outstanding work on the investigation. This case is being handled by the Office's White Plains Division. Assistant United States Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg are in charge of the prosecution.


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