From: Barbara V. Crosier
Sent: Monday, June 25, 2012 8:47 AM
To: Barbara V. Crosier
Subject: NYT-Companies Shortchanged Preschool Special Education Program, State Audits Find
The following story on the comptroller’s report on misuse of funds in preschool special education (all the providers mentioned are for-profit) is in today’s New York Times:
The owners of a Bronx company that employs teachers for disabled toddlers used thousands of dollars in government funds to fix up a weekend getaway in the Poconos, state auditors found. A Brooklyn company in the same program, which provides treatment for prekindergarten special education students, billed taxpayers for his wife’s $150,000 salary as his assistant director when she was a full-time professor at the City University of New York, the auditors said.
And the owners of an upstate company improperly diverted more than $800,000 to pay, among other things, rent and interest to themselves and the full-time salary of an executive who lived in South Carolina and seldom worked.
Those are among the findings of the first of 18 audits being conducted by the state comptroller, Thomas P. DiNapoli, of the preschool special education program, a $2 billion system that relies almost exclusively on private contractors, many of them for-profit companies, to deliver services to 3- and 4-year-olds.
The first three audits, which have already led to criminal charges, are to be released on Monday.
“This money was intended to give our most vulnerable children the services they needed,” Mr. DiNapoli said. “Instead, the money was used for contractors to landscape their second homes or for no-show jobs. Special-needs kids were shortchanged by contractors that had figured out how to game the system.”
More than 60,000 toddlers with physical, learning, developmental and other disabilities are served by the pre-K special education program across the state each year. Private contractors provide classes in special schools, one-on-one instruction in homes or neighborhood nursery schools, and a variety of treatments like speech, physical or occupational therapy.
The prekindergarten program, whose costs are split between the state and local governments, is far more expensive in New York than in other states, The New York Times reported this month.
The number of children in the program has risen slowly in recent years, but expenditures have climbed rapidly as children receive more expensive services.
The costs of the program in New York City have jumped to more than $1 billion this year, nearly double the amount six years ago. City officials say that when it comes to reining in the program they are constrained by state regulations, and maintain that influential lobbyists for private contractors have blocked reforms in Albany.
Contractors say that malfeasance is relatively rare and that the program makes financial sense because early intervention by specialists can avert more serious problems later.
Still, auditors say the system of reimbursing private contractors for their costs, and allowing them to pay back overcharges over time, encourages abuse.
Companies employing “special education itinerant teachers,” who provide individual instruction at homes, day-care centers or preschools, can charge as much as $122 an hour for these services, under rates set by the State Education Department. The annual bill sometimes exceeds $100,000 per child.
One specialist in the so-called SEIT program is Important Steps Inc., of the Bronx, whose billings grew from $1.6 million in 2006-7, its first school year in the program, to $5.7 million a year later. An audit by Mr. DiNapoli’s office of the company’s 2007-8 records found that it had overbilled by hundreds of thousands of dollars that year. The company improperly put in for reimbursement for its corporate income taxes, vehicles, office renovations and other items, auditors found.
The company’s owners, Zhanna (also known as Janet) Reznik and her husband, David Shapiro, also spent several thousand dollars on floor tiles, trees and shrubs to renovate and landscape their second home in the Poconos, according to the audit.
A lawyer and lobbyist for Important Steps, Pamela A. Madeiros, disputed some of the auditors’ findings, suggesting in a February letter that the vendor who sold Ms. Reznik and Mr. Shapiro their landscaping supplies was “confused,” and offering to take auditors on a walk through the Greentown, Pa. property to prove that “no such trees or bushes have been planted.”Auditors responded that they had already toured the property, escorted by the vendor, who “pointed out the trees, bushes, mulch and soil that he installed.”
Ms. Reznik and Mr. Shapiro were arraigned June 6 on five felony charges, including grand larceny, tampering with public records and filing false documents. They are scheduled to appear in Bronx Criminal Court on Monday.
Reached at her office, Ms. Reznik declined to comment.
Criminal charges were also filed against the owners of Special Education Associates Inc. of Brooklyn, which was one of the city’s busiest SEIT providers this year, with 170 children receiving instruction.
The audit found that the company’s owner, Samuel J. Bernstein, paid his wife, Deena, $150,000 a year as his assistant executive director, while she was earning $90,000 a year as a full-time professor of speech, language and hearing sciences at Lehman College of CUNY.
Mr. Bernstein pleaded guilty to defrauding the government, a felony, and was sentenced in December to five years’ probation. He also paid $610,000 in a civil settlement with the Manhattan district attorney’s office, agreed to a lifetime ban from the pre-K special education program, and sold the business.
His wife, who could not be reached Friday, is due in Bronx Criminal Court on Wednesday to face felony charges of grand larceny and defrauding the government.
Mr. Bernstein, reached at his home in Lawrence, N.Y., criticized the authorities for bringing criminal cases. “We compensated them for what they charged us, and it should have ended there,” he said.
He added that he was disappointed to leave the business, which he entered in 1995. “We did very good work for a very long time,” he said.
A third company, Capital District Beginnings of Troy, N.Y., will have to pay back $831,244 in disallowed expenses. Company representatives would not comment.
The company, which serves 800 children in a 12-county area that includes Albany, charged government $240,000 for salaries for its two co-owners, though they performed little work, auditors said.
One of them, Mary K. Garrett, had moved to South Carolina for health reasons but still received full-time pay and a company car.
Vice President, Government Relations
Cerebral Palsy Associations of NYS
90 State Street, Suite 929
Albany, New York 12207
Phone: (518) 436-0178
Cell: (518) 424-3198
Fax: (518) 436-8619
E-mail: [email protected]
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