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November 20, 2012

 

DiNapoli: Audit Finds Another Special Education Provider Bilked Taxpayers

Separate Audit Focusing on SEDís Management of Special Education Program

The directors of Achievements PLLC, a Latham-based special education service provider, billed taxpayers for more than $180,000 in ineligible expenses, some of which personally enriched the directors, their family members and staff, according to an audit released today by State Comptroller Thomas P. DiNapoli. The audit’s findings have been referred to the Albany County District Attorney’s Office.

“Money that should be spent solely on students is instead being wasted, misspent or even pocketed by certain special education contractors to enrich themselves,” DiNapoli said. “It’s clear the system for monitoring these dollars is broken and taxpayers are paying the price. The parents and children who rely on special education programs deserve better, and taxpayers have the right to know their money is being well-spent. It is clear from a series of audits done by my office that the state’s special education program needs a thorough review.”

DiNapoli also announced that his office is completing an expedited top-to-bottom audit of the State Education Department’s oversight and management of New York’s special education program. Through SED, New York State spends $2 billion each year to provide special services and classroom instruction to 37,000 children with physical, developmental and emotional disabilities.

Earlier this year, after seeing several red-flags in audits and data collected by his staff, DiNapoli launched a widespread probe to look into the special education sector. Auditors have found numerous cases of provider contractors who have cheated the system and bilked taxpayers out of millions of dollars.

In the latest report, auditors disallowed a total of $182,590 in Achievements’ claimed costs for the five-year period ended June 30, 2010 based on guidelines set in SED’s Reimbursable Cost Manual. The improper claims included $68,072 for goods and services for Achievements’ executive director and her husband, the business’ fiscal director, and their family.

Investigators and auditors found the directors attempted to charge taxpayers $12,616 for a home entertainment center that was delivered and installed in their personal residence. Other personal expenses charged to the program included airfares and hotels at various vacation sites such as Disney World, a cruise, tickets to rock concerts, installation of fencing, a dishwasher at their personal residence and annual membership fees to a family recreation center.

“These types of egregious examples of public dollars diverted for blatant personal benefit should be detected and stopped much sooner through effective state oversight and monitoring by the State Education Department,” DiNapoli said.

DiNapoli’s auditors also found:

  • $66,225 in excessive charges to lease office space in a building owned by Achievements’ directors;
  • $48,293 in other costs that did not comply with the requirements of the manual; and
  • Failure to comply with SED’s requirements for time and attendance records, cost allocation methodologies, and other financial management functions.

Auditors further determined Achievements’ directors attempted to conceal their personal charges by distributing them to various accounts used to set the business’ reimbursement rates.

Auditors recommended:

  • SED review the disallowances identified in the audit and determine if adjustments to Achievements’ tuition reimbursement rates are needed; and
  • Achievements ensure that the expenses claimed comply with the requirements prescribed by SED.

SED generally agreed with the auditís recommendations. For a copy of the complete Achievements report, including the providerís response, visit: http://osc.state.ny.us/audits/allaudits/093013/11s18.pdf

There have been several criminal referrals, felony arrests and hundreds of thousands of dollars in restitution made as a result of the earlier audits completed by DiNapoli’s office.

In one case, auditors found nearly $250,000 in improper costs claimed by a Bronx company, including $3,162 used to purchase trees, bushes, gravel, carpeting and tiles for the vacation residence of its executive director and her husband. The audit can be found here: http://osc.state.ny.us/audits/allaudits/093012/10s32.htm

One Long Island-based contractor couldn’t document the need for $1.5 million in staff salaries, including $850,000 paid to 11 relatives of its executive director. The company even charged taxpayers $15,382 for rent and expenses for the California home of the executive director’s son. That audit can be seen here: http://osc.state.ny.us/audits/allaudits/093012/10s59.htm

And another provider paid its assistant executive director, the wife of its executive director, $324,881, as a full-time employee even as she was employed at the same time as a full-time dean, professor and department chair for the City University of New York. The full audit can be seen here: http://osc.state.ny.us/audits/allaudits/093012/10s31.htm

To view the most recent audits of special education providers, visit: http://www.osc.state.ny.us/audits/auditAgencyList.htm#State Education Department

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