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Orthodox New York Schools Scam $$Millions on E-Rate Program
« on: March 02, 2013, 01:44:55 AM »
Haredi Schools Reap Millions In Federal Tech Funds

How does a community that rails against the Web pull in $30 million in one year for its schools from the E-rate program?

Julie Wiener and Hella Winston

This past summer, the fervently Orthodox filled two stadiums to rally against the Internet. Getty Images

At Yeshivat Avir Yakov, an all-boys school in the chasidic enclave of New Square in New York’s Rockland County, students spend the vast majority of their long school days studying religious texts in spartan classrooms furnished only with battered wooden benches and desks. Unlike their counterparts in public or private schools outside the chasidic community, the boys at Avir Yakov do not have access to the Internet or computers in their school because chasidic leaders view the Internet as a corrupting force capable of undermining their way of life.

Indeed, recent graduates report never having seen — let alone used — a computer in their classrooms, and video of the inside of the Avir Yakov building shot within the past two weeks and obtained by The Jewish Week seems to support their accounts: not one of the yeshiva’s classrooms, public areas or designated resource rooms seen on the video contains a computer, or even a telephone.

So it comes as a surprise that the approximately 3,000-student school has, since 1998, been allotted more than $3.3 million in government funds earmarked for Internet and other telecommunications technology.

In 2011 alone, the yeshiva collected $817,065 through E-rate, a 15-year-old federal program that subsidizes telecommunications services and infrastructure for schools and libraries, giving larger discounts to those serving low-income populations.

In 2012, Avir Yakov got $209,423 the vast majority of that money for telecommunications service provided by a Brooklyn company called Discount Cellular Plus.

Avir Yakov is just one of many fervently Orthodox Jewish schools in New York State that, despite publicly eschewing Internet use and despite offering their students minimal, if any, access to computers, have spent large sums of E-rate money.

Disbursed to service providers — often small businesses, like Discount Cellular Plus, which appear to serve an exclusively Orthodox clientele — E-rate funds distributed to 285 New York State Jewish schools totaled more than $30 million in 2011, although not all that money ended up being disbursed.

This means that while Jewish schools enrolled approximately 4 percent of the state’s K-12 students, they were awarded 22 percent of the state’s total E-rate allocations to schools and libraries that year. In addition, in recent years, a number of fervently Orthodox organizations — including Chabad.org and Torah Umesorah (The National Association for Hebrew Day Schools) — have classified themselves as libraries in E-rate applications and collectively received millions of dollars, a trend first reported in the Forward.

E-rate, which disbursed $2.2 billion in 2011 and is designed to directly benefit students, is one of several programs operated by the Universal Service Administrative Company (USAC) for the Federal Communications Commission with money collected from fees on long-distance phone service.

While many have lauded E-rate for helping to give large numbers of schools and libraries access to the Internet, the program has also been criticized for its inadequate safeguards against fraud and waste.

In a four-month investigation, The Jewish Week reviewed E-rate data along with numerous filings submitted by Jewish schools and their service providers. The newspaper conducted an extensive analysis of 2011 E-rate awards, reviewed the funding history of the Jewish schools and service providers receiving the largest sums of money, examined “470” forms detailing schools’ technology requests, and looked at various audit reports and FCC rulings. With the exception of the 470s, all of this information is publicly available on the website of E-rate Central, a Long Island-based E-rate consulting firm.

The Jewish Week also made repeated attempts to interview administrators at several of the Jewish schools receiving the largest sums of money, as well as officials at companies that have billed E-rate for services reportedly provided to these schools. With the exception of an E-rate consultant, whom one school suggested The Jewish Week contact, none of these people returned calls or agreed to be interviewed.

What The Investigation Found

Perhaps not surprisingly, the investigation revealed that of the almost 300 Jewish schools benefiting from E-rate, large ones serving predominantly low-income populations got the lion’s share of the money: 10 schools — all but one chasidic — collectively were approved for nearly $9 million in E-rate-funded services in 2011, almost one-third of the Jewish total.

While E-rate does cover certain non-Internet-related expenses, such as PBX business phone systems and wiring for internal networks, and while most fervently Orthodox schools do have at least basic Internet service for office administrators, it is unclear why schools like Avir Yakov that offer their students minimal, if any, access to computers and the Internet are consistently among the program’s largest beneficiaries.

This is a segment of the Jewish community deeply concerned about the perceived social threat posed by the Internet. Indeed, last May, 60,000 fervently Orthodox Jews filled the Citi Field and Arthur Ashe stadiums in Queens for a rally about the dangers of the Internet, and the community’s schools routinely require parents to sign documents at the beginning of each school year committing to not having Web access in their homes as a precondition for enrollment.

Setting aside questions of how these schools are using technology, it is also unclear why, given the financial constraints of E-rate, which had $2.3 billion to allocate last year yet received over $5 billion in requests, the program continues to dole out disproportionately large sums to a small sector of the population.

Among The Jewish Week’s Findings:

Yeshivat Avir Yakov submitted requests in 2012 seeking, among other things: 65 direct connections to the Internet, wiring that would provide 25 classrooms, as well as 40 computers or other devices, with Internet access; phone service for 95 classrooms; more than 260 cell phone lines with data plans; various PBX (phone) equipment and wire and cable upgrades.

One recent Avir Yakov graduate told The Jewish Week that during the time he was a student there, the school installed “phone systems and data cables in each classroom, but no computer or Internet connection was ever installed.”

“There were phone jacks and data jacks, but nothing more,” the graduate continued.

The Jewish Week was unable to confirm this with Avir Yakov, as the school did not return three detailed voice-mail messages, including one notifying the school that it would be a subject of this story.

Notably, Avir Yakov’s primary service provider, Williamsburg-based Discount Cellular Plus, is being sued in federal court by Sprint/Nextel. The suit alleges that Discount Cellular Plus, along with its owner Yoel Stossel and two other men, targeted yeshivas to steal their special discounts and rate plans and that the defendants then fraudulently acquired large quantities of “new high-end Sprint phones,” including iPhones, which they illegally unlocked and resold for a substantial profit overseas. (Avir Yakov is not mentioned in the suit).

Bais Ruchel D’Satmar, an all-girls Satmar school in Williamsburg with over 3,000 students, received more than $1.5 million in 2011, the largest E-rate haul by any Jewish school that year. The following year, it requested, among other things: high-speed T1 lines with dedicated Internet access for eight locations; 250 cell phones; local and long-distance service for more than 100 lines in eight buildings; 100 pagers and eight locations for a video conferencing system. Over the years, the school — which, former students and employees told The Jewish Week, offers students some training on office software like QuickBooks but no Internet access — has spent more than $4 million in E-rate money. In 2012 it spent $45,000 just on Internet access provided by one supplier, Jet Wave.

Bais Ruchel D’Satmar, also known as Beth Rachel, has been involved in fraud in the past. In 1999, Rabbi Hertz Frankel, then principal of Bais Ruchel D’Satmar’s elementary school, pleaded guilty to felony charges of conspiring for nearly two decades with Brooklyn Community School District 14 to place dozens of chasidic women on the district payroll in no-show teaching jobs as a part of a plot to funnel more than $6 million to the school and its parent organization, United Talmudical Academy.

According to the April 1999 report submitted by the special commissioner for investigation of the New York City School District, the women typically turned over their paychecks to Frankel — who in turn handed the money over to the school — but, through the scheme, were able to get heath benefits for their families. Investigators were unable to fully account for how all the funds were used, but Frankel was sentenced to three years' probation and ordered to pay $1 million in restitution (the school was allowed to pay the money on his behalf as the 6 year investigation had found no evidence that Frankel, who currently serves as Bais Ruchel’s English division principal, had benefitted personally from the scheme.

United Talmudical Academy (UTA), a Satmar boys’ school in Williamsburg that has approximately 2,800 students (there are also UTA’s in Borough Park and Rockland County that apply separately for E-rate), spent $831,603 in 2011, and has spent almost $8.2 million in E-rate funds since 1998. In 2012 it requested, among other things: wireless Internet and e-mail on 100 cellular lines, 160 cell phones, 100 landlines, Internet access on two dedicated lines and 75 pagers. In 2012, Dynalink Communications received $81,600 just to supply Internet access to UTA.

Dynalink, Birns Telecommunications, Hashomer and First Class Computers, Inc. have received the lion’s share of UTA’s E-rate business, and UTA has consistently been approved for E-rate reimbursements, even though a 2004 audit by the FCC’s inspector general concluded that in 1999, the focus of the audit, UTA was “not compliant with the program regulations.” (The FCC later overruled the resulting recommendation that the Satmar school return $934,300.)

Congregation Machne Shalva, also going by the name Talmud Bnei Zion Bobov, a K-12 boys’ school in Borough Park with 1,675 students, has been approved for over $100,000 each year in E-rate services since it first got involved with the program in 2006. In 2012, Machne Shalva, requested nine T1 lines, 150 cell phones, 20 BlackBerry devices, text-messaging service for 150 users, 75 pagers and nine cable/DSL Internet access points. It received $660,865.43 in 2012 and $709,489.38 in 2011. Its primary service providers are Dynalink and Birns.

Yeshiva Beth Hillel D’Krasna, a 421-student boys’ school in Borough Park, spent more than $1.5 million between 1998 and 2012. One of its recent major service providers is an entity called Mekach Tov Enterprises, Inc., which has done about $850,000 worth of E-rate business in the two years it has participated in the program.

Catholic schools and public schools in New York, even ones serving high-poverty populations, do not seem to reap as much money from E-rate as do their ultra-Orthodox counterparts.

Our Lady of Sorrows in Queens, a pre-K through eighth grade Catholic school serving 235 students and also eligible for a 90-percent discount, spent $6,102 in 2012 and $21,105 in 2011. Since 1998, the school has received approximately $530,000 — averaging about $35,000 per year — spending just under $9,000 on Internet access in 2012.

Catherine McAuley High School, an all-girls Catholic school in East Flatbush serving 250 students and also eligible for a 90-percent discount, spent only $4,137 in 2011. From 1998-2012, the school spent less than $700,00 — averaging less than $50,000 per year. Unlike UTA, Bais Ruchel D’Satmar, Yeshiva Beth Hillel of Krasna, Machne Shalva and Avir Yakov,

McAuley has a website, which enables students and parents to access private content and information about the classes in which students are enrolled.

Meanwhile, the New York City public schools, which enroll close to 1 million students, almost half of them eligible for free/reduced lunches, has spent about $1.3 billion in E-rate funds, or the equivalent of 158 UTA’s. Looked at another way, E-rate has spent approximately $1,300 for each public school student, compared to almost $3,000 for each UTA student, even though the yeshiva is part of a community whose ideology rejects the Internet and discourages computer use except in very limited ways.

Asked in an e-mail why New York’s fervently Orthodox Jewish schools appear to disproportionately benefit from E-rate, Eric Iversen, USAC’s director of external affairs, replied that “program rules do not address diversity or proportionality of enrollments in the way you seem to be asking. They require only that a school be eligible, as per federal laws. … The amount of funding that goes to certain kinds of school — public, private, religious, etc. — is a function of how individual applications from schools in these categories add up. It’s just an accident of addition, not anything that is part of [how] our funding decisions are made.”

In an e-mail interview, Tehyuan Wan, coordinator of education and technology programs and initiatives at the New York State Department of Education, speculated about disproportionate representation of Jewish schools in E-rate, noting that, “Some schools have been more aggressive in maximizing the opportunity while others calculate their actual usage and needs and budget accordingly.”

He also noted that because of USAC’s “Two In Five” rule whereby schools can only be reimbursed for certain expenses twice every five years, “Eligible schools may choose to deploy their technology upgrades or expansion in a particular year or two within the five-year funding cycle. So the total spending and reimbursement for each of the schools may vary from one to another, depending on when they use Priority II funding resources. Therefore, it is important to take the five-year funding usage cycle into consideration in your computation and comparison.”

Responses From Schools

The Jewish Week phoned representatives of seven of the Jewish schools that have received some of the largest E-rate awards in the program’s history, leaving two voicemail messages at each school: UTA Williamsburg, Yeshivat Avir Yakov, Bais Ruchel d’Satmar, Congregation Machne Shalva, Yeshiva Beth Hillel d’Krasna, Bobover Yeshiva B’nai Zion and Talmud Torah Tzoin Yosef Pupa. The messages requested information on what technology the school makes available to students and how it has spent its E-rate dollars. The reporter noted that an article would appear this week. None of these calls was returned. A third call, placed to Avir Yakov and its E-rate consultant Robert Sniecinski and detailing some of the allegations against it, also was not returned.

Indeed, the only fervently Orthodox leader contacted who agreed to speak was Rabbi David Niederman, executive director and president of  the United Jewish Organizations of Williamsburg.

He emphasized that he has “no oversight over any schools whatsoever” and said that he has “no idea of E-rate, what that means, I don’t know the details of the program.”

“Let the schools talk about it themselves, let me not go into it,” he added.

Officials at Yeshiva Beis Chaya Mushka, a Chabad girls’ school in Crown Heights approved for $878,506 in 2011, referred interview requests to Richard Bernstein, the school’s E-rate consultant.

In a phone interview, Bernstein, who is founder of E-Rate Consulting LLC in Woodmere, L.I., and has been involved with E-rate since its inception, came to the defense not only of Beis Chaya Mushka, but also of fervently Orthodox E-rate beneficiaries in general. (While Bernstein has a variety of clients, both Jewish and non, he said that he has not worked with the other schools cited in this article.)

He offered a number of potential explanations why the schools in question benefited disproportionately from E-rate:

New York State as a whole has historically been one of the states receiving the most E-rate dollars (as much as 17.4 percent in 2002), something he attributes to the state’s department of education promoting the program and encouraging schools to apply.

Jewish groups are better organized and better at sharing information among themselves than other groups.

Many fervently Orthodox schools are large and serve large numbers of low-income students, a population given preferential treatment by E-rate.

Because E-rate’s application process is labor-intensive and “difficult to navigate,” many schools that might be eligible do not bother to apply.

Regarding the fact that most fervently Orthodox schools, with the possible exception of Chabad ones like Chaya Mushka (which is using its E-rate money, in part, to wire the two new floors of classrooms it is building), don’t give students access to the Internet, he said, “There are innovations out there and it’s creeping in,” adding that some schools not currently using the Internet may be “positioning themselves for when it’s going to happen.”

“No one knows how long [E-rate] is going to last, because it’s running out of money,” he said. “If you don’t take advantage of it now, you may not be able to later.”

In addition, he said, wiring is required for phone lines and voicemail systems, as well as Internet, and even schools that don’t use Internet still need advanced computer systems to track attendance, grades and other administrative details.

“You can no longer manage a school with paper and pencil, it just doesn’t work,” he emphasized.
Asked why fervently Orthodox schools average dramatically larger E-rate expenditures per pupil than the New York City public schools, which also serve large numbers of low-income students, Bernstein speculated that the public schools “have different resources available to them,” such as funds through its buildings department, and may not need E-rate as much.

So Many Pagers?

Just what are fervently Orthodox schools doing with pagers, Smartphones and expensive Internet connections?

In a December interview with The Jewish Week, Rabbi Martin Schloss and Sara Seligson of the Jewish Education Project’s day schools and yeshivot department, said they were unaware of fervently Orthodox schools, with the possible exception of those affiliated with Chabad, providing their students with access to the Internet.

JEP stopped dealing with the E-rate program several years ago, in larger part because of its reputation for problems related to fraud, Seligson and Schloss said.

Schloss, the department’s director of government relations and general studies, said: “[E-rate] had a lot of problems in past, and the last thing we need to do is get stuck in the middle of that. That would destroy our own credibility and ability to work with schools. We in general try to steer clear of questionable practices or practices that could lead us all into trouble.”

Seligson noted that computers and software are provided by the government for use in Title 1, programs for low-income children, and that the Gruss Foundation also provides Orthodox schools with some equipment and software, such as a program called SuccessMaker that drills basic academic skills.

Asked if they thought such schools would be willing to budget any of their own money for technology, something E-rate requires of even its poorest schools, Seligson and Schloss said no.

“The population you’re talking about is hurting” financially, Schloss said. “So they’d have a tough time justifying that kind of money.”

While the ardent opposition to the Internet is gradually weakening in “yeshivish and Bais Yakov” communities and schools, Schloss observed, it is still strong in chasidic ones, with the exception of Chabad.

Asked if she is aware of non-Chabad chasidic schools providing Internet access to students, or using it for Skype or other video-conferencing, Seligson said, “No. Definitely not.”

As for chasidic boys schools giving students access to computers, other than ones provided through Title 1 specifically for Title 1 programs, Seligson said, “I would be shocked to find out that anyone actually does.”

The two Jewish schools with by far the largest E-rate allocations in 2011 — collectively approved for $2.8 million — are both non-Chabad chasidic.

Told about large numbers of fervently Orthodox schools benefiting from E-rate services they do not make available to their students, Naftuli Moster, founder of Yaffed, an advocacy group that seeks to improve the secular education in ultra-Orthodox schools, said, “This problem is only the tip of the iceberg. … In my quest to make sense of which yeshivas provide what level of education, I ask people [who went through the haredi yeshiva system] if they’ve received computer lessons in yeshiva,” said Moster, himself a graduate of a fervently Orthodox school. “Typically we stare at each other for two seconds and then laugh really hard.”

 From the outside, Computer Corner does not look like a technology business handling million-dollar technology contracts.

On a recent Tuesday afternoon, a graffiti-marred metal gate covers the window, and the doorway, in need of a paint job, has no sign.

The only indication that a computer store lies inside this four-story red-brick building with rusty fire escapes on a modest residential block of Brooklyn’s South Williamsburg is a discarded Dell computer carton lying next to the garbage cans.

Nonetheless, the company recently sought $1.2 million from E-rate, a federal program subsidizing technology costs for schools and libraries, to equip its neighbor, Bais Ruchel D’Satmar, with “internal connections” and provide “internal connections maintenance.”

Universal Service Administration Company (USAC), the nonprofit that runs E-rate and other programs for the Federal Communications Commission, appears to have denied that particular request. However, it did pay Computer Corner more than $500,000 in 2011 for services provided to the Satmar girls’ school, a school that 12 years earlier was implicated for colluding with the local community school district. The 1999 scheme involved placing dozens of chasidic women on the public schools’ payroll in no-show teaching jobs in order to funnel more than $6 million to the school and its parent organization, United Talmudical Academy.

How did Computer Corner — along with numerous other little-known companies, most of them located in fervently Orthodox neighborhoods of Brooklyn and Rockland County — get to be among the largest service providers in the E-rate program, earning millions of dollars providing Internet and other tech services to yeshivas whose leaders publicly rail against what they call the “evils” of the Internet?

Some of these companies, many of which, like Computer Corner, don’t have a website, have even appeared on E-rate’s top 10 list of funding approvals and funding denials nationwide.

E-rate, which disbursed $2.2 billion nationally in 2011, was created under President Bill Clinton, part of the
sweeping Telecommunications Act of 1996. That legislation established the Universal Service Fund, a pool of money collected through a fee on long-distance phone service and then used to “help communities across the country secure access to affordable telecommunications services,” according to the USAC website.

But the E-rate money is not distributed evenly. In 2011, 285 Jewish schools in New York State, which enroll approximately 4 percent of the state’s K-12 students, were approved for more than $30 million, more than 20 percent of the state’s total E-rate allocations.

In a four-month investigation, The Jewish Week reviewed E-rate data along with numerous filings submitted by Jewish schools and their service providers. The paper conducted an extensive analysis of 2011 E-rate awards, reviewed the funding history of the Jewish schools and service providers receiving the largest sums of money, examined “470” forms detailing schools’ technology requests, and looked at various audit reports and FCC rulings. With the exception of the 470s, all of this information is publicly available on the website of E-rate Central, a Long Island-based E-rate consulting firm.

The Jewish Week also made repeated attempts to interview administrators at several of the yeshivas receiving the largest sums of money, as well as officials at companies that have billed E-rate for services reportedly provided to these schools. With the exception of an E-rate consultant, whom one school suggested The Jewish Week contact, none of these people returned calls or agreed to be interviewed.

It is not hard to become an E-rate service provider.

More than 4,000 companies nationwide collect payments through E-rate; becoming an official provider simply requires calling USAC to obtain a Service Provider Identification Number (SPIN) and providing basic information, like the company’s name and street address. Beyond that, USAC and the FCC do not vet service providers, requiring them only to submit an annual certification form containing basic company contact information and certifying that they will abide by the rules of the program. (Companies that provide telecommunications services responsible for contributing to the Universal Services Fund, which funds E-rate, must register with the FCC, however).

Many of the providers that haredi schools rely on for the bulk of their E-rate-subsidized purchases seem, like Computer Corner, to be small businesses that appear to serve an exclusively Jewish clientele.

These businesses include:

Williamsburg-based Discount Cellular Plus (DCP), which became an E-rate service provider only in 2010, has been allotted about $1.5 million through E-rate in New York between 2010 and 2012. It appears to provide E-rate services exclusively to fervently Orthodox schools, and has so far requested more than $500,000 in E-rate reimbursements for fiscal year 2013.

DCP is currently being sued in federal court by Sprint/Nextel. The suit alleges that DCP, along with its owner Yoel Stossel and two other men, Chaim Weiss and Yanky Katz, targeted yeshivas to steal their special discounts and rate plans and that the defendants then fraudulently acquired large quantities of “new high-end Sprint phones,” including iPhones, which they illegally unlocked and resold for a substantial profit. When a Jewish Week reporter called DCP to talk about E-rate and the Sprint case, she was referred to the company’s attorney. A message left with the attorney was not returned by press time.

Mekach Tov Enterprises, Inc. has done about $850,000 worth of E-rate business in the three years it has participated in the program. The company, which has an address in Brooklyn and is sometimes listed as Tov Mekach, is categorized in Manta, an online database, as a “Burglar and Security Systems store.” However, a company by the same name at the same Borough Park address (which appears to be a storefront mailbox rental establishment) appears previously to have been an importer of religious books and articles. A call to the phone number listed for the company was answered by a fax machine.

Not all of the providers serving haredi schools are exclusively local or small, however and several, it seems, are run by the same or related people.

Dynalink and Birns are both located in the same building on West 17th Street in Manhattan and both list Mendel Birnbaum as the contact person on E-rate forms. Birns, a large telecom company that was established in 1973 and has participated in E-rate since 1998, has received over $9 million serving Orthodox schools in New York through the program. It landed at No. 7 on a list of E-rate’s top 10 funding commitments nationally in 2011.

Dynalink, which appears in New York State to serve almost exclusively haredi or chasidic E-rate clients (it also does E-rate business in other states, including New Jersey, Florida, Texas and Tennessee) got into the E-rate business in 2006. But it has already been awarded over $6 million in New York alone, the majority of that for telecom services followed by internet access.

In 2009, XO Holdings — a Delaware-based company with revenues of $1.4 billion in 2007 and whose subsidiary, XO Communications, has participated in the E-rate program with all types of schools nationwide (it has been awarded close to $90 million since 2005) — filed a federal lawsuit against Lawrence Fishelson, a former XO employee, and Solomon Birnbaum (who co-founded Birns), Mendel Birnbaum, Dynalink and Voice Data Technology Consultants. Upon Fishelson’s termination from XO in 2005, he formed Dynalink with the Birnbaums. The complaint alleges that together they conspired to intentionally interfere with XO’s business relationships with yet another company, Choice Tel Communications, which Birnbaum acquired from his father-in-law, Moshe Birnbaum and daughter, Chaya Freund.

Other big E-rate providers in the Jewish community include: Communications Data & Security, Inc., in Rockland County ($10.2 million); Hashomer Alarm Systems in Rockland County ($8.9 million); Smart Telecom in Far Rockaway ($8.2 million); ID-Tech, which has offices in Borough Park and in Lakewood, N.J. ($7.5 million); and LightHouse Equity, Inc., a Borough Park company that, according to state records became inactive 2010 but still seems to be operating ($4 million).

Given the amount of E-rate business it has done over the years, one would expect there would be more public information available about LightHouse (which found its way onto a top 10 list of both funding commitments and denials in 2011). The contact address for the company, in care of an entity called My Advisor LLC., appears to be a residential building in Borough Park, the back of which practically abuts Bnai Zion, a Bobover yeshiva on 15th Avenue (to which the company has provided service, among other Bobover yeshivas and other haredi schools). The contact for LightHouse’s E-rate program is Thomas Monahan, however a call to the number listed for him on E-rate forms was answered by a woman who indicated that she was not at the company’s physical location but worked for an answering service. A message left for Monahan was not returned by press time.

In 2011, Hashomer and Birns Telecommunications each collected more E-rate money for services provided to Jewish schools than did Verizon, Sprint or Nextel. In fact, Hashomer, which received close to $3.5 million in E-rate work for Jewish schools in 2011, did more E-rate business in the Jewish sector that year than Verizon, Sprint and Nextel combined.

The Jewish Week called Hashomer, which has addresses in both Spring Valley and Monsey, but was told by the man who answered the phone — who did not give his name but said he was with the “Security Division”— that nobody was in the office as they were all out in the schools, making estimates for upcoming E-rate application deadlines; he told The Jewish Week to call back “in a few weeks.”

Reached by phone at Dynalink, Hirsch Birnbaum (this name also appears on Birns’ documents as vice president of sales for that company) told The Jewish Week that he didn’t have time to talk about E-rate unless the reporter wanted to buy a contract or was willing to pay him $200 an hour. A call to Birns was answered by someone who told The Jewish Week he was in “service” and didn’t even know “what an E-rate is” and had “no idea” what the reporter seeking information was talking about.

When The Jewish Week called Communications Data & Security, the reporter was put on hold by the woman who answered and then put through to a number that rang more than 20 times, with no answer and no voicemail.

In 2007, Bais Ruchel D’Satmar — the school that was the top Jewish E-rate recipient in 2011 and has been awarded about $3 million since E-rate’s inception — is also identified in public data as a service provider, with two service-provider identification numbers associated with its name. One is the same number Hashomer has today, while the other now belongs to All Care Communications Inc. Asked why this may have been the case, an E-rate consultant who requested anonymity so as not to jeopardize client relationships, told The Jewish Week that it could have been some kind of typo. However, the consultant added that schools registered as service providers should raise red flags because of the possibility of self-dealing.

Between 2007-2010, All Care was approved for close to $1 million in E-rate funds. Since 2009, it has been registered with the FCC as headquartered at 320 Roebling St., a low-rise apartment building with a mailbox rental establishment on the first floor. Several calls to the listed contact person, Joel Polatsek, were answered by the sound of a beep. A call to a Brooklyn-based company called All Care Management yielded a message that the number had been disconnected.

Asked if he finds it odd that the yeshivas rely largely on small businesses that serve only other Orthodox institutions, Richard Bernstein, a Woodmere, L.I., E-rate consultant whose clients include Jewish and non-Jewish schools, said no.

“That’s the way [they] do business in general, with people they know,” he said. “Other groups are the same, they want to work with someone who knows and understands them. … It comes down to service. You want to know if there’s a problem you can make a call and someone will come fix it. You don’t want to call Dell and get someone in India. Schools can’t afford to [have their computer system go] down or to not have their phones work.”

 Nine years ago, Thomas Cline traveled from Washington, D.C., to Brooklyn to tour seven buildings occupied by the United Talmudical Academy.

As the assistant inspector general for audit at the Federal Communications Commission’s Office of Inspector General, Cline — whose Southern drawl must have stood out amid the Yiddish accents of Williamsburg — was there to look at the large Satmar school system’s more than $1 million in technology purchases, in 1999, subsidized by the FCC’s E-rate program.

His team found a number of major violations and ultimately recommended that the FCC make UTA return over $900,000. But in the end, the school — which did not return calls from The Jewish Week seeking an interview — paid nothing. In the years that have followed, it and the numerous institutions within its sprawling system of boys and girls’ schools in Brooklyn and Rockland County, each of which now files separately for E-rate, have been awarded tens of millions of E-rate dollars. In 2012, one of UTA’s service providers billed the program $81,600, just on Internet access for the Williamsburg boys’ divisions.

That is despite the fact that UTA students are not allowed access to the Internet.

E-rate, created as part of the sweeping Telecommunications Act of 1996, enables schools and libraries to get telecommunications and other tech infrastructure at a discount — as much as 90 percent for schools, like UTA, in which at least 75 percent of the students are eligible for reduced or free lunches.

Drawing from funds collected through a fee on long-distance phone service, the E-rate program, administered by the nonprofit Universal Service Administration Company (USAC), disburses $2.25 billion a year to more than 4,000 service providers working in over 100,000 schools.

But the money is not distributed evenly, as The Jewish Week learned in a four-month investigation. In 2011, 285 Jewish schools in New York State, which enroll approximately 4 percent of the state’s K-12 students, were approved for over $30 million, more than 20 percent of the state’s total E-rate allocations. The largest of these Jewish institutional recipients are, like UTA and Avir Yakov, a yeshiva in Rockland County, haredi (or, fervently Orthodox and/or chasidic) — the same community that, last May, filled Citi Field and Arthur Ashe Stadium for a rally denouncing the evils of the Internet. Meanwhile, the program, citing a scarcity of funds, has in recent years annually denied over $2 billion in requests from other schools nationwide.

Haredi schools are not the only Jewish ones participating in the E-rate program. A number of Modern Orthodox and liberal schools, including Ramaz, Solomon Schechter of Westchester and the Abraham Joshua Heschel School also benefit from E-rate, but, in part because their student bodies are more affluent,  the amounts they have received pale in comparison to the money lavished on the haredi schools. In addition, the Modern Orthodox and liberal day schools routinely make computers and the Internet accessible to their students.

History Of Problems

E-rate has long been criticized for inadequate safeguards against fraud and waste, and there have been several high-profile cases over the years involving service providers, E-rate consultants and schools filing millions of dollars in claims for services and equipment that were never provided.

Just a few years after E-rate began, Puerto Rico’s secretary of education was caught mismanaging over $100 million in E-rate funds. High-profile fraud cases, some involving big-name companies like IBM and NEC and entailing tens of millions of dollars, have been exposed in Texas and California, with the FCC maintaining a list of people and companies that have been “debarred” from participating in the program. Two General Accounting Office reports (most recently in 2010) have cited problems with USAC’s “internal controls,” and in 2005, the program was the subject of a congressional investigation.

Yet, despite some red flags raised in audits, like the one in 2004 of UTA, no Jewish schools or their service providers appear to have been barred from E-rate or deemed guilty of anything more serious than “noncompliance.”

Nonetheless, the program’s reputation for being susceptible to fraud is the reason why staff at the Jewish Education Project, formerly the Board of Jewish Education of Greater New York, say they have steered clear of E-rate in recent years, even as they help Jewish schools access a wide array of other government funds and services.

And, while few people are willing to accuse the Jewish schools of outright deception, their large E-rate awards are raising some eyebrows.

One E-rate expert who asked not to be identified said the large sums for schools that use minimal technology do look suspicious.

The question, he said, is, “Are you dealing with unsophisticated consumers being taken advantage of or are they in on it. … Who knows if this is legitimate of if it’s illegitimate and who’s at fault?”

Asked if it is currently investigating any potential improprieties in E-rate use among haredi institutions, Cline, the FCC auditor involved in the 2004 visit to UTA, declined to share specifics but said, “It’s come to our attention, and we are looking into it.”

In response to a follow-up e-mail from The Jewish Week, sent after the first two installments of an investigative series were published and seeking comment on some of the institutions the articles addressed, Cline said, via e-mail: “I can’t confirm, deny or discuss any investigative activity currently in progress by our staff.”

However, he added, his staff has “found the articles very interesting.”

Steve White, a Rockland County community activist who in 2011 successfully appealed to New York State to block the East Ramapo Central School District’s below-market-price sale of a school building to Avir Yakov, told The Jewish Week that it looks like Avir Yakov, if not others, has been deceptive in its dealings with E-rate.

“To me, it seems obvious that they’re trying to game the system,” he said. “If they expressly forbid their students from using the Internet, then what do they need Internet connections for?”

He noted that the blocked real estate deal between Avir Yakov and the school district, whose board is composed mostly of fervently Orthodox Jews and is currently being sued, involved “appraisal fraud. The exact same place that’s in trouble over real estate fraud is also listed as strangely getting all these monies. There is a pattern.”

`We Pulled Back’

Interviewed in December, Sara Seligson, associate director of the Jewish Education Project’s day schools and yeshivot department, told The Jewish Week that while her department was initially involved with E-rate, “it is a very complex application, and there were some challenges in terms of what the schools were using it for and what they were allowed to use it for. Not just our schools, but schools all over the country were cited for using it inappropriately, and we kind of just pulled back.

She said her department has not had any involvement with the program “for many years.”

In particular, Seligson said she had heard of vendors cutting deals with schools, permitting them to skip paying their 10 percent share.

While acknowledging that E-rate Central and the New York State Department of Education occasionally contact her office when there is a problem processing an E-rate application, she said: “We’re relatively hands-off.”

Rabbi Marty Schloss, the department’s director of government relations and general studies, commented: “[E-rate] had a lot of problems in past, and the last thing we need to do is get stuck in the middle of that. That would destroy our own credibility and ability to work with schools. We in general try to steer clear of questionable practices or practices that could lead us all into trouble.”

Despite its problems in the past, Eric Iversen, USAC’s director of external relations, insisted to The Jewish Week that USAC has “zero tolerance” for fraud and has “a pretty robust audit program.”

In a follow-up e-mail, he wrote that USAC has conducted over 800 audits of E-rate beneficiaries since 2006. “None of these audits has revealed fraud in the program,” he wrote.

The Department of Justice and the FCC’s Office of Inspector General (OIG) also audit E-rate. Thomas Cline, who audited UTA in 2004 and is now deputy inspector general in the OIG, told The Jewish Week that his department has closed about 30 investigations of E-rate recipients and service providers since 2002, and has a number of ongoing ones.

Asked during last week’s interview if he agrees with Iversen’s assessment that E-rate audits rarely find evidence of fraud, Cline said audits more commonly uncover “inconsistencies and noncompliance with certain requirements.

“Overpayments are many times the result of an honest error, rather than an attempt to defraud the federal government,” he said. “The end result of audits is more frequently to catch noncompliance and tell participants how to clean up procedures.”

He emphasized that “the need to recover funds is not in itself necessarily evidence of fraud.”

No Deadline For Payment

In his 2004 audit of UTA, Cline’s team discovered a number of problems:

UTA had not paid its required 10 percent portion of the bill;

Communications Data and Security, Inc. (still an approved E-rate service provider) had billed and received payment for services it had not provided;

There was no evidence of a competitive bidding process;

When auditors attempted to visit various UTA locations to determine the physical existence of the E-rate equipment, they found the school had, without obtaining approval, made numerous equipment substitutions, did not maintain asset records and lacked proof that all E-rate funded services had been received and installed.

Cline’s team recommended that USAC recover $934,300 from the school. UTA appealed the audit decision and in 2008, Jennifer K. McKee, the acting chief of Wireline Competition Bureau’s Telecommunications Access Policy Division, the FCC division responsible for E-rate, granted the appeal.

“Based on the record before us, it appears that this matter can be resolved through USAC’s review of additional documentation UTA provided to the Commission in its appeal, which it had not previously provided to USAC,” she wrote. In other words, the bureau determined that it was acceptable for UTA and its service provider, who had been unable to provide appropriate documentation when they were audited, to submit receipts years after the fact.

Interviewed last week about the overruling of his audit recommendations concerning UTA, Cline said the UTA audit, like many audits of that time, revealed that “in the early years of the program there were significant problems with weaknesses in the rules designed to protect the program. As a result, FCC has issued orders doing away with the loopholes and tightening the rules.”

Asked if was not suspicious for a company to produce a receipt after the audit was complete, and for the FCC to accept it, Cline noted that “the issue was there was no requirement of time in which you had to pay. That was the problem. So if you pay years later, there was nothing in the rules saying that was a problem.”

Rules specifying deadlines for payment have been implemented.

As for the UTA’s other findings, Cline said he no longer recalls the details. “We do the audits and make recommendations, but we’re not the administrators,” he said. “We have things we can do if we’re not satisfied, but how far you elevate things like that depends on the circumstance.”

Various Jewish schools have been cited for noncompliance in USAC-commissioned audits, yet, like UTA, they seem not to have been penalized.

In 2009, KPMG carried out an audit of Bais Ruchel D’Satmar, which in the early years of the program filed for E-rate together with UTA,  and found “material noncompliance with technology plan certification and service substitution requirements” during the fiscal year 2008. Notably, the functionality of the requested services on the original application was for T-1 services, while the functionality of the substituted services was for wireless phone services. While USAC decided to seek recovery for the monetary effect of this finding, nowhere in the audit, however, were the reasons for this substitution questioned or made clear.

Meanwhile other FCC rulings of Jewish schools — and other schools’ — appeals seem to have been similarly lenient. In May 2006, FCC Secretary Marlene Dortch granted 30 appeals on behalf of 96 participants, many of them haredi Jewish schools, accused of violating competitive bidding rules. USAC had flagged the schools because the language on their technology plans was very similar; however Dortch argued that considerably more evidence was needed before making the schools and their service providers return their funding.

Offline wag

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- Orthodox New York Schools Scam $$Millions on E-Rate Program
« Reply #1 on: March 02, 2013, 06:05:35 AM »
Jews control ALL the federal grant programs.  100% corruption.  Improprieties are only possible for non-jews.
Nobody gets paid to tell the truth.

Offline EyeBelieve

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- Orthodox New York Schools Scam $$Millions on E-Rate Program
« Reply #2 on: March 02, 2013, 08:29:52 PM »
Jews control ALL the federal grant programs.  100% corruption.  Improprieties are only possible for non-jews.

Perhaps so, OTOH a bit odd that Jewish publications seem to dominate publicizing the scandal--seems to follow Talmudic style of prohibiting airing dirty laundry in view of Gentiles.  IE regular MSM will ignore the story while Jews read about it & think, "Oh, those clever Haredim! Cluck, cluck."

Even aside from the Jew-school favoritism, the E-Rate program is a boondoggle, $1,300 per public student.  For that money they should be able to buy nice laptops for each student & install good networks.

We might see some vicious wrist-slapping:

According to the April 1999 report submitted by the special commissioner for investigation of the New York City School District, the women typically turned over their paychecks to Frankel — who in turn handed the money over to the school — but, through the scheme, were able to get heath benefits for their families. Investigators were unable to fully account for how all the funds were used, but Frankel was sentenced to three years' probation and ordered to pay $1 million in restitution (the school was allowed to pay the money on his behalf as the 6 year investigation had found no evidence that Frankel, who currently serves as Bais Ruchel’s English division principal, had benefitted personally from the scheme.