FBI Arrests 7 Over $14 Million Rockland Yeshiva Tech Fraud Scheme

Seven Rockland residents were arrested Wednesday morning, accused of a multi-year scheme to defraud a federal program called "E-rate," prosecutors said. Basically, they are accused of billing for equipment and services that were not actually provided to Jewish religious schools in Rockland County and elsewhere, and using the money for themselves.

Arrested were Simon Goldbrener, Ben Klein, Peretz Klein, Susan Klein, Aron Melber, Moshe Schwartz and Sholem Steinberg, who were vendors, consultants and yeshiva school officials involved in the alleged fraud.

Between 2009 and 2016, the schemers applied for $35 million in E-rate funding and received $14 million, prosecutors alleged.

“Schools have to fight for every dollar these days to supply their students with the high-tech, expensive equipment and technology they need in this day and age to succeed in life," FBI Assistant Director in Charge William F. Sweeney said in an announcement about the indictments. "The suspects in this investigation allegedly used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts. To add insult to injury, school officials, who see the day-to-day struggle to even find money for pencils and paper, were allegedly involved in the scheme.”

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 defendants pocketed the difference, prosecutors alleged.

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

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).

That money should have gone to technology to improve the education of under-privileged children, prosecutors said.

“These individuals concocted a scheme that not only defrauded taxpayers, but also deprived local students of access to affordable technology equipment and Internet service," Rockland County District Attorney Thomas P. Zugibe said. "In short, the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds. The Rockland County District Attorney's Office will continue to work collaboratively with the U.S. Attorney and FBI to root out fraud and abuse - especially misconduct that impacts children. Offenders must be dealt with swiftly to prevent further fraud of this magnitude from occurring.”

The Journal News reported that the seven named in the indictment were arrested before dawn by members of the FBI and the Rockland County Attorney's Office, who used 300 agents in a massive raid on businesses and schools in 2016.

Both 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.

Wednesday, TJN reporter Steve Lieberman wrote:

The agents hit additional religious schools in Orange County ultra-Orthodox community of Kiryas Joel and made at least one stop the same day in Brooklyn.

SEE: FBI Stages E-Rate Raids in Ramapo