Seven Rockland Residents Sentenced In $14M Yeshiva Fraud Scheme

ROCKLAND COUNTY, NY — Six of the seven people who used yeshivas in Rockland County to steal $14 million from the federal E-Rate program meant for underprivileged children have been sentenced to prison.

Damian Williams, United States Attorney for the Southern District of New York, announced the sentencing of all seven defendants on Monday.

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. 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.

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

"The seven defendants who have now pled guilty in this case sought to steal from our most vulnerable population: economically disadvantaged children," Williams said in the announcement. "The defendants created elaborate schemes with complete disregard for the fact that the money they selfishly stole should have gone towards providing children with much-needed technology to further their education and brighten their future. Each defendant now faces serious penalties for their callous crime."

Under a plea deal in 2020, they had pleaded guilty each to one count of conspiring against the United States. They were sentenced in proceedings held between June 2022 and Feb. 28.

• PERETZ KLEIN, 68, of Spring Valley, was sentenced on June 8, 2022, to 48 months in prison followed by 24 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount.
• BEN KLEIN, 43, of Monsey, was sentenced on October 19, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $412,586.37 and to pay restitution of the same amount.
• MOSHE SCHWARTZ, 50, of Monsey, was sentenced on June 9, 2022, to 27 months in prison followed by 24 months of supervised release and was ordered to forfeit $275,160.00 and to pay restitution of the same amount.
• SIMON GOLDBRENER, 59, of Monsey, was sentenced on November 7, 2022, to 24 months in prison followed by 24 months of supervised release and was ordered to forfeit $479,357.18 and to pay restitution of the same amount.
• SHOLEM STEINBERG, 43, of Monsey, was sentenced on November 7, 2022, to 12 months and one day in prison followed by 24 months of supervised release and was ordered to forfeit $191,423.50 and to pay restitution of the same amount.
• ARON MELBER, 47, of Monsey, was sentenced on February 28, 2023, to nine months in prison followed by 24 months of supervised release and was ordered to forfeit $127,654.55 and to pay restitution of the same amount.
• SUSAN KLEIN, 62, of Spring Valley, was sentenced on June 8, 2022, to time served followed by 12 months of supervised release and was ordered to forfeit $1,144,288.37 and to pay restitution of the same amount.

U.S. District Judge Kenneth M. Karas imposed all sentences.

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. Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period, and every year, requests for E-Rate funds have exceeded funds available. In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor. If approved, the program defrays the cost by up to 90 percent.

The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor then submit a series of certifications that they comply with a number of requirements of the E-Rate program. A school applying for E-Rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E-Rate funded equipment and services.

Some of the schools used in the scheme never received millions of dollars’ worth of these items and services for which the conspirators billed the E-Rate program. In other cases, the schools and the conspirators requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population, prosecutors said.

For example, from 2009 through 2015, one day care center that served toddlers from the ages of 2 through 4 requested over $700,000 – nearly $500,000 of which was ultimately funded – for equipment and services – including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet – from companies controlled by members of the conspiracy.

In still other instances, the schools received equipment and services that fulfilled the functions for which the schools had requested E-Rate funds (such as providing the school with internet access), but the schools and the conspirators materially overbilled the E-Rate program for the items provided in order to enrich themselves at the expense of the underprivileged children the program was designed to serve, prosecutors said.

They also perverted the fair and open bidding process required by the program, prosecutors said. Some who held themselves out as independent consultants working for the schools in truth worked for and were paid by others who controlled vendor companies. They presented the schools with forms to sign or certify, awarding E-Rate funded contracts to companies owned by others in the conspiracy. As a result of false and misleading filings, the schemers received millions of dollars in E-Rate funds for equipment and services that they did not, in fact, provide and which the schools did not use, and the members purporting to act as consultants accepted payments totaling hundreds of thousands of dollars from the vendors, despite falsely presenting themselves as independent of the vendors.

In return for their participation in the scheme to defraud the program, certain schools and school officials received a variety of improper benefits from certain defendants, including a percentage of the funds fraudulently obtained from E-Rate for equipment and services that were not, in fact, provided to the schools; free items paid for with E-Rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E-Rate program does not authorize) installed at the schools; and free services for which the E-Rate program authorizes partial reimbursement (such as internet access) but for which the schools did not – contrary to their statements in filings – make any payment at all.

The Kleins and Steinberg held themselves out as vendors to schools participating in the program. Corporations controlled by these them requested over $35 million in funds and received over $14 million in funds from in or about 2010 to in or about 2016. Each of them 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, prosecutors said.

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

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.

Williams thanked the Federal Bureau of Investigation, the Federal Communications Commission - Office of the Inspector General, and the Rockland County District Attorney’s Office for outstanding work on the investigation.

SEE ALSO:

• Prosecutors Seek Jail Time For E-Rate Fraud Ring: Report
• Plea Deals For Rockland Schemers In $14M Yeshiva E-Rate
• FBI Arrests 7 Over $14 Million Rockland Yeshiva Tech Fraud