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Ed. Co. Operator Pays for Fraud

Took Cash For Special Needs, Pre-K Programs

The owner of an educational services company was sentenced in Manhattan federal court last week to 24 months in prison and over $2 million in forfeiture and restitution for defrauding the state Education Department (NYSED) and the city Department of Education (DOE) out of millions of dollars.

As announced by U.S. Attorney for the Southern District of New York Preet Bharara, Cheon Park pled guilty in March 2014 to one count of mail fraud before U.S. District Judge J. Paul Oetken, who also imposed the sentence.

In addition to his prison term, Park, 46, of Manhasset, L.I., was ordered to forfeit $1,924,318, representing the proceeds of the crime, as well as pay restitution in the amount of $2,151,318. Last week, Park paid to the United States Marshals Service the entirety of the forfeiture amount. He was also sentenced to pay a $100 special assessment.

“Cheon Park lined his pockets with millions of dollars meant to provide important services for special-needs children,” Bharara said last Thursday, Sept. 4. “Today, he was made to pay for his crimes through federal prison time and restitution in the millions of dollars. We will continue to do everything in our power to pursue and prosecute those who defraud the government, particularly those who shamelessly siphon scarce public money away from some of the city’s most vital programs.”

According to the information, an earlier criminal complaint, and statements made at court proceedings, between 2005 and 2012, Park deliberately inflated the amount of compensation Bilingual SEIT, a company he owned and operated, paid certain of its employees and contractors.

He also misrepresented the type of work performed by certain employees on annual certified consolidated fiscal reports (CFRs) and financial statements submitted to the NYSED and DOE.

Park owned and operated Bilingual SEIT from at least 2005 to 2012. It operated out of five locations in Manhattan, Queens and Brooklyn.

During that time, Bilingual SEIT had a contract with the DOE to provide publicly funded special education services and preschool programs to New York City schoolchildren aged three to five with physical, emotional, and/or developmental disabilities. Specifically, Bilingual SEIT received funding to provide: (1) special education itinerant teacher, commonly referred to as SEIT, services; (2) special education classes in a centerbased setting for preschool students with special needs; (3) individual evaluations for preschool students with disabilities; and (4) physical, occupational, and/or speech therapy for preschool students who qualified for such services.

During the seven-year period that Bilingual SEIT was under contract with the DOE, it claimed reimbursement for and received approximately $94.5 million in federal, New York State, and New York City funds to provide the services described above.

In order to receive such money, Park was required to file a CFR on behalf of Bilingual SEIT supported by audited financial statements with the NYSED. The CFR and audited financial statements represented the costs that Bilingual SEIT had incurred the previous year and the justification for those costs, and included compensation Bilingual SEIT purported to pay its employees and contractors.

Each year, Park signed the certification pages for the CFRs filed with the NYSED, which relied on the CFR and audited financial statements in determining the amount of public funds to pay Bilingual SEIT per student for the services Bilingual SEIT provided to New York City preschool students.

Beginning in approximately June 2011, the New York State Comptroller’s office conducted an audit of Bilingual SEIT to determine whether the costs reported by Bilingual SEIT on the CFRs for the years July 2007 through 2009 were properly calculated, justified, and allowable under guidance issued by the NYSED.

In July 2012, the comptroller issued a report that concluded that nearly $1.5 million of the costs that Park certified for the two-year audit period should have been disallowed, including money paid to 26 employees whose time and attendance could not be substantiated. As a result of the comptroller’s report, the DOE cancelled Bilingual SEIT’s classes and declined to renew its contract with Bilingual SEIT.

In fact, Park engaged in several schemes designed to inflate the costs Bilingual SEIT represented it incurred, resulting in more public money for Bilingual SEIT, much of which, as set forth below, was kicked back to Park.

Park fraudulently received funds from New York State and New York City to pay multiple individuals who performed little or no work for Bilingual SEIT. At Park’s request and direction, these individuals then kicked back as much as 50 percent of the salary they fraudulently received from Bilingual SEIT to Park.

Park also fraudulently received funds from New York State and New York City to deliberately overpay other individuals who worked for Bilingual SEIT. At Park request and direction, these individuals also kicked back a portion of the overpayment to Park on a regular basis.

Further, in addition to receiving kickbacks, Park used Bilingual SEIT funds for his personal benefit in other ways. Park arranged for Bilingual SEIT to pay his ex-wife and ex-sisterin law for work they did not perform, and also arranged for Bilingual SEIT to pay for tutoring for Park’s children and for a Bilingual SEIT employee to clean Park’s home twice a week.

Bharara praised the investigative work of the Office of the State Comptroller, the Special Commissioner of Investigation for New York City’s Department of Education, and the Office of Inspector General for the United States Department of Education. He also thanked the Queens County District Attorney’s office for its assistance.

This case is being prosecuted by the office’s Public Corruption Unit. Assistant United States Attorneys Paul Krieger and Martin Bell are in charge of the prosecution.

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