Pennsylvania Man Pleads Guilty In Manhattan Federal Court To Bribing New York City Department Of Education Employee In Furtherance Of $2.7 Million Fraud
FOR IMMEDIATE RELEASE Monday, December 17, 2012
Fraud Scheme Was Based on False Billing for Services to Special Needs Students That Were Never Provided
Preet Bharara, the United States Attorney for the Southern District of New York, announced that NELSON RUIZ pled guilty today to defrauding the New York City Department of Education (“DOE”) out of approximately $2.7 million and to bribing a DOE employee in furtherance of the fraud scheme. RUIZ pled guilty in Manhattan federal court before U.S. District Judge John G. Koeltl.
Manhattan U.S. Attorney Preet Bharara said: “In stealing scarce and precious education resources intended for children with special needs, Nelson Ruiz did an extreme disservice to both the DOE and the children who really do need extra help. We have no tolerance for those who defraud the government and who bribe public officials in furtherance of their schemes.”
According to the Complaint, the Information, the plea agreement, and statements made in court:
From 2008 through June 2012, RUIZ used six companies that he controlled (the “RUIZ Companies”) to bill the DOE approximately $2.7 million for sign language interpretation services. According to the DOE billing forms that RUIZ submitted, the sign language interpretation services were provided between 2008 and June 2012 to 11 New York City public schoolchildren – all of whom had varying special needs, including cognitive, developmental, academic, and language delays (the “11 Students”) – at their schools.
None of the sign language interpretation services for which the DOE paid the RUIZ Companies were ever provided to any of the students. In fact, none of the students actually needed the services that the RUIZ Companies claimed to have provided and for which he received approximately $2.7 million. For example, during the 2010-2011 and 2011-2012 academic years, at least three of the 11 Students were not even enrolled in a DOE school. In addition, from July 2010 through May 2012, RUIZ falsely certified on 75 DOE billing forms that he had provided approximately $200,000 worth of sign language interpreting services to one of the 11 Students, even though that student never received any such services during that period and had not been a New York City public school student since 2009.
Ruiz used students’ personal information, submitted fraudulent DOE applications and billing forms, forged the signatures of at least two students’ parents and seven DOE officials – one of whom had died prior to the date of her forged signature, and another who had retired six years prior to the date of her forged signature.
As part of this scheme, RUIZ also paid hundreds of dollars each month to an employee of the DOE to whom he submitted the fraudulent billing forms for the 11 Students. RUIZ paid these bribes in exchange for the DOE employee’s assistance in, among other things, expediting the processing of and payment to RUIZ for the fraudulent sign language interpretation bills.
RUIZ, 35, of Shohola, Pennsylvania, pled guilty today to one count of mail fraud and one count of bribery concerning programs receiving federal funds. He faces a maximum term of 20 years in prison on the fraud count and a maximum term of 10 years in prison on the bribery count. In addition, RUIZ has agreed to forfeit to the United States a total of $2,720,860, representing the proceeds of the crime, including approximately $275,000 that the Government seized from the RUIZ Companies’ bank accounts at the time of RUIZ’s arrest. RUIZ is scheduled to be sentenced by Judge Koeltl on March 22, 2013 at 10 a.m.
Mr. Bharara praised the investigative work of the New York City Department of Investigation and the Special Commissioner of Investigation for the New York City School District.
This case is being prosecuted by the Office’s Public Corruption Unit. Assistant United States Attorneys Paul Krieger and Alvin Bragg are in charge of the prosecution. Assistant United States Attorney Andrew Goldstein is in charge of the forfeiture aspects of the case.
Here is another case:
Former Consultant To The New York City Department Of Education Sentenced In Manhattan Federal Court To 37 Months In Prison For $1.7 Million Fraud Scheme
FOR IMMEDIATE RELEASE
Tuesday, September 18, 2012
Preet Bharara, the United States Attorney for the Southern District of New York, announced that WILLARD LANHAM, a/k/a “Ross Lanham,” a former consultant to the New York City Department of Education (“DOE”), was sentenced today in Manhattan federal court to 37 months in prison for illegally obtaining $1.7 million in DOE funds that were intended to provide Internet access to New York City Public Schools. LANHAM directed the funds to “Lanham Enterprises,” a company he owned and controlled, but performed no work to justify receipt of the funds. He was convicted in March 2012 of one count of theft concerning a program receiving federal funds and three counts of mail fraud after a six-day jury trial. LANHAM was sentenced by United States District Judge George B. Daniels.
Manhattan U.S. Attorney Preet Bharara said: “The Department of Education entrusted Willard Lanham with the vitally important task of helping young students get connected to the Internet – thereby connecting them to the world around them and the infinite resources that can be found online. Instead, Lanham chose to steal precious dollars from DOE to help underwrite his lifestyle, and he will now pay for his crimes.”
According to the Complaint, Information, and the evidence at trial:
From 2002 through October 2008, LANHAM was a consultant to DOE, responsible for managing multiple major initiatives, including Project Connect, a large-scale cabling, integration, and wireless deployment project designed to provide Internet access to all New York City public school classrooms. During his tenure as a consultant to the DOE, LANHAM was involved in all aspects of managing Project Connect and two other DOE initiatives, responsible for providing oversight and supervision of the various contractors and subcontractors engaged on the projects. Between 2002 and 2008, LANHAM was paid an annual salary of approximately $200,000, for a total of approximately $1.4 million in compensation, all of which was billed to, and ultimately paid for by, DOE.
Without authority, LANHAM unlawfully converted an additional $1.7 million in DOE funds that was intended to be used for Project Connect for his own personal use. He accomplished this in two ways. First, LANHAM orchestrated the hiring of outside consultants (the “LANHAM Consultants”), including his own brother, to work for him on a DOE project that he oversaw, and arranged for Lanham Enterprises to pay these consultants directly. LANHAM also billed a Project Connect subcontractor for work performed by the LANHAM Consultants, which was unrelated to the work the subcontractor was performing for DOE. He billed for the work at a much higher rate than what he had actually paid the LANHAM Consultants, and then pocketed the difference.
Second, LANHAM instructed a subcontractor working on DOE projects he managed to pay a LANHAM Consultant, and to bill Lanham Enterprises for approximately the same amount. LANHAM then used his company to charge another subcontractor a greatly inflated amount for the same work and again pocketed the difference. In both of these circumstances, Lanham Enterprises contributed nothing of value to the work that the LANHAM Consultants performed, other than to submit significantly marked-up invoices for the work that was ultimately paid for by DOE.
In addition, LANHAM affirmatively misled DOE along with the contractors and subcontractors he was responsible for overseeing. For example, LANHAM told certain individuals at DOE that DOE was not paying for the LANHAM Consultants, and that they were being paid for by a DOE contractor.
LANHAM used some of the proceeds from the scheme to fund a lavish lifestyle that included purchasing luxury cars, and purchasing and developing significant real estate holdings on Long Island.
* * *
In addition to the prison term, Judge Daniels sentenced LANHAM, 58, of East Northport, New York, to three years of supervised release and ordered him to pay a $100 special assessment fee. Judge Daniels also ordered Lanham to forfeit $1,727,112.00, and to pay $1,727,112.00 in restitution to the DOE.
Mr. Bharara praised the outstanding investigative work of the New York City Department of Investigation and the Special Commissioner of Investigation for the New York City School District.
This case is being handled by the Office's Public Corruption Unit. Assistant United States Attorneys Brian A. Jacobs and Alvin Bragg are in charge of the prosecution.
TUESDAY, SEPTEMBER 18, 2012, 5:33 PM
The computer consultant who stole $1.7 million while linking city schools to the Internet was sentenced Tuesday to three years in prison.
Willard (Ross) Lanham was motivated by "pure greed" and took advantage of a "bureaucratic mess" to rob from the city Department of Education through an inflated billing scheme, Manhattan Federal Court Judge George Daniels said.
Before sentencing Lanham, 58, on theft and fraud charges, Daniels also whacked the city’s DOE.
“There was absolutely no checks and balances, no procedure to identify and prevent the overbilling that went undetected at DOE,” Daniels said. “It was a crime waiting to happen.”
He added: "It was total chaos. There is no other way to describe it. It gave Mr. Lanham the opportunity to take advantage of that chaos."
In an email, a Department of Education spokeswoman countered that, "Since we first suspected and reported this fraud, we have instituted more stringent oversight and provided additional training to ensure that this doesn’t happen again.”
At the time of Lanham's arrest, it made news as much for details of the crime as for his ex-wife’s blog.
In it, Laura Lanham descibed herself online as the “Yummy Mommy,” who dumped her husband and chronicled her life chasing younger men as a cougar at Long Island nightclubs.
Lanham insisted Tuesday he was totally innocent.
He told the judge he saved the DOE $27 million after he was hired to connect 573 schools and their 28,000 students to the Internet as part of the much-touted "Project Connect."
Lanham called it “disheartening” to have his efforts described as theft.
A jury in March found that from 2002 to 2008, Lanham's company paid three consultants, including his brother, $35 to $75 an hour. He then submitted inflated bills, which the DOE paid out at $200 to $250 an hour
During that time, Lanham made $200,000 a year on top of what he stole, court records show.
Prosecutors said Lanham used the money to fund a lavish lifestyle that included the purchase of luxury automobiles — a Corvette and a Porsche — and real estate, including a $1.1 million home in East Northport, L.I.
Yet Lanham's attorney Stephen Preziosi said his client is broke, and that his house is in foreclosure.
Daniels gave him until Dec. 7 to begin serving his sentence, and ordered him to pay $1.7 million in restitution to the DOE.
Preziosi said Lanham needed the extra time to be a parental figure for his 16-year-old daughter because the girl could not count on her mother, Lanham's ex-wife.
Lanham and his wife Laura divorced this year after a bitter three-year battle that became public when he was arrested last year.