Fraud: FBI Raids Jew Schools

The New Observer
April 2, 2016

More than 300 Federal Bureau of Investigation (FBI) agents have raided dozens of Jewish schools in New York State in connection with a fraud investigation involving the theft of millions of dollars of taxpayer cash.

The FBI investigation is centered on the “E-rate” program, which funds the purchase of technology equipment and Internet service by schools and libraries.

However, the orthodox Jewish schools—Yeshivas—which were the subject of the raids—eschew computers and the Internet, a contradiction which alerted the FBI to malfeasance at the institutions.

 

According to the Jewish Telegraphic Agency (JTA), the FBI raided charedi Orthodox yeshivas and technology vendors that serve them in Brooklyn, Rockland County, and Orange County during March this year, and will announce charges in due course.

FBI agents, search warrants in hand, entered the offices of the yeshivas and vendors in Rockland County and the Williamsburg section of Brooklyn, demanding they account for technology purchases for which they billed the federal government.

Agents were seen walking out with boxes of documents and computer hard drives.

A 2013 investigative report in the New York Jewish Week revealed that the charedi Orthodox yeshivas, particularly chasidic ones, in Rockland County and Brooklyn “disproportionately benefit from the program even though few offer their students or teachers Internet access.”

In 2011, Jewish schools were awarded 22 percent of the E-rate funds in New York State, even though they enroll only 4 percent of the state’s students.

That year, of the $30 million approved for E-rate purchases at almost 300 New York Jewish schools participating in the program, nearly $9 million went to ten Jewish schools.

Those schools, among them United Talmudical Academy in Williamsburg, which was one of those raided, were collectively awarded nearly $9 million in E-rate-funded services.

In the E-rate program, money does not go directly to schools but to the vendors, called “service providers,” who sell the tech equipment and services.

According to the JTA, the charedi Orthodox yeshivas largely work with small Jewish-owned companies whose E-rate contracts are almost exclusively in charedi schools. Many of these companies lacked websites or storefronts, and some had “overlapping owners.”

Hashomer Alarm Systems, for example, one of the Rockland County vendors raided, was the largest E-rate service provider, and won more than $3 million in E-rate contracts—all for Jewish schools, and did more business in the Jewish sector than Verizon, Sprint, and Nextel combined.

As one of the original Jewish Week investigations asked: “How does a community that rails against the Web pull in $30 million in one year for its schools from the E-rate program?”

The Jewish Week report quoted Naftuli Moster, founder of Yaffed, an advocacy group “that seeks to improve the secular education in ultra-Orthodox schools,” as saying that “This problem is only the tip of the iceberg.”

Another report in the Journal News, which is part of the USA Today network, quoted Moster further on the topic:

“E-Rate is a symptom of a much larger problem of how these yeshivas use this (public) money,” said Moster.

“The underlying issue is the lack of oversight, which is what leads to all of this. Lawmakers and government officials share in the blame because they have allowed public funds to flow—unchecked—to yeshivas,” he said.

“They want the votes, so they’re willing to turn a blind eye, until you have FBI raids and arrests.”