Seven New York state residents who scammed E-Rate program sentenced

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WHITE PLAINS, N.Y – Seven New York state residents have been sentenced for stealing millions of dollars from a federal program designed to provide computer technology to underprivileged schoolchildren.

U.S. Attorney Damon Williams tallied up the sentences Tuesday of the six men and one woman who pleaded guilty to defrauding the federal “E-Rate” program.

They admitted to conspiracy to commit wire fraud and conspiring against the United States. Judge Kenneth Karas sentenced them during proceedings held between June 2022 and Tuesday.

FBI seizes evidence during 2016 raids

The E-Rate investigation in Rockland County burst into public view in March 2016 when hundreds of FBI agents, Rockland District Attorney’s Office detectives, and police descended on ultra-Orthodox private schools and companies in Ramapo, New York, seizing payment records, equipment and other documents.

The FBI-led raids were part of an investigation into whether local yeshivas properly spent money obtained through the E-Rate program, overseen by the Universal Service Administration Co. for the Federal Communications Commission. The program came into existence in 1998 and allocates more than $4 billion annually for computer and internet access across the nation.

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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.

In connection with E-Rate funds provided to private religious schools in Rockland, the following people were sentenced:

Peretz Klein, 68, was sentenced to 48 months in prison in July and must repay $1.14 million for stealing millions of dollars from the program. He was considered the ringleader of the Rockland gang. He was sent to Otisville Correctional Facility and will be supervised for two years after finishing his prison stint, according to documents.
Moshe Schwartz, 50, was sentenced to 27 months in prison, 24 months of supervised release, and must forfeit $275,160 and pay restitution of the same amount.
Ben Klein, 43, was sentenced to 27 months in prison. 24 months of supervised release and must forfeit $412,586.37 and pay restitution of the same amount.
Simon Golbrener, 59, was sentenced to 24 months and 24 months of supervised release and must forfeit $479,357.18 and pay restitution of the same amount.
Sholem Steinberg, 43, was sentenced to 12 months and one day in prison. and 24 months of supervised release and must forfeit $191,423 and pay restitution of the same amount
Aaron Melber, 47, was sentenced to nine months in prison, followed by 24 months of supervised release, and must forfeit $127,654. and pay restitution of the same amount.
Susan Klein, 62, was sentenced to time served with 12 months of supervised release and must forfeit $1,144,288.37 and pay restitution of the same amount. She is married to Peretz Klein.

“The seven defendants who have now pled guilty in this case sought to steal from our most vulnerable population: economically disadvantaged children,” Williams said on Tuesday. “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.”

The sentencing and pleas had been delayed due to the COVID-19 pandemic.

Authorities outline the conspiracy

Williams said the seven people convicted perverted the fair and open bidding process required by the E‑Rate program. The defendants who held themselves out as independent consultants working for the schools in truth worked for and were paid by other defendants who controlled vendor companies.

Peretz Klein, his wife Susan, Ben Klein, and Steinberg held themselves out as vendors to schools participating in the E‑Rate program. Corporations controlled by these defendants requested over $35 million in E‑Rate funds and received over $14 million in E‑Rate funds from in or about 2010 to in or about 2016.

Goldbrener and Schwartz passed themselves off as consultants who worked for educational institutions, supposedly helping schools participate in the E-Rate program, according to federal prosecutors in their sentencing memorandum.

They admitted in court that they were paid hundreds of thousands of dollars by Peretz Klein and other 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.

Melber worked for a private religious school in Rockland that participated in the E-Rate program. Melber admitted he filed false certifications claiming to have obtained authorized E-Rate-funded equipment and services from vendors selected through a fair and open bidding process.

The memorandum stated Peretz Klein ran a web of shell companies and supervised more than a dozen employees carrying out the fraud, which he repeated for years.

For example, prosecutors wrote, when a confidential informant went to one local yeshiva they learned the preschool program for children 2 to 5 years old does not use information technology for instructional purposes Nevertheless, from funding years 2009 through 2015, the school sought over $1.1 million in E-Rate funding – more than $700,000 in connection with Peretz Klein’s companies.

“They robbed students of technology needed to prepare for a digital world in order to enrich themselves and their families,” the prosecutors wrote. “And, when they lied to steal that money, they broke the law.”

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