Federal prosecutors say The Princeton Review, a leading test-preparation company, fraudulently claimed "millions of dollars" of federal money for tutoring services it never provided to hundreds of underprivileged students in New York City.
The U.S. Department of Education's Office of Inspector General and New York State announced Tuesday that a civil fraud lawsuit was filed in federal court against The Princeton Review and its former employee-director Ana Azocar. The governments seek punishments and damages under the False Claims Act. (Read the full complaint below).
According to the suit, a city investigation found misconduct in 2006, but the company continued to submit and receive false claims between 2006 and 2010, when the company closed its school tutoring division, for reimbursement under the federal Supplemental Education Services tutoring program.
The initiative, mandated for low-performing students at underperforming schools under the federal No Child Left Behind law, provides reimbursement to providers based on the volume of students tutored. Princeton Review's documentation of students served were sign-in sheets from tutoring sessions, and tutoring supervisors -- like Azocar -- were given bonuses if attendance was high.
But the company and some of its employees forged student signatures, falsified sign-in sheets and provided fake certifications to "deceitfully profit from a well-meaning program," the United States attorney in Manhattan, Preet Bharara, said in a statement Tuesday. The program was paid between $35 and $75 an hour for each student it claimed to tutor.
The suit argues that the company's bonus system incentivized fraud, and supervisors pressured site managers to falsify numbers, as evidence shows "obvious" forgeries and falsifications. Azocar, the suit alleges, was paid bonuses of $9,600 and $6,600 in 2008 and 2009, respectively.
Below: A chart from the lawsuit shows how often Princeton Review claimed reimbursements for tutoring services for students who were absent or when school was closed, and how much was paid from the federal fund to the company.
Princeton Review does not currently serve all city schools, though some have hired the company to provide test prep courses for exams like the SAT, according to GothamSchools. More than 100 other companies are eligible to offer Supplemental Education Services tutoring to students in New York City as the number of eligible students increased this year while an unprecedented number of schools failed to meet federal performance benchmarks.
In a statement Tuesday, the Princeton Review did not deny the claims but noted that the alleged improprieties are in the company's past -- and ended when its Supplemental Educations Services division was discontinued in 2010. The company says it is working with prosecutors to resolve the charges and none of the employees or executives involved in the program are still with the company.
Alleged dishonesty associated with Princeton Review's bonus incentives is reminiscent of widespread cheating among Atlanta Public School educators, in which teachers and school administrators said they were pressured to maintain high scores under No Child Left Behind, as student performance on standardized exams is tied to school funding and teacher performance assessments. A number of school districts offered bonuses to teachers who had students with significant gains to testing scores. An investigation into the scandal found that Atlanta Public Schools officials created a culture of "fear, intimidation and retaliation."
But the overhead pressure wasn't unique to Atlanta. School districts from Washington, D.C. to Pennsylvania to Texas to California saw similar problems, often identified by test erasure analyses, as investigations launched in systems across the country.
A Detroit Free Press survey last July reported that nearly 30 percent of public school educators say pressure to cheat on standardized exams is a problem at their schools, particularly at schools that don't meet federal standards, where 46 percent say cheating is an issue.
To lessen the strain of a one-size-fits all approach to student assessments, the Education Department has issued waivers to 11 states, allowing them more freedom from No Child Left Behind -- the Bush-era law that requires annual testing, results of which are tied to consequences for low-performing schools. States that seek waivers from the Obama administration are required to adhere to a measurement, curriculum and assessment plan proposed during the application process. An additional 26 states have applied for waivers.