Former New York University finance director charged with $3.4 million fraud
By Jonathan Allen
NEW YORK (Reuters) - A former director of finance at New York University was indicted on Monday for what prosecutors described as the defrauding of the school to divert about $3.4 million intended to fund minority- and women-owned businesses.
Cindy Tappe is accused of diverting the money into bank accounts via two shell companies she had created and using at least $660,000 of the funds to renovate her Connecticut home and other personal expenses, including an $80,000 swimming pool.
She drafted false invoices for three subcontractors to submit in order to divert the funds, and the subcontractors took between 3% and 6% without doing any of the contracted work, prosecutors from the Manhattan district attorney's office said.
The remainder of the diverted funds was sent to Tappe's shell companies, High Galaxy Inc and PCM Group Inc, and used to pay legitimate grant-related expenses and to reimburse NYU employees for expenses and services, though without proper school oversight, the indictment said.
Tappe is charged with money laundering, grand larceny, falsifying business records and other fraud charges.
She could not immediately be reached for comment and her lawyer, Deborah Colson, declined to comment.
The fraud began in 2012 soon after Tappe became the director of finance and administration for NYU's Metropolitan Center for Research on Equity and Transformation of Schools and continued until school officials confronted her in September 2018, prosecutors said.
NYU discovered "suspicious activity" by Tappe after it began using a new electronic payment system in 2018, John Beckman, a school spokesman, said in a statement.
Findings by the school's internal audit unit were shared with the New York Department of Education and the New York State Comptroller's office. When confronted, she misled school officials about her relationship with the subcontractors and shell companies, and Tappe left the school, the statement said.
"We are deeply disappointed that an employee abused the trust we placed in her in this way, and we are pleased to have been able to assist in stopping this misdirection of taxpayer money," the statement said.
The funds were intended to go to women- and minority-owned businesses to provided services for English-language learners and students with disabilities in New York schools.
(Reporting by Jonathan Allen; Editing by Bill Berkrot)
