Rockland ringleader of multi-million dollar computer scam gets 4 years, $1.14M penalty
A Spring Valley man has been sentenced to four years in federal prison and must repay $1.14 million for stealing millions of dollars from a federal program designed to provide computer technology to underprivileged school children.
Peretz Klein was considered the ringleader of the scheme involving his wife and five other Ramapo residents, who conspired to rip off the federal E-Rate program, which supplied provided billions of federal dollars to install computers and modern technology in needy schools.
Klein, his wife Susan, Ben Klein, and Sholem Steinberg, of Monsey, acted as vendors, federal prosecutors said, requesting more than $35 million in E-Rate funds and receiving more than $14 million from about 2010 to 2016.
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Judge Kenneth Karas sentenced Susan Klein to time served, one year of supervised release, and ordered her responsible with her husband to pay $1.14 million in restitution, according to documents filed with the U.S. District Court in White Plains.
Peretz Klein, sentenced earlier this month, must report to Otisville Correctional Facility on Aug. 8 and will be supervised for two years after finishing his prison stint, according to documents.
The prosecutors said the seven people convicted "figured out how to game the program, submitting fraudulent invoices in order to get paid for equipment they did not provide, among many other deceptions."
The sentencings of the others involved in the scam are pending. According to a sentencing memorandum filed by the U.S. Attorney’s Office for the Southern District with Karas, prosecutors recommended the following sentences:
Simon Goldbrener: 37 months with a fine of $10,000 to $100,000 and one to three years of supervised release
Moshe Schwartz: three years with a fine of $10,000 to $100,000 and one to three years of supervised release
Ben Klein: 2.25 to 2.75 years with a fine of $10,000 to $100,000 and one to three years of supervised release
Ari Melber: 1.5 to 2 years with a fine of $7,500 to $75,000 and one to three years of supervised release
Steinberg: two to three years with a fine of $10,000 to $100,000 and one to three years of supervised release
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."
Peretz Klein profited far more than any other defendant and paid others, such as Schwartz and Goldbrener, hundreds of thousands of dollars to further his scheme, according to prosecutors.
"He did all this so that he and his family could enjoy a comfortable lifestyle by depriving underprivileged schoolchildren of the technology they needed to prepare for the information age," the memorandum states.
The investigation burst into public view in March 2016 when hundreds of FBI agents, Rockland District Attorney's Office detectives, and local police descended on ultra-Orthodox private schools and companies, 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.
Peretz Klein once ran the Bridgestone Group LLC in 2012 and 2013 and faced 144 infractions of the New York City health code for a 46-unit apartment building at 1645 Grand Ave. in the Bronx, according to the New York City Public Advocate's Office.
Ben Klein was at the center of a political squabble in 2007 over his transfer from a Pennsylvania jail to serve most of his sentence closer to his family in Rockland. During the 2007 Rockland County sheriff's race, challenger Tim O'Neill accused incumbent James Kralik and his jail chief of helping facilitate Klein's 2005 transfer from Pennsylvania, where he was serving a nearly one-year term for vehicular homicide, to the Rockland County jail. Kralik, who has since passed away, denied the accusations.
This article originally appeared on Rockland/Westchester Journal News: Rockland E-Rate scam ringleader Peretz Klein sentenced
