Princeton Review Sued by Federal Government

Princeton Review offers cheap SAT prep courses, gets enrollment high, then apparently forges signatures saying the kids never dropped out of the course to collect $75 an hour per student for SAT prep. One kid was in Mexico on a family cacation when his signature "magically" appreader on the sign in sheet.

http://www.huffingtonpost.com/2012/05/02/princeton-review-sued-by-_n_1471006.html

PREETBHARARAUnitedStatesAttorneyfortheSouthernDistrictofNewYorkBy:CHRISTOPHERB.HARWOODAssistantUnitedStatesAttorney86ChambersStreet,ThirdFloorNewYork,NewYork10007Telephone:(212)637-2728Facsimile:(212)637-2786Email:christopher.harwood@usdoj.gov UNITEDSTATESDISTRICTCOURTSOUTHERNDISTRICTOFNEWYORK Plaintiff, ---------------------------------------------------------------x UNITEDSTATESandSTATEOFNEWYORKexrel.JANEDOE,v.THEPRINCETONREVIEW,INC.andSTEPHENGREEN,09Civ.6876(BSJ)Defendants. COMPLAINT-IN-INTERVENTION -------~-------------------------------------------------------x OFTHEUNITEDSTATES UNITEDSTATESOFAMERICA, OFAMERICA Plaintiff, JuryTrialDemanded v.THEPRINCETONREVIEW,INC.andANAAZOCAR,Defendants. ---------------------------------------------------------------x TheUnitedStatesofAmerica(the"UnitedStates"orthe"Government"),byitsattorney,PreetBharara,UnitedStatesAttorneyfortheSouthernDistrictofNewYork,bringsthisactionagainstThePrincetonReview,Inc.("PrincetonReview")andAnaAzocar("Azocar"),aformer employeeofPrincetonReview(collectively,"Defendants"),alleginguponinformationandbeliefasfollows: INTRODUCTION 1.ThisisacivilfraudsuitbroughtbytheUnitedStatesagainstPrincetonReview,aleadingproviderofeducationalproductsandservices,andAzocar,aformeremployeeofPrincetonReview,forPrincetonReview'sbillingandobtainingGovernmentfundsforthousandsofhoursoftutoringservicesthatPrincetonReviewneverinfactprovided.Between2006and2010(the"CoveredPeriod"),PrincetonReviewwaspaidtensofmillionsofdollars-infederalfundspursuanttotheElementaryandSecondaryEducationActof1965,asamendedbytheNoChildLeftBehindActof2001-forpurportedlyprovidingtutoringservicestounderprivilegedstudents.Infact,however,PrincetonReviewwasrepeatedlybillingforstudentswhoneverreceivedtheseservices.ManyofthePrincetonReviewemployeeswhowereresponsibleforoverseeingtheday-to-dayoperationsofPrincetonReview'stutoringprogramroutinelyfalsifiedstudentattendancerecordstomakeitappearasthoughmorestudentshadattendedtheprogramthanhadactuallyattended.Theseemployeesdidthisbecausetheywerepressuredbytheirsupervisorstomaintainhighdailystudentattendance.Moreover,someoftheseemployeesfalsifiedstudentattendancerecordsatthedirectionand/orurgingofAzocar.DuringtheCoveredPeriod,andasaresultofthesefalsifiedattendancerecords,PrincetonReviewsubmittedfalsecertificationstotheNewYorkCityDepartmentofEducation(the"NYCDOE")statingthattheinvoicesitwassubmittingforitstutoringserviceswere"trueandaccurate"eventhoughtheywerenot.ThesefalsecertificationsmisledtheNYCDOEintopayingPrincetonReviewmillionsofdollarsfortutoringservicesthatPrincetonReviewhadnotinfactprovided. 2 2.DuringtheCoveredPeriod,PrincetonReviewwasaproviderofSupplementalEducationalServices("SES")inNewYorkCity.Assuch,PrincetonReviewprovidedafter-schooltutoringtounderprivilegedstudentsattendingunderperformingpublicschoolsinNewYorkCity.Inexchangeforprovidingthesetutoringservices,theNYCDOEpaidPrincetonReviewafixedamountofmoneyperhourforeachstudentthatPrincetonReviewtutored.ThismoneyconsistedentirelyoffundsprovidedtoNewYorkStatebythefederalGovernmentundertheElementaryandSecondaryEducationActof1965,asamendedbytheNoChildLeftBehindActof2001.3.DuringtheCoveredPeriod,PrincetonReviewenteredintocontractswiththeNYCDOE.Pursuanttothesecontracts,PrincetonReviewwasrequiredtorecordattendanceateachofitsSEStutoringclassesonadailybasis.Foreachtutoringclass,PrincetonReviewwasrequiredtohaveeachstudentwhoattendedsigninandsignoutonastandardattendanceform.Asaconditionofgettingpaidforitstutoringservices,PrincetonReviewwasrequiredtocertifytotheNYCDOEthatitsattendancerecordswere"trueandaccurate."4.ManyofthePrincetonReviewemployeeswhooversawtheday-to-dayoperationsofPrincetonReview'sSESprogram,however,didnotaccuratelykeeptrackofdailystudentattendance.Rather,theyroutinelyfalsifiedentriesonPrincetonReview'sdailystudentattendanceformstomakeitappearasthoughmorestudentshadattendedtheprogramthanhadactuallyattended.Theseemployees("SiteManagers")werepressuredbytheirsupervisors("Directors")tomaintainhighdailystudentattendance,includingbybeingthreatenedwithterminationand/orhavingtheirpaycut.Moreover,Azocar(aDirector)instructedand/orencouragedsomeoftheseSiteManagerstofalsifyentriesonthedailystudentattendanceforms,includingbysigninginforabsentstudents.3 5.DuringtheCoveredPeriod,PrincetonReviewhadanincentivecompensationsystemthatencouragedthefalsificationofstudentattendancerecords.PrincetonReviewpaidDirectorssubstantialbonusesiftheSiteManagerstheysupervisedconsistentlyreportedhighdailystudentattendance.Forexample,Azocarwaspaidbonusesof$9,600and$6,600in2008and2009,respectively,becausetheSiteManagersshesupervisedconsistentlyreportedhighdailystudentattendance.Directorsthereforehadastrongincentivetopressureand/orinstructtheirSiteManagerstofalsifyentriesonthedailystudentattendanceforms,andSiteManagersinturnhadastrongincentivetofalsifysuchentries-theywantedtokeeptheirjobsandnothavetheirpaycut.6.PrincetonReview'sdailystudentattendanceformsfromtheCoveredPeriodarerepletewithfalsifications.Forexample,thereareinstanceswherethestudents'allegedsignatureslooknothingliketheiractualsignatures.Therearealsoinstanceswherethestudents'allegedsignatureschangeinappearancefromclasstoclass.Inaddition,thereareinstanceswherethestudents'allegedsignaturescontainmisspellings.Inonesuchinstance,thefirstname"Dontae"wasmisspelled"Donate."Moreover,thereareinstanceswhereparentshaveconfirmedthattheirchildrendidnotattendPrincetonReview'sSESclassesonspecificdayswhenthechildren'spurportedsignaturesappearondailystudentattendanceforms.OneparenthasstatedthatherchildwasinMexicoonafamilyvacationonfourdayswhenthechild'spurportedsignatureappearsondailystudentattendanceforms.Thechild'spassportconfirmsthatthechildwasinfactinMexicoonthefourdates.Anotherparenthasstatedthatherchildwasathomerecuperatingfromsurgeryonthreedayswhenthechild'spurportedsignatureappearsondailystudentattendanceforms.Theparenthasacopyofadoctor'snoteexcusingthechildfromschoolonthesethreedates. 4 7.PrincetonReviewusedthesefalsifieddailystudentattendanceformstoprepareinvoicesthroughwhichitbilledtheNYCDOEforitsallegedtutoringservices.PrincetonPrincetonReviewcertifiedthattheinformationontheinvoicewas"trueandaccurate."ReviewsubmittedtheseinvoicestotheNYCDOEonamonthlybasis.Foreachsuchinvoice,Notwithstandingthesecertifications,most,ifnotall,ofthemonthlyinvoicescontainedfalseinformation;theinvoicesbilledtheNYCDOEforthousandsofhoursofSEStutoringthatPrincetonReviewneveractuallyprovided.Asaresultofthesefalseinvoices,PrincetonReview8.Notably,therearethousandsofinstancesduringtheCoveredPeriodwherewaspaidmillionsofdollarsfortutoringservicesthatPrincetonReviewneverinfactprovided.PrincetonReviewbilledtheNYCDOE-andwaspaidbytheNYCDOEusingfederalfunds-forprovidingtutoringservicestostudentsondayswhenthestudentswereabsentfromschoolsuchinstances.orwhenschoolwasclosed.Indeed,fortheperiod2006-2010,thereareapproximately19,0009.TheUnitedStatesseekstrebledamagesandpenaltiesundertheFalseClaimsAct("FCA"),31U.S.C.§§3729, etseq., formoneypaidtoPrincetonReviewfortutoringservicesthatPrincetonReviewdidnotprovide. , JUlUSDICTIONANDVENUE 10.ThisCourthasjurisdictionpursuantto31U.S.c.§3730(a),28U.S.C.§§1331and1345,andtheCourt'sgeneralequitablejurisdiction.11.Venueisappropriateinthisjudicialdistrictpursuantto31U.S.C.§3732(a)and28U.S.C.§§1391(b)and(c),becausePrincetonReviewtransactsbusinesswithinthisdistrictandthereforeissubjecttopersonaljurisdictioninthisdistrict.Inaddition,thefraudulent 5 activitiesofDefendantsthatgaverisetothisaction,andthatareallegedinthiscomplaint,tookplacewithinthisdistrict. PARTIES 12.PlaintiffistheUnitedStatesofAmerica.13.DefendantPrincetonReviewisaDelawarecorporationwithitsprincipalofficeslocatedat 111 SpeenStreet,Framingham,Massachusetts01701.DuringtheCoveredPeriod,PrincetonReviewalsomaintainedofficesinNewYorkCityat160VarickStreet,NewYork,NewYork10013.14.PrincetonReviewwasfoundedin1981toofferpreparationcoursesfortheScholasticAchievementTest(the"SAT").Today,PrincetonReviewbillsitselfasaleadingproviderofin-person,onlineandprinteducationalproductsandservices.15.DuringtheCoveredPeriod,PrincetonReviewprovidededucationalproductsandservicesthroughfourdivisions:(1)theHigherEducationReadinessdivision,throughwhichPrincetonReviewprovidedin-personandonlinetestpreparationcoursesfor,amongotherstandardizedtests,theSAT,theGraduateManagementAdmissionsTest,andtheLawSchoolAdmissionsTest;(2)thePennFosterdivision,throughwhichPrincetonReviewoperatedthePennFosterEducationGroup,whichprovidesonlinedegreeandvocationalprogramstostudentswithintheUnitedStatesandabroad;(3)theCareerEducationPartnershipsdivision,throughwhichPrincetonReviewenteredintostrategicrelationshipswithcollegesandotherinstitutionsofhighereducationtoenhancetheirabilitytoprovideonlinecoursesandprograms;and(4)theSupplementalEducationalServicesdivision(the"SESdivision"),throughwhichPrincetonReviewprovidedtutoringservicestounderprivilegedstudentsatunderperformingschoolsthroughoutthecountry.PrincetonReviewcloseditsSESdivisionandexitedtheSESbusiness6 afterthe2009-2010academicyear.TheallegationsinthissuitrelateexclusivelytoPrincetonReview'sprovisionofSEStutoringinNewYorkCityfrom2006to2010.16.DefendantAnaAzocarisaformeremployeeofPrincetonReview.From2006-2010,AzocarwasemployedwithinPrincetonReview'sNewYorkCitySESdivision.Duringthe2006-2007academicyear,AzocarwasaSiteManager.Thereafter,duringtheacademicyears2007-2008to2009-2010,AzocarwasaDirector.AzocarcurrentlyresidesinNewYork FACTS County,NewYork. I.BACKGROUNDA.THESTATUTORYFRAMEWORKGOVERNINGTHEPROVISIONOFSES 17.TheNoChildLeftBehindActof2001(the"NCLBAct"),20U.S.C.§6301, et seq., wasacomprehensivereformoftheElementaryandSecondaryEducationActof1965(the"ESEA"),thefederalspendingprogramthatprovidesfundstoassisttheStatesandtheirlocaleducationalagencies("LEAs")intheeducationofelementaryandsecondaryschoolchildren.TitleI,PartAoftheESEA,asamendedbytheNCLBAct,providesfederalgrantstoassisttheStatesandtheirLEAsinimprovingtheacademicachievementofdisadvantagedstudents,andinensuringthatallstudentsmeethighacademicstandards.18.TitleIfundsaredistributedtotheStatesbytheUnitedStatesDepartmentofEducation("USDOE").Stateeducationalagencies,inturn,allocateTitleIsub-grantstoLEAs.Forexample,theUSDOEallocatesTitleIfundstotheNewYorkStateEducationDepartment(the"NYSED"),which,inturn,allocatesfundstoitsLEAs,oneofwhichistheNYCDOE.ThevastmajorityofTitleIfundsreceivedbyLEAsareallocatedtoTitleIschoolstobeusedattheschool-levelforactivitiesdesignedtoimprovestudentachievement.7 19.LEAs_.suchastheNYCDOE-mayuseaportionoftheirTitleIallocationtopayforSES.SESmayincludeafter-schooltutoring,aswellasremediationandothersupplementalacademicenrichmentservices. B.THEPROVISIONOFSESTUTORINGINNEWYORKCITY 20.InaccordancewiththeESEA,asamendedbytheNCLBAct,theNYCDOEentersintocontractswithentitiesthatareapprovedbytheNYSEDtoprovideSEStutoringandareselectedbyparentsofeligiblestudentstoprovideSEStutoringtotheirchildren(collectively,"SESproviders").StudentsareeligibletoreceiveSEStutoringifthey: (l) arefromlow-incomefamilies;and(2)attendaTitleIschool (i.e., aschoolthatreceivesfundsunderTitleI,PartAoftheESEA)thatisinitssecondyearofbeingidentifiedforimprovement,correctiveaction,orrestructuring.21.ParentsofeligiblestudentsreceivealistofallSESproviders.EachparentmayselectfromthislistoneSESprovidertoprovideSEStutoringtohisorherchild.OnceaparentselectsanSESproviderforhisorherchild,thechildisthenenrolledinthatparticularprovider'sSESclasses.22.SESprovidershireteacherstoprovideSEStutoringtothestudentsenrolledintheirSESclasses.SESprovidersareultimatelyresponsibleforoverseeingtheSESteachersandforensuringthattheirSESprogramsareadministeredproperly.23.TheNYCDOEpaysSESprovidersforeachstudenttheytutorwithfundsprovidedtotheNYSEDbythefederalGovernmentunderTitleI,PartAoftheESEA,asamendedbytheNCLBAct. 8 24.EachSESproviderispaidafixedhourlyrateforeachstudentittutors.ThisfixedhourlyrateisnegotiatedbetweentheSESproviderandtheNYCDOEandissetforthinacontractbetweentheparties.25.SESprovidersbilltheNYCDOEforthetutoringservicestheyprovideonamonthlybasis.26.Sinceatleast2006,theNYCDOEhasrequiredthatSESprovidersregularlymaketwo,distinctcertificationsinconnectionwiththeirprovisionofSEStutoring.First,onadailybasis,SESprovidersmustrecordstudentattendanceateachoftheirtutoringclasses,andcertifythateachday'sattendancerecordsareaccurate.Second,whenSESproviderssubmitinvoicestotheNYCDOEforthetutoringservicestheyhaveprovided,theymustcertifythattheinvoicesaretrueandaccurate (i. e., thattheSESprovidersinfactprovidedthetutoringservicesforwhichtheyarebilling). 1. DailyStudentAttendanceCertifications 27.Foreachtutoringclasssinceatleast2006,SESprovidersservingstudentsinNewYorkCityhavebeenrequiredtorecordstudentattendanceonaformtitled,"SupplementalEducationalServicesStudentSign-In"(the"DailyStudentAttendanceSheet").TheDailyStudentAttendanceSheetisastandardformapprovedbytheNYCDOE.AcopyofaredactedDailyStudentAttendanceSheetisattachedtothiscomplaintasExhibitA.PrincetonReviewusedtheDailyStudentAttendanceSheettorecordstudentattendancethroughouttheCoveredPeriod.28.TheDailyStudentAttendanceSheetcontainsthreesections.Thefirstsection-locatedatthetopofeachDailyStudentAttendanceSheet-islabeled,"SessionDetails."ThissectioncontainsabasicdescriptionoftheSESclass,includingthenameoftheSESprovider,the9

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