Pre-K Provider Stole Millions, State Audit Says

One of New York City’s largest providers of special education services to preschoolers with disabilities illegally diverted millions in taxpayer financing to a girls’ religious school, summer camps and a kosher supermarket owned by the group’s officers and board members, state auditors said on Monday.

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The auditors were unable to confirm that any of the hundreds of children who were supposed to get one-on-one instruction from the agency, Island Child Development Center, ever actually did, said the office of the state comptroller, Thomas P. DiNapoli.

After subpoenaing more than 13,000 checks from the agency’s bank, auditors said they gave up counting after the first 1,549 checks they reviewed turned up $5.8 million in what they said was fraudulent spending over a six-year period when Island Child billed the state and the city more than $27 million.

Mr. DiNapoli’s office called it the largest misappropriation unearthed yet in its inquiry into New York State’s $2 billion special education prekindergarten program. Spending on the program has jumped in recent years, and regulation has not kept pace.

Several proposals for enhanced oversight have been debated as part of the state budget process, though prospects for their approval are not clear.

“To take advantage of taxpayer dollars designated for special-needs children and instead use these moneys for personal gain is reprehensible,” Mr. DiNapoli said in a statement. “New Yorkers deserve greater oversight of these programs.”

As of last April, Island Child was billing taxpayers for providing one-on-one teachers to nearly 200 disabled children ages 3 to 5, records show.

Yet Island Child, in Far Rockaway, Queens, paid nearly $2 million to Bnos Bais Yaakov, a nearby school for Orthodox Jewish girls, of which the auditors said Rabbi Samuel Hiller, the assistant executive director of Island Child, is both dean and an owner. Another $877,000 went to various Jewish summer camps, two of them tied to Mr. Hiller, and more than $330,000 in nonpayroll checks went to Mr. Hiller himself, the auditors said.

Mr. DiNapoli’s office referred its audit to the Queens district attorney’s office, which said it was reviewing the findings.

Mr. Hiller declined to comment. His lawyer, Marc Agnifilo, did not address the details of the audit, but said he intended to work with Queens prosecutors to resolve the investigation.

Auditors said Island Child also bought $344,000 in food, including $73,000 from Super Sol, a kosher supermarket whose founder, Laurence Garber, led Island Child’s board. The special education prekindergarten program prohibits purchases of food.

Auditors cited what they said were many other improper or fraudulent expenses, including $200,000 in construction, $12,000 to two jewelers, $235,000 to credit-card companies, $44,000 to “cash,” and nearly $200,000 to five fictitious workers.

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