Kiryas Joel Also Targeted In FBI E-Rate Raids; Program Has Long Been Abused, Insiders Say

The FBI raids that targeted more than twenty addresses in Ramapo and Brooklyn last week reached as far north as Orange County, with two locations in Kiryas Joel also targeted by federal agents.

According to News 12 reports, agents carried out raids at one address on Filmore Court in the heart of Kiryas Joel and another on Zlotchev Way, a cul de sac adjacent to the Quickway. The Kiryas Joel raids took place at the same time as the searches in Ramapo last Wednesday afternoon.

The online E-Rate database lists only seven of the many private schools in Kiryas Joel as program participants, with no raids taking place at the top three E-Rate recipients in the village, United Talmudical Academy, Congregation Bnai Joel and Sheri Torah, which received over $11.2 million in federal funding under the program over the last 18 years.

Many questions have been raised, however, about why schools that vehemently oppose computers and internet have been recipients of technology funding.

The FBI confirmed that over 300 agents and officers were involved in last week’s raids, as reported by The Journal News. 22 of those searches took place in Ramapo but little information has been released regarding the operation.

A U.S. Attorney’s office statement confirmed that the searches were conducted a part of an ongoing fraud investigation but that information about the raids would only be released if and when charges were filed in the matter.

The E-Rate program was created by President Bill Clinton in 1996, at a time when schools were just beginning to take advantage of the technology boom and less than 15 percent of elementary and high schools had internet access.

Part of the 1996 Telecommunications Act, it was funded by fees charged to interstate and international telecommunications service providers in order to subsidize affordable telecommunications and internet services to economically disadvantaged schools nationwide.

Currently run by the non-profit Universal Service Administration Co. for the Federal Communications Commission, the program provides 20 to 90 percent of the costs of eligible services to qualifying schools.

The E-Rate program has been the subject of much controversy and a magnet for fraudsters for years.

From its earliest days, the program was dogged by legal challenges from eleven states and six telecommunications companies and reports of misuse have continued for years.

A 2005 CNET reported that Puerto Rican school officials took advantage of $101 million in E-Rate funding over a six year period ending in 2004 but only managed to wire nine of the island’s approximately 1,500 schools, earning the commonwealth’s secretary of education Victor Fajardo-Velez three years in prison and a $4 million fine.

Chicago public schools were found to have improperly stockpiled more than $8 million of equipment that was never installed and sometimes double-billed.

Computer company NEC paid more than $21 million in fines and free services after being charged with both fraud and price-rigging in connection with the E-Rate program in the San Francisco Unified School District as well as several others.

According to the Christian Science Monitor, an Atlanta school district spent $73 million in federal funding without seeking competitive bids, with one local newspaper reporting that the entire amount was “misspent or mismanaged.”

Some critics say that by offering a 90 percent discount, the program encourages schools to overspend on equipment they don’t need because they are spending so little out of pocket.
“If you bumped their portion to 25 to 30 percent, they would have a bigger stake,” said Jeannene Hurley, Michigan E-Rate coordinator.

“If they had more invested, they might think more about getting that multimillion-dollar server.”

Others say that the structure of the entire E-Rate program is flawed, with Bob Williams of the Center for Public Integrity describing the structure of the corporations involved in the program as “almost a formula for fraud and abuse.”

“E-Rate is the classic example of a program that was begun with good intentions and has found itself suffering from corruption because there wasn’t sufficient oversight,” said Williams.

In its earliest days, E-Rate had a single auditor responsible for monitoring 35,000 applications annually.

Since that time the number has grown and The USAC employs a staff of lawyers to oversee the tens of thousands of applications it receives each year and also has a dedicated whistleblower line where callers can anonymously reported any suspected abuse.

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