Comptroller: Cedarhurst Agency Bilked State out of $2.6M

A Cedarhurst-based special education contractor allegedly “inappropriately” charged the state and other entities more than $2.6 million over two years, with some of the money apparently benefitting the relatives of its director, according to the New York State comptroller.

Educational Services, which provides special education services to 375 children ages three to five, failed to provide auditors with the documentation to support salary and wage costs for 50 employees totaling $1,540,082, said the office of Thomas DiNapoli. About $856,800 of this money was allegedly paid to 11 relatives of Executive Director Morty Kramer. The audit says Kramer routinely deposited the paychecks of his two sons into his own personal bank account.

“Waste, fraud and abuse cannot be tolerated in our special education programs, but my auditors keep finding it,” DiNapoli said in a release. “Allowing these abuses to continue deprives children with disabilities of the resources intended for them and threatens the entire private special education program.”

The comptroller’s office has referred the findings to the Manhattan district attorney.

IncludED ceased operations as of April 1, 2011, according to the audit.

The audit also accuses Kramer and his wife of billing $32,359 to the Department of Education for costs that include non-allowable meal expenses, student loan payments and tuition costs, maintenance of their home and airline tickets. Another $15,382 was allegedly charged to the city and state for rent and expenses for the California home of the son of the executive director.

A woman who identified herself as Kramer’s wife told Newsday, “It was very overblown, the numbers were very overblown.”

According to the release, state education department officials “generally agreed with the audit’s findings and intend to seek restitution as appropriate.”

“The state and localities need to improve their management and oversight of special education providers,” DiNapoli said, “to make sure taxpayers get what they’re paying for and students aren’t cheated.”