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U.S. prosecutors filed a civil fraud lawsuit on Tuesday against Princeton Review alleging that it had claimed millions of dollars in reimbursement for tutoring services that it did not provide in a federally funded program for children who were underprivileged. The lawsuit has also charged a former employee at the company which is well known form providing preparation guides and manuals for competitive examinations like the GRE, GMAT, and SAT.
U.S. Attorney Preet Bharara said in a statement that “The Princeton Review and its employees were supposed to tutor needy students, not cheat a federal program.â€
The Princeton Review had a contract with the New York City Department of Education to provide after-school tutoring for underprivileged children and at underperforming schools. The length of the contract was for eight years, from 2002 to 2010.
Using federal grant money, the city of New York paid the Princeton Review a rate of $35 to $75 per hour for tuitions that were never delivered. The lawsuit alleged that as a contract Supplemental Educational Services provider, Princeton Review managers and aides illegally billed the city by artificially inflating attendance sheets and charging tuition for students who never showed up.
Speaking on behalf of Princeton Review, Denise DesChenes, a company spokeswoman said that the employees involved in the alleged program were no longer with the company. Denise said, “The activity allegedly occurred within the company’s former Supplemental Educational Services division, which the company discontinued in 2010.â€
Allegedly, New York paid the company $38 million between 2006 and 2010. The scam had gone so deep and the fraudsters so irreverent of authority, that the company, Princeton Review, once billed the city of New York for tutoring 74 students at a Bronx school on New Year’s Day, on which there was a holiday and no classes.
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The lawsuit accused that Ana Azocar, the former Princeton Review site manager and director directly encouraged employees to falsify claims, and administrators received bonuses depending upon the attendance rates they produced on paper.
The case is U.S. v. The Princeton Review, Inc, U.S. District Court for the Southern District of New York, No. 09-6876.
