TRENTON
– Attorney General Anne Milgram announced
that the former chief executive officer
of High Road Schools of NJ, now known as
New Road Schools of NJ, was sentenced to
state prison today for using the corporation
to fraudulently overbill New Jersey school
districts in excess of $1.3 million in connection
with four private schools it operated in
the state for special education students.
Ellyn
Lerner, 56, of Long Branch, was sentenced
to three years in state prison by Superior
Court Judge Bradley J. Ferencz in Middlesex
County. She also was ordered to pay a fine
of $50,000. Lerner pleaded guilty on June
2 to an accusation charging her with second-degree
misconduct by a corporate official. The
charge resulted from an investigation by
the Division of Criminal Justice Corruption
Bureau.
As
president and CEO of High Road Schools of
NJ, Inc., and a related corporation, Kids
1, Inc., Lerner had responsibility for all
aspects of the administration of the corporations.
Kids 1 is now known as Specialized Education
Services, Inc. and no longer does business
in New Jersey.
In
pleading guilty, Lerner admitted that High
Road, which has its principal offices in
Sayreville, and Kids 1 fraudulently overbilled
New Jersey school districts $1,332,247 between
July 1, 2001 and Oct. 19, 2004 for sending
students to their four special education
schools.
Deputy
Attorney General Robert J. Brass prosecuted
the case. It was investigated by Detectives
Benjamin Kukis and Scott Donlan of the Division
of Criminal Justice Corruption Bureau.
School
districts contract for special education
services through the state Department of
Education. The private schools are paid
according to department regulations based
on their reimbursable costs plus a 2.5 percent
profit. Lerner admitted that High Road and
Kids 1 violated the regulations in order
to increase their reimbursable costs and
profits.
Schools
are required to bill the costs of supplies
and equipment in whole units, and depreciate
amounts over $2,000 over a period of years,
billing only a portion each year. The Corruption
Bureau investigation revealed that Lerner’s
corporations broke down whole units into
multiple, arbitrary amounts under $2,000
to get around the regulations and increase
their reimbursements.
In
addition, the corporations billed districts
in New Jersey for equipment such as computers
and books that were sent to schools owned
and operated by Kids 1 in other states.
Those bills included $250,000 for computers
and textbooks sent out of state during the
fiscal year ending June 30, 2002. In other
instances, the corporations violated the
regulations by billing districts for expenditures
in one year, when the items were not put
into service or received until a later year.
High
Road and Kids 1 previously paid restitution
to the affected school districts totaling
$914,233. As part of the plea agreement,
New Road Schools was required to pay the
remaining balance of $418,024 in restitution
to the school districts, and pay $125,000
to the Division of Criminal Justice to cover
the costs of its investigation and prosecution.
In
addition, New Road Schools entered into
an agreement with the Division of Criminal
Justice requiring, among other things, that
the corporation retain an independent monitor,
approved by DCJ, to review and recommend
changes to New Road’s business policies,
practices and procedures. DCJ can insist
on implementation of any changes and related
training recommended by the monitor. DCJ
will receive reports from the monitor and
an independent auditor. The monitor will
be in place until the final acceptance by
the Department of Education of the New Road
Schools Annual Report for the fiscal year
running from July 1, 2008 through June 30,
2009.
Lerner
was required to divest herself of all interests,
employment and affiliation with New Road
for the duration of her criminal sentence,
including any period of parole or probation.
She also must divest herself with respect
to Specialized Education Services if it
does any business in or with the State of
New Jersey or any of its subdivisions.
High
Road previously operated four schools: (1)
High Road Lower School, which was relocated
from East Brunswick to the corporate headquarters
in the Parlin section of Sayreville; (2)
High Road Upper School, formerly located
in Somerset but moved to Franklin Township;
(3) High Road School of Ocean County in
Toms River; and (4) High Road School of
Bergen County in Lodi, which has ceased
operation. The private for-profit schools
serve numerous school districts throughout
the state, not only those located in their
home counties. Beginning in the 2007-2008
school year, the three remaining schools
were re-named New Road School of Parlin,
New Road School of Somerset, and New Road
School of Ocean County.
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