Head of Bklyn Education Company Providing Special Ed Care to NYC Yeshivas Charged in $2.8M Embezzlement Scheme
Edited by: TJVNews.com
Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Susan A. Frisco, the Acting Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS-OIG”), announced the unsealing of a seven-count Indictment on Wednesday, charging five defendants with participating in schemes to steal millions of dollars from government-funded childcare programs for low-income families, including by stealing proceeds from a fake after-school program that received millions in funding and by using funds to purchase private real estate, items at auction, and a luxury vehicle.
Four of the defendants were arrested Wednesday and will be presented before U.S. Magistrate Judge Robert W. Lehrburger in federal court in Manhattan. Harold Schwartz was arrested and will be presented in the Southern District of Florida. The case has been assigned to U.S. District Judge Jennifer H. Rearden.
U.S. Attorney Damian Williams said: “As alleged, the defendants brazenly participated in schemes that stole from programs meant to benefit society’s most vulnerable members — children — and spent the proceeds of their crimes on items like real estate, cars, and to buy items at auction. Their schemes used children as currency, creating a fake afterschool program and ‘enrolling’ in that program children who never attended it, all so they could line their own pockets. Let me be clear: this Office is committed to rooting out the abuse of government funds intended for the public welfare.”
FBI Assistant Director Michael J. Driscoll said: “Today we allege the defendants operated multiple schemes to enrich themselves by defrauding government-funded childcare programs designed to assist needy families. The FBI remains dedicated to uncovering and eliminating the abuse of government-sponsored programs and ensuring those who exploit programs intended to assist low-income families will be held accountable.”
HHS-OIG Acting Special Agent in Charge Susan A. Frisco said: “The monies that the defendants are alleged to have stolen were intended to support New York families that greatly need financial assistance in securing safe and quality care for their children. HHS-OIG and our law enforcement partners are fervent in our efforts to detect and investigate individuals believed to defraud federally funded childcare programs and deprive deserving enrollees in an attempt to gain personal wealth.”
As alleged in the Indictment unsealed today in Manhattan federal court and statements made in court filings:[1]
Martin Handler, Menachem Lieberman, Harold Schwartz, Isidore Handler, and Ben Werczberger participated in multiple related schemes to steal from and defraud daycares receiving funding from the City of New York’s Administration for Children’s Services (“ACS”) and the U.S. Department of Health and Human Services (“HHS”).
Among their schemes, Martin Handler, Lieberman, Schwartz, and Isidore Handler participated in a scheme to fraudulently claim reimbursement from ACS for the enrollment of children in a fake after-school program purportedly operated by a non-profit daycare provider (“Daycare Provider-1”), resulting in the theft of more than $1,000,000.
Martin Handler and Menachem Lieberman perpetrated another fraudulent scheme against HHS by concealing their secret ownership of Daycare Provider-1, an ostensible “non-profit” entity without any legal owners that has received in excess of $90 million in federal funding since 2009. Martin Handler’s and Menachem Lieberman’s secret ownership of Daycare Provider-1 allowed them to circumvent statutory and regulatory restrictions against less-than-arm’s length partnerships. Martin Handler and Lieberman steered Daycare Provider-1 into partnerships with their respective for-profit daycares (“Daycare Provider-2 and Daycare Provider-3”), that resulted in millions of dollars of federal funding for Daycare Provider-2 and Daycare Provider-3.
Martin Handler, Menachem Lieberman, Harold Schwartz, and Isidore Handler also submitted false information to HHS to hide their fraudulent schemes. In about December 2021, HHS initiated an investigation into Daycare Provider-1 and conveyed allegations that had arisen about Lieberman’s relationship with Daycare Provider-1. The four defendants then conspired to submit a letter to the regional HHS office responding to these allegations that, among other things, falsely denied Lieberman had a less-than-arm’s length relationship with Daycare Provider-1, even though, in fact, Lieberman secretly owned it.
Martin Handler and Ben Werczberger participated in a scheme to steal, and to launder the proceeds of their theft, from Handler’s for-profit daycare, Daycare Provider-2. Martin Handler and Werczberger stole at least $2.8 million in federal funding intended for childcare services for low-income children in the Bronx. They carried out this theft by funneling a portion of HHS’s monthly funding to Werczberger, by providing no-show jobs to Werczberger’s wife and grandson, and by having Daycare Provider-2 cover the cost of a luxury SUV for Werczberger’s wife.
Finally, Martin Handler himself stole funds from Daycare Provider-2’s operating expenses, including to purchase real estate, to repay a $500,000 loan to a business associate, to purchase historical items at auction, and to purchase a luxury vehicle.
