oversight

Former Fugitive in Multimillion-Dollar New Square Fraud Scheme Pleads Guilty in Manhattan Federal Court. New York, NY., March 15, 2010

Published by the Department of Education, Office of Inspector General on 2010-03-15.

Below is a raw (and likely hideous) rendition of the original report.

Press Release NY, March 15, 2010 - Former Fugitive in MultiMillion-Dollar New Square Fraud Scheme Pleads Guilty in Manhattan Federal Court
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CONTACT: U.S. ATTORNEY’S OFFICE
YUSILL SCRIBNER,
REBEKAH CARMICHAEL,
JANICE OH
PUBLIC INFORMATION OFFICE
(212) 637-2600
FORMER FUGITIVE IN MULTIMILLION-DOLLAR NEW SQUARE FRAUD SCHEME PLEADS GUILTY IN MANHATTAN FEDERAL COURT
March 15, 2010
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced today that AVRUM DAVID
FRIESEL pleaded guilty today in Manhattan federal court before
United States Magistrate Judge HENRY B. PITMAN for his role in a
long-running scheme to defraud a number of federal and state
programs. FRIESEL initially fled from the United States to
Israel in about 1997, prior to the unsealing of the original
Indictment. FRIESEL subsequently fled from Israel to the United
Kingdom, where he resided until his arrest there in 2008.
FRIESEL was then extradited to the United States, arriving in New
York in August 2009.
According to the Superseding Indictment, statements
made during FRIESEL’s guilty plea, and other documents filed in
Manhattan federal court and in connection with extradition
proceedings in the United Kingdom:
FRIESEL and several other co-defendants defrauded a
number of federal and state grant, loan, and subsidy programs for
the benefit of themselves and other residents of the Village of
New Square, an incorporated village in Rockland County. During
the course of the fraud, millions of dollars were obtained from
various federal and state programs.
For example, FRIESEL and his co-defendants defrauded
the Pell Grant program funded by the United States Department of
Education. The Pell Grant program provides funds to financially
needy post-secondary students who are seeking to obtain an
academic or professional degree, vocational certificate, or other
recognized undergraduate educational credential. FRIESEL and his
co-defendants assisted in enrolling thousands of New Square
residents and others in post-secondary educational programs in
order to obtain tens of millions of dollars in Pell Grants and
other forms of student financial aid to which they were not
entitled. Most of these students were enrolled in "independent
study" programs that did not require the students to attend
classes, but instead permitted them to study independently under
the guidance of "mentors," who supposedly met with them
periodically to gauge their progress and administer examinations.
Members of the conspiracy used fraudulent means to conceal the
fact that many of these "students" were actually ineligible to
receive financial aid because they were not seeking any
certificate or degree, or because they were still in high school.
Among other things, and in order to execute the fraud,
participants in the conspiracy: created entities through which
federal and state funds could be fraudulently obtained; submitted
fraudulent documentation in order to establish the eligibility of
New Square residents and others to participate in these programs;
used the funds obtained from these programs for impermissible
purposes; and concealed their fraud by using false names and
nominee bank accounts.
In addition to the Pell Grant program, participants in
the conspiracy defrauded other programs and departments,
including: a Small Business Administration program designed to
provide venture capital to small, minority-owned businesses; the
Section 8 rental subsidy program funded by the United States
Department of Housing and Urban Development; the Social Security
Administration; and the Internal Revenue Service.
FRIESEL faces a maximum penalty of five years in prison
and a maximum fine of $250,000 or twice the gain or loss
resulting from the crime. In addition, as part of his plea
agreement with the Government, FRIESEL agreed to pay restitution
of more than $11.6 million.
FRIESEL is scheduled to be sentenced by United States
District Judge BARBARA S. JONES on June 15, 2010, at 11:00 a.m.
FRISEL’s co-defendants, KALMEN STERN, DAVID GOLDSTEIN,
JACOB ELBAUM, and BENJAMIN BERGER, were convicted on January 25,
1999, following an 11-week jury trial in White Plains federal
court and received sentences of between 30 and 78 months in
prison, sentences which were commuted in 2001. CHAIM BERGER, the
leader of the scheme who fled the United States, was arrested in
Israel in 1999 and was later extradited to the United States. He
pleaded guilty on January 23, 2002, and was sentenced to 72
months in prison. The last defendant, NATHAN ADLER, remains at
large.
Mr. BHARARA said, “Today, Avrum Friesel has
acknowledged his role in stealing money intended for legitimate
students in need of financial assistance. After fleeing and
living in hiding for eleven years, Friesel will finally face
justice. In cases like these, our Office, in coordination with
our local, federal, and international law enforcement partners,
never ceases to pursue fugitives who evade responsibility for
their crimes.”
Mr. BHARARA praised the work and cooperation of the
Department of Education, the Internal Revenue Service, the
Federal Bureau of Investigation, the Department of Housing and
Urban Development, the Small Business Administration, and the
Social Security Administration for their investigation and their
extraordinarily dedicated commitment to the prosecution. Mr.
BHARARA also praised the efforts of the United States Marshals
Service for locating FRIESEL, for helping to apprehend FRIESEL in
the United Kingdom, and for providing essential support in
obtaining his return the United States. Mr. BHARARA also thanked
London's Metropolitan Police Service, Extradition Unit, for its
assistance in the location and apprehension of FRIESEL.
The case is being prosecuted by the Office's Complex
Frauds Unit. Assistant United States Attorney DANIEL W. LEVY is
in charge of the prosecution.
10-080 ###
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Last Modified: 03/17/2010
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