Federal prosecutors are urging a judge to sentence six Ramapo residents to prison for their involvement in stealing millions of dollars from a federal program designed to provide computer technology to underprivileged students.
Peretz Klein and his wife, Susan Klein, both of Spring Valley; and Monsey residents Simon Goldbrenner, Moshe Schwartz, Ben Klein, Sholem Steinberg and Aron Melber all entered guilty pleas to conspiracy charges in February.
Sentencing had been delayed from June due to the coronavirus pandemic and is expected in mid-January, according to a memorandum submitted by the U.S. Attorney’s Office in Manhattan. A hearing is likely after defense attorneys file their sentencing memorandums with the court.
SENTENCING MEMO: Federal prosecutors recommend prison time for six Ramapo residents in E-Rate thefts
COMPUTER SCAM: Seven from Ramapo plead guilty, face prison and thousands in fines
RAMAPO ARRESTS WITH VIDEO: FBI, Rockland DA make 7 arrests in $14M computer fraud scam
According to the memorandum filed with U.S. District Court Judge Kenneth Karas, prosecutors recommended the following:
• Peretz Klein, the conspiracy’s de facto leader — 5 years with a fine ranging from $25,000 to $250,000 and one to three years of supervised release.
• Susan Klein — one to three years probation with a fine of $7,500 to $75,000.
• Goldbrener — 37 months with a fine of $10,000 to $100,000 and one to three years supervised release.
• Schwartz — 3 years with a fine of $10,000 to $100,000 and one to three years supervised release.
• Ben Klein — 2. 25 to 2.75 years with a fine of $10,000 to $100,000 and one to three years supervised release.
• Steinberg — 2 to 3 years with a fine of $10,000 to $100,000 and one to three years supervised release.
• Melber — 1.5 to 2 years with a fine of $7,500 to $75,000 and one to three years supervised release.
Karas determines the sentences.
Prosecutors, in recommending prison for six of the seven, said, “In a purely technical sense, they defrauded a government program called ‘E-Rate.’ But what they really did was steal from underprivileged schoolchildren.”
The E-Rate program helps provide telecommunications services and equipment to schools serving needy students. The program never has sufficient funds to aid every eligible school.
The prosecutors said the seven people convicted “figured out how to game the program, submitting fraudulent invoices in order to get paid for equipment they did not provide, among many other deceptions.
“They robbed students of technology needed to prepare for a digital world in order to enrich themselves and their families,” the prosecutors wrote. “And, when they lied to steal that money, they broke the law.”
The memorandum stated Peretz Klein ran a web of shell companies and supervised more than a dozen employees carrying out the fraud, which he repeated for years.
He profited far more than any other defendant and paid others, such as Moshe Schwartz and Simon Goldbrener, hundreds of thousands of dollars to further his scheme, according to prosecutors.
“He did all this so that he and his family could enjoy a comfortable lifestyle by depriving underprivileged schoolchildren of the technology they needed to prepare for the information age,” the memorandum states.
FBI action nearly five years ago
The investigation burst into public view in March 2016 when hundreds of FBI agents, Rockland District Attorney’s Office detectives, and local police descended on ultra-Orthodox private schools and companies, seizing payment records, equipment and other documents.
The FBI-led raids were part of an investigation into whether local yeshivas properly spent money obtained through the E-Rate program, overseen by the Universal Service Administration Co. for the Federal Communications Commission. The program came into existence in 1998 and now allocates more than $4 billion annually for computer and internet access across the nation.
Peretz, Susan and Ben Klein and Steinberg acted as vendors, requesting more than $35 million in E-Rate funds and receiving more than $14 million from about 2010 to 2016, prosecutors said.
Peretz Klein once ran the Bridgestone Group LLC in 2012 and 2013 and faced 144 infractions of the New York City health code for a 46-unit apartment building at 1645 Grand Ave. in the Bronx, according to the New York City Public Advocate’s Office. The company is no longer listed on the office’s “NYC Worst Landlord Watchlist” for 2017. The company’s corporate address is Klein’s home at 44 Ellish Parkway.
Ben Klein was at the center of a political squabble in 2007 over his transfer from a Pennsylvania jail to serve most of his sentence back home in Rockland County.
Goldbrener and Schwartz passed themselves off as consultants who worked for educational institutions, supposedly helping schools participate in the E-Rate program. They admitted that they were paid hundreds of thousands of dollars by the vendors to complete and file false E-Rate documents that circumvented the bidding process and resulted in the payment of millions of dollars to the vendors.
Melber worked for a private religious school in Rockland that participated in the E-Rate program with some of the defendants. Melber admitted he filed false certifications claiming to have obtained authorized E-Rate funded equipment and services from vendors selected through a fair and open bidding process.
Steve Lieberman covers government, breaking news, courts, police, and investigations. Reach him at [email protected]. Twitter: @lohudlegal. Read more articles and bio. Our local coverage is only possible with support from our readers.