David Ostrove, the ex-CFO of the Schechter School of Long Island, New York, is on trial in Suffolk County Supreme Court for allegedly stealing $8.4 million from the private school. The charges date back to 2022, including first-degree grand larceny and first-degree money laundering.
Over a span of just over eight years, from 2014 to 2022, Ostrove stands accused of diverting school funds to his personal Stripe and PayPal accounts. He allegedly utilized these funds to afford a “lavish lifestyle,” according to the Suffolk County Assistant District Attorney Jessica Lightstone, to procure luxury vehicles, sports memorabilia, historical artifacts and multiple properties on Fire Island in New York.
“The Schechter School administration put complete trust in [Ostrove] to conduct financial transactions on behalf of and in the best interest of the Schechter School and its students ... The defendant violated that trust,” Lightstone said to the jury.
Despite earning a modest salary of $85,000, Ostrove's extravagant lifestyle failed to raise suspicions among colleagues, assuming previous success in unrelated ventures, as reported by Newsday.
Court documents reveal that when PayPal froze the school's accounts due to the transactions that indicated potential fraud, Ostrove continued his activities on Stripe.
Cynthia Dolgin, the former school president who hired Ostrove, has also accused him of maintaining secrecy regarding finances and rebuffing her requests for transparency.
Financial controls failure
According to testimony during the trial, a number of failures in financial controls took place during Ostrove’s oversight of the school’s finances.
Testimonies from witnesses suggest that Ostrove actively encouraged parents to use credit cards and banking apps for transactions, claiming it streamlined payment processes.
Dolgin testified that such usage was permitted only for substantial donations exceeding processing fees, but Dolgin learned that, by 2017, Ostrove was allowing “just about everybody” to pay tuition via credit card, which allowed more money to flow through the digital banking platforms, allowing for easier diversion to Ostrove’s personal accounts, Newsday also reported.
Testimony also indicated that a budget and finance committee, as well as an independent accounting firm, were responsible for reviewing and auditing the CFO’s work. However, Dolgin, when questioned by the Suffolk County DA’s office, responded in the negative when asked if “anyone ever questioned Mr. Ostrove” about the funds transferred.
A $30,000 certified bank check gifted to colleague Julia Hardy, the school’s business director, is also under scrutiny. Hardy alleges Ostrove presented her with the check due to her husband's deployment as a Navy Reservist, resulting in loss of civilian income. However, the funds were later seized through civil forfeiture by the district attorney's office.
Court proceedings continued on Friday. The trial is expected to last another four weeks.
