Dive Brief:
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An ongoing investigation into Cleveland's alleged $8.5 million E-rate fraud has found that the school district and its legal team have not provided clear answers about components of the rebate failures, members of the Bond Accountability Commission (BAC) tell Cleveland.com.
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Previously, the district was pre-approved for $12 million in federal E-rate rebates between 2006 and 2011, but didn't collect $8.5 million.
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Thus far, the school district's $500,000 investigation has said that the alleged fraud occurred due to paperwork mistakes, missing documentation and missed deadlines.
Dive Insight:
What's unfolding in Cleveland is certainly a cautionary tale for other districts who have applied for and received federal E-rate rebates. Previously, school district lawyers said that would be impossible to retroactively collect the missing $8.5 million of rebate money, and that taxpayers would likely foot the bill.
Back then, the Cleveland school board was reportedly considering legal action against the contractor E-Rate Central and two former employees. And at the time E-rate Central was hired, the district's COO was Dan Burns. Burns has since been convicted of racketeering, theft, and tampering with records, though previous news reports claimed that the E-rate rebate loss wasn't due to intentional fraud.
Proper record-keeping is essential for schools and districts in relation to all E-rate transactions. In New York, another investigation examined the role of a consultant who served as project manager for NYC’s Project Connect. That consultant was found guilty of overbilling the school district over four years, and subsequently charged with theft and fraud. On December 30, 2015, a $3 million settlement was reached for the New York City Department of Education, related to their alleged violations of competitive bidding rules in E-rate. That settlement mandated that the NYC DOE cancel all of its E-rate funding requests from 2011-2013, pay $3 million to resolve the conflict, file compliance reports, retain all E-rate related documents for 10 years, and appoint an E-rate Compliance Officer.
