Audit: Special-ed provider overcharged millions

New York Comptroller Thomas DiNapoli's office released a New York Comptroller Thomas DiNapoli's office released a report on a state audit that shows a Cedarhurst-based special education provider overcharged the state millions of dollars while its executive director used those funds to help relatives. (March 14, 2012) Photo Credit: Newsday / Audrey C. Tiernan

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A Cedarhurst-based special education provider overcharged the state millions of dollars while its executive director used those funds to help relatives, according to an audit by State Comptroller Thomas DiNapoli's office released Wednesday.

The state reimbursed the nonprofit IncludED Educational Services for $12.6 million from 2007 to 2009, but the audit found that $2.6 million in claimed expenses were ineligible.

"Waste, fraud and abuse cannot be tolerated in our special education programs, but my auditors keep finding it," DiNapoli said in a release. "Allowing these abuses to continue deprives children with disabilities of the resources intended for them and threatens the entire private special education program."

Some expenses flagged by DiNapoli included $19,888 for meals for executive director Morton Kramer and his wife; $15,382 in rent and related costs for Kramer's son's California apartment; $1,482 for landscaping at Kramer's personal home, and $197,335 for services that were either not documented or improperly billed. Kramer's family members were on the payroll, with 11 relatives collecting $856,827 of the $1.5 million of wages the nonprofit claimed during the audit period.

A woman who answered the phone at Kramer's home in Lawrence identified herself as his wife but wouldn't give her name and said he didn't want to talk because of the negative news coverage.

"He was really badly burned, they told a bunch of lies and he doesn't want to get involved with any of this," she said. "It was very overblown, the numbers were very overblown."

The company ceased operations during the audit and owes the New York City Department of Education $3.15 million for overpayment of services, DiNapoli's office said.

The company's website says it is a "leader in the provision of disability services for young children, holding fast to standards of excellence, compassion and quality of care."

But the audit paints a picture of company that kept shoddy records and may have falsified some records after the audit began. The son's housing costs in California were initially claimed to be a satellite office, but the comptroller's office said Kramer's son admitted that he had made up an invoice for some of the costs.

Kramer said he was aware that he couldn't use public funds for the rental costs and would reimburse his company, according to the audit.

According to the nonprofit's 2008 tax filing, Kramer received $179,963 in total compensation while his daughter, Shira Forman, received $110,519 for work as a supervisor.

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