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New York City Comptroller William C. Thompson, Jr. today called on the Department of Education (DOE) to immediately investigate a non-profit – which provides special education services to city school kids – under fire from state officials for alleged fraud and other financial irregularities.

“The report’s findings clearly indicate that New York City school children could be at risk unless DOE strengthens its oversight of its service providers,” Thompson wrote in a letter to Schools Chancellor Joel I. Klein. “DOE should review all payments to the Center to determine if they were appropriate and proper.”

Thompson’s letter was triggered by a February report by the New York State Commission on Quality of Care and Advocacy for Persons with Disabilities, entitled Lessons Learned – Changes Made: The Case of Evelyn Douglin Center for Serving People in Need (SPIN).

The report summarizes an investigation into SPIN, of which the DOE contracts through a subsidiary, and identifies significant fraud and mismanagement of the Center. In addition, the report identified evidence of a no-show job, unauthorized employee compensation, diversion of agency funds for personal use and misrepresentation to government authorities. In total, the report found misuse of funds topping $100,000.

The State’s report found that when SPIN applied for the contract through the State Education Department, the names and credentials of five professionals listed as workers were false. When the Commission contacted these persons, none had heard of SPIN and denied authorizing them to use their names and license numbers on their application.

The SPIN program identified by the State provides special classes for preschool students with disabilities. 

DOE currently relies on the State to identify if a provider such as SPIN is responsible enough to provide adequate services. But the Comptroller wants DOE to strengthen the approval process by further vetting providers before awarding lucrative contracts.

“Clearly a problem exists,” Thompson said. “My review of the Commission’s report raises a significant number of red flags concerning how DOE contracts with service providers. Unless DOE bolsters its oversight, I fear students may be at risk.”

The DOE, since 2000, has awarded three contracts to the Center, including a current $25 million contract to provide services to pre-school students with disabilities. Since February, DOE has paid the Center more than $11,000.

“It is possible that public funds associated with DOE’s contracts with the Center have also been compromised,” Thompson said. He further called on DOE to broaden its probe to encompass similar providers.

“We must make sure that New York City is not only getting every dollar that it is due, but that children are receiving the best, quality education and services that they are due,” Thompson said. “I am hopeful that Chancellor Klein will recognize the severity of my concerns and act urgently to address this matter.”

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