Special ed administrator charged with mail fraud

Bill San Antonio

A Manhasset man who owned and operate a special education program based in Queens was arraigned on Wednesday on charges that he defrauded the government of millions of dollars through false financial statements and by diverting funds intended for children with special needs.

Cheon Park, 46, is alleged to have received illegal kickback payments from employees of his company, Bilingual SEIT, a city- and state-funded special education program that provided classes and physical, occupational and speech therapy to preschoolers with special needs at five locations in Queens, Manhattan and Brooklyn. 

“Cheon Park allegedly orchestrated multiple schemes to enrich himself by taking funds intended for special needs children and diverting them into his own coffers,” said Preet Bharara, United States  attorney for the southern district of New York. “As today’s arrest makes clear, we will not tolerate individuals who cheat local, state and federal government under the guise of helping children, and will do everything in our power to hold them accountable.”

Park has been charged on single counts of mail fraud and conspiracy to commit mail fraud. Each charge carries maximum prison sentences of 20 years. 

The case is being prosecuted by Assistant U.S. attorneys Paul Krieger, Rebecca Ricigliano and Martin Bell of the Manhattan U.S. Attorney’s office’s Public Corruption Unit.

Park’s arrest came as the result of a joint investigation between the offices of the Manhattan U.S. Attorney; New York state Comptroller Thomas DiNapol; Richard Condon, special commissioner of Investigation for New York City’s Department of Education;  and Brian Hickey, Special Agent-in-Charge United States Department of Education’s Office of Inspector General Special Agent-in-Charge of the Northeast Region. 

Park appeared in Manhattan federal court on Wednesday before U.S. Magistrate Judge Ronald L. Ellis.

“Today’s arrest relates to allegations that Mr. Park not only knowingly and willfully abused his position of trust for personal gain, but did so at the expense of special needs students. That is completely unacceptable,” Hickey said. “Tracking down those who would cheat the children and families that rely on special education programs is a priority of our office.” 

According to prosecutors, Park owned and operated Bilingual SEIT from 2005 until 2012, during which the program received $94.5 million in federal, state and New York City payments for its services. 

To receive the funds, Park had to first sign and file with the state and city education departments annual consolidated fiscal reports supported by audited financial statements detailing the program’s costs during the previous year. Prosecutors said the state education department used these consolidated financial statements to determine the proper funds per student to pay Bilingual SEIT for its services.

Park is alleged to have engaged in three fraudulent schemes inflating the costs he reported in Bilingual SEIT’s financial statements, which prosecutors said resulted in Park receiving money for personal use that was intended for the program.

In June 2011, the state comptroller’s office audited Bilingual SEIT to determine whether financial reports that Park filed from July 2007 through 2009 were calculated properly. 

In July 2012, DiNapoli concluded in a report that nearly $1.5 million in costs Park certified in financial statements during that two-year period should have been disallowed by the by the state, including payments to 26 employees whose work hours could not be substantiated. After the report was released, the city’s department of education cancelled Bilingual SEIT classes and did not renew its contract with the program.

“As alleged, Cheon Park blatantly ripped off taxpayers for hundreds of thousands of dollars, partly through kickbacks, to support his lavish lifestyle, even going as far as using the public’s money to clean his house,” DiNapoli said in a statement. “Our audits and investigations of special education providers have uncovered too much fraud and abuse that is depriving students with special needs of the resources intended for them.” 

Prosecutors said Park fraudulently received funds from New York State and New York City to pay multiple Bilingual SEIT employees who did little to no work for the program, who then kicked back as much as 50 percent of their salaries to Park.

In one instance cited in a news release from Bharara’s office, Park asked an employee who sporadically evaluated children for the program to accept payment from Bilingual SEIT, but kick back 50 percent of the payments to Park. The employee agreed, sending $3,800 each month to Park from 2005-08, prosecutors said.  

During DiNapoli’s audit, Park allegedly asked that employee to sign various documents falsely indicating that he worked for the program from 2007-09.

Park is also alleged to have fraudulently received funds from the state and city to overpay employees working for Bilingual SEIT, who would then regularly kick back a portion of their salaries to Park.

According to the news release, Park hired an office worker in 2006 who he shortly thereafter asked to kick back $2,200 each month. The employee agreed and sent the payments to Park until leaving Bilingual SEIT in 2011.

Prosecutors said that in addition to receiving kickbacks, Park used Bilingual SEIT funds for his personal use, arranging for the program to pay his ex-wife and ex-sister-in-law for work they never actually did.

According to consolidated financial statements Park filed, Park’s ex-wife served the program from 2006-12 as its assistant executive director, the second most senior position with Bilingual SEIT and among the program’s highest-compensated employees.  

But interviews conducted by Bharara’s office and DiNapoli’s audit both revealed Park’s ex-wife’s role with Bilingual SEIT was as an office worker, not the administrative function specified in the program’s financial statements. 

Witnesses also told prosecutors that Park’s ex-wife’s sister also never actually worked for Bilingual SEIT.

Park also allegedly arranged for the program to pay for the tutoring of Park’s children and for a Bilingual SEIT employee to clean Park’s home twice a week.

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