A Brooklyn Hasidic school will pay more than $5 million in fines after admitting to a fraud scheme that included misusing funds meant to feed children in need, prosecutors said in a statement Monday.
Central United Talmudic Academy in Williamsburg received more than $3.2 million from a U.S. Department of Agriculture program designed to feed hungry children, but the school diverted the funding and used it for private parties thrown by adults, according to the U.S. Attorney for the Eastern District of New York.
“Today’s admission makes clear there was a pervasive culture of fraud and greed in place at CUTA,” Michael J. Driscoll, the assistant director in charge of the FBI’s New York office, said in a statement Monday.
The yeshiva also paid staff with coupons that were redeemable at local stores for a specific cash value, allowing employees to qualify for government welfare benefits like health care and child care. When employees used the vouchers, the stores redeemed the coupons back to CUTA and received payment, creating an “underground economy,” prosecutors said.
From 2010 through 2015, the school provided at least 17% of its employee compensation — more than $12 million — in the form of these tokens, according to the U.S. Attorney’s Office.
Additionally, prosecutors say the school provided no-show jobs to non-employees, helped others get religious housing benefits they were not entitled to and obtained technology funding that did not go toward educational purposes.
“The misconduct at CUTA was systemic and wide ranging,” U.S. Attorney Breon Peace said in a statement. “Today’s resolution accounts for CUTA’s involvement in those crimes and provides a path forward to repay and repair the damage done to the community.”
The statement says that the $5 million in penalties CUTA has agreed to pay are in addition to more than $3 million in restitution it has already paid. The school will also be subject to supervision of an independent monitor for a three-year period.
Elozer Porges, the former executive director of the academy, was sentenced to two years in prison in October 2019 for his role in the scheme. His assistant, Joel Lowy, was sentenced to five years of probation and 1,000 hours of community service, plus ordered to pay almost $100,000 in restitution, in April 2022.
The school is the largest private Hasidic Jewish school in New York, serving more than 5,000 students in Williamsburg who range from preschool to secondary school. CUTA is among other yeshivas in the city that have recently been under heavy scrutiny.
The state found that Yeshiva Mesivta Arugath Habosem in Williamsburg had not provided enough evidence to show it was meeting state standards as required by law.
This came after The New York Times published an exposé in September analyzing the state’s Hasidic schools. The Times uncovered that New York yeshivas have received around $1 billion in government funding in the past four years, but are not providing basic education to its students.
However, non-public schools, including yeshivas, could now be subject to inspections by the city’s Department of Education after the state passed new rules in September.