Date: 09-04-2018

Case Style:

Case Number: 7:18-cr-00614-KMK

Judge: Kenneth M. Karas

Court: United States District Court for the Southern District of New York (New York County)

Plaintiff's Attorney: Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg

Defendant's Attorney: Shulamis Peltz for Simon Goldbrener

Susan Rose Necheles for Peretz Klein

Deborah Loewenberg and Kenneth Gribetz for Bem Klein

Steve Yurowitz for Moshe Schwartz

Eric Creizman for Sholem Steinberg

Henry Mazurek for Aron Melber

Description: White Plains, NY - Vendors, Consultants, And School Administrator Charged In Wide-Ranging Scheme To Defraud Federal “E Rate” Subsidy Program

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney, Assistant Director in Charge, Federal Bureau of Investigation (the “FBI”), David L. Hunt, Inspector General of the Federal Communications Commission (the “FCC-OIG”), and Thomas P. Zugibe, the District Attorney for Rockland County, announced today the return of an Indictment charging SIMON GOLDBRENER, a/k/a “Simon Goldbrenner,” a/k/a “Shimon Goldbrenner,” PERETZ KLEIN, SUSAN KLEIN, a/k/a “Suri Klein,” BEN KLEIN, a/k/a “Benzion Klein,” a/k/a “Benzi Klein,” MOSHE SCHWARTZ, SHOLEM STEINBERG, and ARON MELBER, a/k/a “Aharon Melber,” with conspiracy to commit wire fraud and wire fraud charges in connection with the federal program known as “E‑rate,” which provides subsidies for affordable telecommunications equipment and related services to qualified schools This case has been assigned to United States District Judge Kenneth M. Karas.

Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, for years, these defendants stole money from the E‑rate program, billing the E-rate program for equipment and services which were not in fact provided. The defendants allegedly fraudulently obtained millions of dollars in E rate funds to which they were not entitled, and which should lawfully have been spent to help provide access to technology to educate underprivileged children. This indictment is important not only because fraudsters should be held to account for their crimes, but also because the next generation of students should have access to telecommunication services, internet access, and related equipment, irrespective of their means and in spite of the fact that people like the defendants seek to line their own pockets at the expense of underprivileged children.”

FBI Assistant Director in Charge William F. Sweeney said: “Schools have to fight for every dollar these days to supply their students with the high-tech, expensive equipment and technology they need in this day and age to succeed in life. The suspects in this investigation allegedly used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts. To add insult to injury, school officials, who see the day-to-day struggle to even find money for pencils and paper, were allegedly involved in the scheme. The FBI and our law enforcement partners will hold these criminals accountable, and stop others from defrauding not only the government and tax payers, but students who depend on these programs to get a better education.”

Rockland County District Attorney Thomas P. Zugibe said: “These individuals concocted a scheme that not only defrauded taxpayers, but also deprived local students of access to affordable technology equipment and Internet service. In short, the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds. The Rockland County District Attorney's Office will continue to work collaboratively with the U.S. Attorney and FBI to root out fraud and abuse - especially misconduct that impacts children. Offenders must be dealt with swiftly to prevent further fraud of this magnitude from occurring.”

According to the allegations made in the Indictment[1]:

The E‑rate distributes funds to schools and libraries mostly serving economically disadvantaged children, so that those institutions can afford needed telecommunication services, internet access, and related equipment. Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period; every year, requests for E‑rate funds have exceeded funds available. In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor; if approved, the program defrays the cost by up to 90%. The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor submit a series of certifications that they comply with a number of requirements of the E‑rate program. A school applying for E‑rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E‑rate funded equipment and services.

PERETZ KLEIN, SUSAN KLEIN, BEN KLEIN, and SHOLEM STEINBERG (collectively, the “Vendor Defendants”) held themselves out as vendors to schools participating in the E‑rate program. Corporations controlled by the Vendor Defendants requested over $35 million in E‑rate funds, and received over $14 million in E‑rate funds, from in or about 2010 to in or about 2016.

SIMON GOLDBRENER and MOSHE SCHWARTZ (collectively, the “Consultant Defendants”) held themselves out as consultants who assisted educational institutions that desired to participate in the E rate program. The Consultant Defendants, and individuals acting at their direction, completed and filed E‑rate documents that resulted in the payment of millions of dollars in E‑rate funds to the Vendor Defendants.

ARON MELBER is an official at a private religious school in Rockland County, New York. MELBER and his school have participated in the E‑rate program with certain of the Vendor Defendants and Consultant Defendants, and filed certifications purporting to have obtained authorized E‑rate funded equipment and services from Vendor Defendants selected through a fair and open bidding process. From in or about 2009 through in or about 2015, MELBER’s school received over one million dollars in E‑rate funds.

From at least 2009 up to and including 2016, certain private religious schools, including MELBER’s school, sought and received E‑rate funds for the purpose of paying the Vendor Defendants for equipment and services that the schools, the Vendor Defendants, and the Consultant Defendants falsely claimed the Vendor Defendants had provided to the schools.

However, the schools never received millions of dollars’ worth of these items and services. In other cases, the schools, Vendor Defendants, and Consultant Defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population. For example, from 2009 through 2015, one day care center that served toddlers from the ages of 2 through 4 requested over $700,000—nearly $500,000 of which was ultimately funded—for equipment and services—including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet—from companies controlled by PERETZ KLEIN and SUSAN KLEIN, using the Consultant Defendants as their consultants. In still other instances the schools received equipment and services that fulfilled the functions for which the schools had requested E‑rate funds (such as providing the school with internet access), but the schools, Vendor Defendants, and Consultant Defendants materially overbilled the E‑rate program for the items provided, in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.

As alleged, the defendants also perverted the fair and open bidding process required by the E‑rate program. The Consultant Defendants—who held themselves out in filings as independent consultants working for the schools, but, in truth, worked with and for the Vendor Defendants—and the Vendor Defendants presented the schools with forms to sign or certify, awarding E‑rate funded contracts to the Vendor Defendants. As a result of false and misleading E‑rate filings, the Vendor Defendants received millions of dollars in E‑rate funds for equipment and services that the Vendor Defendants did not in fact provide and which the schools did not use, and the Consultant Defendants accepted payments totaling hundreds of thousands of dollars from the Vendor Defendants, despite falsely presenting themselves as independent of the Vendor Defendants.

In return for their participation in the scheme to defraud the E‑rate program, certain schools and school officials received a variety of improper benefits from the Vendor Defendants, including: a percentage of the funds fraudulently obtained from E‑rate for equipment and services that were not in fact provided to the schools; free items paid for with E‑rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E‑rate program does not authorize) installed at the schools; and free services for which the E‑rate program authorizes partial reimbursement (such as internet access) but for which the Schools did not—contrary to their statements in filings—make any payment at all.

The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list.

* * *

Mr. Berman thanked the FBI, the FCC-OIG, and the Rockland County District Attorney’s Office for their outstanding work on the investigation. This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

18-296 ###

United States v. Simon Goldbrener, et al.



Defendant


Age


Residence


Charges and Maximum Penalties

Simon Goldbrener


55


Monsey, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (three counts): 20 years in prison per count

Peretz Klein


64


Spring Valley, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Susan Klein


57


Spring Valley, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Ben Klein


39


Monsey, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Moshe Schwartz


45


Monroe, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Sholem Steinberg


39


Monsey, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (two counts): 20 years in prison per count

Aron Melber


42


Monsey, New York


Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Outcome: Date Filed # Docket Text
08/29/2018 3 Order to Unseal Case as to Sealed Defendant 1, Sealed Defendant 2, Sealed Defendant 3, Sealed Defendant 4, Sealed Defendant 5, Sealed Defendant 6, Sealed Defendant 7. (Signed by Magistrate Judge Judith C. McCarthy on 8/29/2018) (lnl) (Entered: 08/29/2018)
08/29/2018 INDICTMENT UNSEALED as to Simon Goldbrener, Peretz Klein, Susan Klein, Ben Klein, Moshe Schwartz, Sholem Steinberg, Aron Melber. (ap) (Entered: 08/29/2018)
08/29/2018 Case Designated ECF as to Simon Goldbrener, Peretz Klein, Susan Klein, Ben Klein, Moshe Schwartz, Sholem Steinberg, Aron Melber. (ap) Modified on 8/29/2018 (ap). Modified on 8/29/2018 (ap). (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Simon Goldbrener. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Simon Goldbrener. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Peretz Klein. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Peretz Klein. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Susan Klein. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Susan Klein. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Ben Klein. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Ben Klein. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Moshe Schwartz. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Moshe Schwartz. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Sholem Steinberg. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Sholem Steinberg. (ap) (Entered: 08/29/2018)
08/29/2018 ARREST Warrant Returned Executed on 8/29/2018 as to Aron Melber. (ap) (Entered: 08/29/2018)
08/29/2018 Arrest of Aron Melber. (ap) (Entered: 08/29/2018)
08/29/2018 Minute Entry for proceedings held before Magistrate Judge Judith C. McCarthy: Initial Appearance as to Simon Goldbrener, Peretz Klein, Susan Klein, Ben Klein, Moshe Schwartz, Sholem Steinberg, Aron Melber held on 8/29/2018. (jbo) (Entered: 08/29/2018)
08/29/2018 Minute Entry for proceedings held before Magistrate Judge Judith C. McCarthy: Arraignment as to Simon Goldbrener (1) Count 1,2-4 and Peretz Klein (2) Count 1,2 and Susan Klein (3) Count 1,2 and Ben Klein (4) Count 1,3 and Moshe Schwartz (5) Count 1,2 and Sholem Steinberg (6) Count 1,2,4 and Aron Melber (7) Count 1,4 held on 8/29/2018. Simon Goldbrener present with Shulamis Peltz. Peretz Klein present with Susan Necheles. Susan Klein present with Susan Necheles. Ben Klein present with Deborah Loewenberg and Kenneth Gribetz. Moshe Schwatrz present with Steven Yurowitz. Sholem Steinberg present with Melissa Madrigal standing in for Eric Creizman. Aron Melber present with Henry Mazurek. AUSA: Michael Maimin and Vladislav Vainberg. Court Reporter: Courtflow. The defendants were advised of their rights and the charges against them. The defendants were arraigned on the Indictment, waived public reading, and entered not guilty pleas. The matter was wheeled out and assigned to Judge Karas. The speedy trial time has been excluded until the first pretrial conference before the district judge, not to exceed September 12, 2018. Any further exclusion of time must be made to the District Judge. The Court grants bail as to all defendants. See Appearance Bonds. Plea entered by Simon Goldbrener (1) Count 1,2-4 and Peretz Klein (2) Count 1,2 and Susan Klein (3) Count 1,2 and Ben Klein (4) Count 1,3 and Moshe Schwartz (5) Count 1,2 and Sholem Steinberg (6) Count 1,2,4 and Aron Melber (7) Count 1,4 Not Guilty. (jbo) Modified on 8/30/2018 (lnl). (Entered: 08/29/2018)
08/29/2018 Case as to Simon Goldbrener, Peretz Klein, Susan Klein, Ben Klein, Moshe Schwartz, Sholem Steinberg, Aron Melber REASSIGNED to Judge Kenneth M. Karas. Judge Unassigned no longer assigned to the case. (lnl) (Entered: 08/30/2018)
08/29/2018 4 Secured Bond Entered as to Simon Goldbrener in amount of $500,000.00, secured by $500,000.00 in cash or property; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (See Order Setting Conditions of Release (attached)). (lnl) Modified on 8/31/2018 (ap). (Entered: 08/30/2018)
08/29/2018 5 Secured Bond Entered as to Peretz Klein in amount of $1,000,000.00, secured by $500,000.00 in cash or property; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (See Order Setting Conditions of Release (attached)). (lnl) (Entered: 08/30/2018)
08/29/2018 6 Unsecured Bond Entered as to Susan Klein in amount of $500,000.00; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on her own signature. (See Order Setting Conditions of Release (attached)). (lnl) (Entered: 08/30/2018)
08/29/2018 7 Secured Bond Entered as to to Ben Klein in amount of $500,000.00, secured by $500,000.00 in cash or property; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (See Order Setting Conditions of Release (attached)). (lnl) (Entered: 08/30/2018)
08/29/2018 8 Unsecured Bond Entered as to Moshe Schwartz in the amount of $250,000.00; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (See Order Setting Conditions of Release (attached)) (lnl) (Entered: 08/30/2018)
08/29/2018 9 Unsecured Bond Entered as to Sholem Steinberg in the amount of $250,000.00; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (lnl) (Entered: 08/30/2018)
08/29/2018 10 Unsecured Bond Entered as to Aron Melber in the amount of $100,000.00; co-signed by 2 FRPs. The co-signers and security must be obtained by 9/12/2018. Defendant released on his own signature. (lnl) (Entered: 08/30/2018)

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Defendant's Experts:

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